<PAGE>   1
                                  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, 2000
                                               ------------------

                                       or

              [ ] Transition Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                     For the transition period from      to
                                                   ------  ------

                         Commission File Number: 1-11608

                      WILLIAMS COAL SEAM GAS ROYALTY TRUST
             (Exact name of registrant as specified in its charter)


                  Delaware                                75-6437433
        (State or other jurisdiction                   (I.R.S. Employer
             of incorporation or                      Identification No.)
                organization)

                                 Trust Division
                              Bank of America, N.A.
                                 901 Main Street
                                   12th Floor
                               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 outstanding at November 1, 2000:
9,700,000.



<PAGE>   2

                         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 incorporated by reference in the
Trust's Annual Report on Form 10-K for the year ended December 31, 1999 (the
"1999 Annual Report"). The December 31, 1999 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
September 30, 2000, the distributable income for the three-month and nine-month
periods ended September 30, 2000 and 1999, and the changes in trust corpus for
the nine-month periods ended September 30, 2000 and 1999, 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 September 30, 2000 and for the
three-month and nine-month periods ended September 30, 2000 and 1999 included
herein have been reviewed by Ernst & Young LLP, independent public accountants,
as stated in their report appearing herein.



                                       2
<PAGE>   3

                     Independent Accountants' Review Report

Bank of America, N.A.,
         as Trustee of Williams Coal Seam Gas Royalty Trust

We have reviewed the accompanying condensed statement of assets, liabilities and
trust corpus of the Williams Coal Seam Gas Royalty Trust as of September 30,
2000, and the related condensed statements of distributable income for the
three-month and nine-month periods ended September 30, 2000 and 1999 and the
statements of changes in trust corpus for the nine month periods ended September
30, 2000 and 1999. 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,
which will be performed for the full year with the objective of expressing 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 accounting principles generally
accepted in the United States.

Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying 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 auditing standards generally
accepted in the United States, the statement of assets, liabilities and trust
corpus of the Williams Coal Seam Gas Royalty Trust as of December 31, 1999, 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 24,
2000, 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, 1999, is fairly stated,
in all material respects, in relation to the statement of assets, liabilities
and trust corpus from which it has been derived.


                                                               Ernst & Young LLP



Tulsa, Oklahoma
November 13, 2000



                                       3
<PAGE>   4

WILLIAMS COAL SEAM GAS ROYALTY TRUST

CONDENSED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                               September 30,    December 31,
                                                   2000             1999
                                              --------------   --------------
<S>                                           <C>              <C>
ASSETS

Current Assets - cash and cash equivalents    $       53,242   $      104,693

Royalty interests in oil and gas properties
        (less accumulated amortization
        of $104,869,311 at
        September 30, 2000 and
        $98,399,040 at December 31, 1999)         33,697,352       40,167,623
                                              --------------   --------------

TOTAL ASSETS                                  $   33,750,594   $   40,272,316
                                              ==============   ==============


LIABILITIES AND TRUST CORPUS

Current Liabilities -trust expenses payable   $       77,254   $       73,589

Trust corpus -9,700,000 units of
        beneficial interest authorized
        and outstanding                           33,673,340       40,198,727
                                              --------------   --------------

TOTAL LIABILITIES
        AND TRUST CORPUS                      $   33,750,594   $   40,272,316
                                              ==============   ==============
</TABLE>



The accompanying notes are an integral part of these financial statements. See
accountants' review report.



                                       4
<PAGE>   5

WILLIAMS COAL SEAM GAS ROYALTY TRUST

CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                   THREE MONTHS         THREE MONTHS
                                       ENDED                ENDED
                                September 30, 2000    September 30, 1999
                                ------------------    ------------------
<S>                             <C>                   <C>
Royalty income                  $        2,529,316    $        2,431,301
Interest income                             11,289                 7,020
                                ------------------    ------------------
                                         2,540,605             2,438,321

General and administrative
        expenses                          (108,641)             (107,896)
                                ------------------    ------------------
Distributable income            $        2,431,964    $        2,330,425
                                ==================    ==================

Distributable income per unit
        (9,700,000 units)       $              .25    $              .24
                                ==================    ==================
</TABLE>


The accompanying notes are an integral part of these financial statements. See
accountants' review report.

--------------------------------------------------------------------------------



                                       5
<PAGE>   6

WILLIAMS COAL SEAM GAS ROYALTY TRUST

CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                    NINE MONTHS          NINE MONTHS
                                       ENDED                ENDED
                                September 30, 2000    September 30, 1999
                                ------------------    ------------------
<S>                             <C>                   <C>
Royalty income                  $        9,639,229    $        9,457,966
Interest income                             39,458                28,224
                                ------------------    ------------------
                                         9,678,687             9,486,190

General and administrative
        expenses                          (470,128)             (422,572)
                                ------------------    ------------------
Distributable income            $        9,208,559    $        9,063,618
                                ==================    ==================

Distributable income per unit
        (9,700,000 units)       $              .95    $              .93
                                ==================    ==================
</TABLE>


The accompanying notes are an integral part of these financial statements. See
accountants' review report.

--------------------------------------------------------------------------------



                                       6
<PAGE>   7

WILLIAMS COAL SEAM GAS ROYALTY TRUST

CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                        NINE MONTHS          NINE MONTHS
                                           ENDED                ENDED
                                    September 30, 2000    September 30, 1999
                                    ------------------    ------------------
<S>                                 <C>                   <C>
Trust corpus, beginning of period   $       40,198,727    $       49,769,352

Amortization of royalty interests           (6,470,271)           (9,171,766)

Distributable income                         9,208,559             9,063,618
Distributions to unitholders                (9,263,675)           (9,021,189)
                                    ------------------    ------------------
Trust corpus, end of period         $       33,673,340    $       40,640,015
                                    ==================    ==================

Distributions per unit
        (9,700,000 units)           $              .96    $              .93
                                    ==================    ==================
</TABLE>


The accompanying notes are an integral part of these financial statements. See
accountants' review report.


--------------------------------------------------------------------------------



                                       7
<PAGE>   8

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"), and Bank of America, N.A., as successor to
NationsBank, N.A., a national banking association (the "Trustee"), and Chemical
Bank Delaware, a Delaware banking corporation (the "Delaware Trustee"), as
trustees. 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 at the
time of the Trust's formation 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") dated 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
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 remaining Units to Quatro Finale IV LLC, a Delaware limited liability
company ("QFIV"), in a privately negotiated transaction. Williams has agreed to
hold the transferred Units as Nominee for QFIV. Williams retained the voting
rights and retained a "call" option on the transferred Units and QFIV was
granted a "put" option on the Units. Substantially all of the production
attributable to the Underlying Properties is from the Fruitland coal formation
and constitutes "coal seam" gas that entitles the owners of such production,
provided certain requirements are met, to tax credits for Federal income tax
purposes pursuant to Section 29 of the Internal Revenue Code of 1986, as
amended. Effective May 1, 1997, WPC transferred the Underlying Properties,
subject to and burdened by the Royalty Interests, to Quatro Finale LLC, a
non-affiliated Delaware limited liability company ("Quatro Finale").

         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



                                       8
<PAGE>   9

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 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 81 percent of the NPI Net Proceeds, as
defined below, attributable to (i) gas produced and sold from Quatro Finale's
net revenue interests (working interests less lease burdens) in the properties
in which Quatro Finale has a working interest (the "WI Properties") and (ii) the
revenue stream received by Quatro Finale attributable to its 35 percent net
profits interest in 5,348 gross acres in La Plata County, Colorado (the "Farmout
Properties"). The Royalty Interests also include a 20 percent interest in Quatro
Finale's Infill Net Proceeds, as defined below, from the sale of production if
well spacing rules are effectively modified and additional wells are drilled on
producing drilling blocks on the WI Properties (the "Infill Wells") during the
term of the Trust. No Infill Wells have been drilled on the WI Properties to
date. "NPI Net Proceeds" consists generally of the revenue stream received by
Quatro Finale from its 35 percent net profits interest in the Farmout
Properties, plus the aggregate proceeds attributable to Quatro Finale's net
revenue interest, based on the price paid at or in the vicinity of the wellhead
(the "Wellhead"), of gas produced from the WI Properties, less Quatro Finale's
share of certain taxes and costs. "Infill Net Proceeds" consists generally of
the aggregate proceeds, based on the price at the Wellhead, of gas produced from
Quatro Finale's net revenue interest in any Infill Wells less certain taxes and
costs. The complete definitions of NPI Net Proceeds and Infill Net Proceeds are
set forth in the Conveyance. The NPI percentage is subject to permanent downward
adjustment based on a rate of return computation once a cumulative aggregate
production target is met. The Trust received notice from WPC on October 31, 2000
that a downward adjustment of the NPI percentage to 60 percent is expected to
occur during the fourth quarter of the year 2000. Pursuant to the Conveyance,
the NPI percentage is not subject to further reduction or other adjustment
regardless of the future amount of cumulative production or the achieved
internal rate of return. See "Item 1 - Financial Statements, Note 7 - NPI
Percentage Reduction" below for detailed information about the NPI percentage
reduction.

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 accounting principles generally accepted in the
United States ("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.



                                       9
<PAGE>   10

         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 4).

         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 and amortization of the Royalty Interests is not charged
against operating results.

         Williams sold an aggregate of 5,980,000 Units of the Trust's authorized
9,700,000 Units in the Public Offering at the offering price of $20 per Unit,
retaining 3,720,000 Units. Subsequently, Williams sold an additional 151,209
Units for $23.50 per Unit. Accordingly, the condensed statements of assets,
liabilities and trust corpus reflect the sale of these Units at the respective
sale prices thereof, as well as the remaining 3,568,791 Units at Williams'
historical cost. During the second quarter of 1995 Williams transferred its
Units to 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 QFIV in a privately negotiated transaction but
retained certain rights with respect to the Units as described in "Item 1 -
Financial Statements, Note 1 - Trust Organization and Provisions."

3.       FEDERAL INCOME TAXES

         The Trust is a grantor trust for Federal income tax purposes. As a
grantor trust, the Trust will not be required to pay Federal or state income
taxes. Accordingly, no provision for income taxes has been made in these
financial statements.

         Because the Trust will be treated as a grantor trust, and because a
Unitholder will be treated as directly owning an interest in the Royalty
Interests, each Unitholder will be 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.

         Production from coal seam gas wells drilled after December 31, 1979 and
prior to January 1, 1993, qualifies for the Federal income tax credit for
producing nonconventional fuels under Section 29 of the Internal Revenue Code.
This tax credit is calculated annually based on each year's qualified production
through the year 2002. Such credit, based on the Unitholder's pro rata share of
qualifying production, may not reduce his regular tax liability (after the
foreign tax credit and certain other non-refundable credits) below his
alternative minimum tax. Any part of the Section 29 credit not allowed for the
tax year solely because of this limitation is subject to certain carryover
provisions. Each Unitholder should consult his tax advisor regarding Trust tax
compliance matters.



                                       10
<PAGE>   11

4.       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 Quarterly Distribution Amount for each quarter is payable to
Unitholders of record on the 45th day following the end of such calendar quarter
unless such day is not a business day in which case the record date is the next
business day thereafter. 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, 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 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) 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.

5.       SUBSEQUENT EVENTS

         Subsequent to September 30, 2000, the Trust declared the following
distribution:

<TABLE>
<CAPTION>
                     Quarterly
                      Record                            Payment                     Distribution
                       Date                              Date                         per Unit
                     ---------                          -------                     ------------
<S>                 <C>                               <C>                           <C>
                    November 15                       November 29                     $.728103
</TABLE>

         The distribution per unit increased from $.246454 in the third quarter
of 2000 to $.728103 for the fourth quarter of 2000. The increase in
distributions was primarily the result of complete recoupment of the price
credit account balance with WPX Gas Resources during the quarter ended June 30,
2000 and an increase in the average market price of gas. Prior to the complete
recoupment of the price credit account balance, higher gas prices did not result
in corresponding higher distributions to unitholders because the marginal
increase in revenues attributable to the Royalty Interests was applied to recoup
the account balance in the price credit account.



                                       11
<PAGE>   12
\
6.       CONTINGENCIES

         Under the terms of the gas purchase contract entered into by WPC and
WPX Gas Resources Company ("WPX Gas Resources") (formerly known as WFS Gas
Resources, as successor to Williams Gas Marketing Company), as amended (the "Gas
Purchase Contract"), additional revenues may be paid to the Trust to meet the
Minimum Purchase Price provision of 97 percent of $1.75 per MMBtu. This
additional revenue is subject to recoupment by the purchaser from future
revenues received from production commencing after January 1, 1994 when the
applicable index price exceeds the Minimum Purchase Price as long as the Minimum
Purchase Price commitment is in effect. Pursuant to the terms of the Gas
Purchase Contract, a price credit account was established for the purpose of
accounting for such recoupments. The primary term of the Gas Purchase Contract
expired on December 31, 1997, after which time WPX Gas Resources has had the
annual option, exercisable 15 days prior to the end of each contract year, to
discontinue paying the Minimum Purchase Price by giving notice of its election
to pay solely on an index price. For each of the contract years 1998, 1999 and
2000, WPX Gas Resources did not exercise this option and the pricing mechanism
of the primary term has and will continue to remain in effect through at least
December 31, 2000.

         During the third quarter of 2000, the applicable index price was above
the Minimum Purchase Price. As of September 30, 2000, WPX Gas Resources'
aggregate price credit balance was zero and no balance existed at any time
during the quarter then ended.

         To the extent there may in the future be a balance in the price credit
account, the entitlement of WPX Gas Resources to recoup price credits means that
if and when the applicable Blanco Hub Spot Price rises above $1.75 per MMBtu,
future royalty income otherwise payable to the Trust would be reduced until such
time as such price credits have been fully recouped. Corresponding cash
distributions to Unitholders would also be reduced.

         As long as a zero balance exists in the Price Credit Account, and the
Blanco Hub Spot Price in any month is greater than $2.94 per MMBtu, then WFS Gas
Resources will pay Quatro Finale (as successor to WPC) an amount for gas
purchased equal to $2.94 per MMBtu, less the costs paid by WFS Gas Resources to
gather and process such gas and deliver it to specified delivery points, plus 50
percent of the excess of the Blanco Hub Spot Price over $2.00 per MMBtu (the
"Price Differential").

         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. 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 December 31, 1999,
1998 and 1997, respectively. There are pending or anticipated applications or
approvals for additional participating area enlargements. WPC has advised the
Trustee that it does not believe that final approval of these Unit participating
area enlargements and the resulting retroactive adjustments, if any, will have a
material impact on the revenues as presented in these statements.

         The Trustee has been advised by WPC that the Minerals Management
Service ("MMS"), a subagency of the U.S. Department of the Interior, has from
time to time considered the inclusion of the value of the Section 29 tax credits
attributable to coal seam gas production in the calculation of gross proceeds
for purposes of calculating the royalty that is payable to the MMS. On August
30, 1993, the U.S. Office of the Inspector General (the "OIG") issued an audit
report stating that Section 29 tax credits should be included in the calculation
of gross proceeds and recommending that the



                                       12
<PAGE>   13

MMS pursue collection of additional royalties with respect to past and future
production. On December 8, 1993, however, the Office of the Solicitor of the
U.S. Department of the Interior gave its opinion to the MMS that the report of
the OIG was incorrect and that Section 29 tax credits are not part of gross
proceeds for the purpose of Federal royalty calculations. WPC believes that any
such inclusion of the value of Section 29 tax credits for the purposes of
calculating royalty payments required to be made on Federal and Indian lands
would be inappropriate since all mineral interest owners, including royalty
owners, are entitled to Section 29 tax credits for their proportionate share of
qualifying coal seam gas production. WPC has advised the Trustee that it would
vigorously oppose any attempt by the MMS to require the inclusion of the value
of Section 29 tax credits in the calculation of gross proceeds. However, if such
regulations were adopted and upheld, royalty payments would be increased which
would decrease NPI Net Proceeds and, therefore, the amounts payable to the
Trust. The reduction in amounts payable to the Trust would cause a corresponding
reduction in associated Section 29 tax credits available to Unitholders.

         The Trustee has also been informed by WPC that the MMS has informed
some San Juan Basin natural gas producers that they have incorrectly deducted
certain costs in the producers' coal bed methane valuations in determining the
amounts due to Federal royalty owners. While WPC believes that its past
computations have been appropriately stated, applying the MMS methodology could
potentially result in materially negative adjustments to amounts previously paid
to the Trust.

7.       NPI PERCENTAGE REDUCTION

         The NPI generally entitles the Trust to receive 81 percent of NPI Net
Proceeds. However, under the terms of the Conveyance, at the point that
cumulative production from the Underlying Properties has exceeded 178.5 Bcf of
gas and the internal rate of return of the "after tax cash flow per Trust Unit"
(as defined in the Conveyance) is equal to or greater than 12 percent, the
percentage of NPI Net Proceeds payable in respect of the NPI is automatically
and permanently reduced to 60 percent. The NPI percentage is not subject to
further reduction or other adjustment regardless of the future amount of
cumulative production or the achieved internal rate of return. Cumulative
production from the Underlying Properties to date has exceeded 178.5 since 1999.
Although the 12 percent internal rate of return that would trigger the NPI
percentage reduction was previously not projected to be reached until the first
quarter of 2001, the Trust received notice from WPC on October 31, 2000 that
this internal rate of return will be reached or exceeded sometime during the
fourth quarter of 2000. Consequently, the Trustee expects the reduction of the
NPI percentage from 81 percent to 60 percent to occur during fourth quarter
2000.

         It is expected that the reduction in the NPI percentage will
substantially reduce the distributions paid to the Trust, and in turn the
Quarterly Distribution Amount payable to the Unitholders, beginning with the
Quarterly Distribution Amount for the first quarter of 2001, which generally
relates to proceeds from production occurring during fourth quarter 2000.

Item 2. Trustee's Discussion and Analysis of Financial Condition and Results of
Operations.

         The Trust makes quarterly cash distributions to holders of units of
beneficial interest ("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,



                                       13
<PAGE>   14

are net profits interests (the "Royalty Interests") in certain proved coal seam
gas properties located in the San Juan Basin of New Mexico and Colorado (the
"Underlying Properties"). The Royalty Interests owned by the Trust burden the
Underlying Properties, which are owned by Quatro Finale LLC and not the Trust.

         Distributable income of the Trust 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 (as defined in Note 1 to the
financial statements of the Trust appearing elsewhere in this Form 10-Q) 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. 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 4 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 and Nine Months Ended September 30, 2000 Compared to Three Months
and Nine Months Ended September 30, 1999

         For the quarter ended September 30, 2000, royalty income received by
the Trust amounted to $2,529,316 as compared to $2,431,301 received for the same
quarter in 1999. This increase was primarily due to an increase in gas prices
but offset by an increase in Royalties, taxes and operating costs true-ups. The
most significant adjustment was $1.2 million for prior period operating costs.
For the nine months ended September 30, 2000, royalty income received by the
Trust amounted to $9,639,229 as compared to $9,457,966 received for the same
period in 1999. The increase in royalty income is primarily due to higher gas
prices in 2000 and the complete recoupment of the price credit account balance
during second quarter 2000. Interest income for the quarter ended September 30,
2000 was $11,289 compared to $7,020 for the same quarter in 1999. Interest
income for the nine months ended September 30, 2000 was $39,458 compared to
$28,224 for the same period in 1999. This increase was primarily due to an
increase in funds available for investment. General and administrative expenses
during the third quarter of 2000 amounted to $108,641 compared to $107,896 for
the same quarter in 1999. General and administrative expenses during the nine
months ended September 30, 2000 amounted to $470,128 compared to $422,572 for
the same period in 1999.

         Distributable income for the quarter ended September 30, 2000 was
$2,431,964 or $.25 per Unit which as compared to $2,330,425 or $.24 per Unit for
the third quarter of 1999. Distributable income for the nine months ended
September 30, 2000 was $9,208,559 or $.95 per Unit as compared to $9,063,618 or
$.93 per Unit for the same period in 1999. This increase was a result of the
factors



                                       14
<PAGE>   15

stated in the preceding paragraph. A distribution of $.246454 per Unit was made
on August 29, 2000 to Unitholders of record on August 14, 2000.

         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 which 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
Quatro Finale 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 September 30, 2000 was based on production volumes and natural gas prices
for the period April through June 2000, 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 2000 third quarter reflects estimated
production volumes from the Farmout Properties for the months of March 2000
through May 2000, as shown in the table below. The production volumes included
in the table below are for production attributable to the Underlying Properties,
and not for production attributable to the Trust's Royalty Interests and are net
of the amount of production attributable to Quatro Finale's royalty obligations
to third parties, which is determined by contractual arrangement with such
parties.



                                       15
<PAGE>   16

<TABLE>
<CAPTION>
                                     Three Months       Three Months
                                        Ended              Ended
                                    June 30, 2000      June 30, 1999
                                    -------------      -------------
<S>                                 <C>                <C>
Production (MMBtu)(1)
       WI Properties                    2,285,395(2)       2,382,417(4)
       Farmout Properties                 918,688(3)       1,236,026(5)

Blanco Hub Spot Price
       ($/MMBtu)(6)                 $        3.13      $        1.86
Net Wellhead Price
       WI Properties ($/MMBtu)(6)   $        1.13      $         .98
</TABLE>

----------

(1)    Million British Thermal Units.

(2)    Includes prior period adjustments of 58,956 MMBtu.

(3)    Reflects estimated volumes for March 2000 through May 2000.

(4)    Includes prior period adjustments of 413,032 MMBtu.

(5)    Reflects March 1999 through May 1999.

(6)    Simple average of estimates for the months included in the period
       presented.

         Production from the WI Properties is generally sold pursuant to a gas
purchase contract between WPC and WPX Gas Resources Company ("WPX Gas
Resources") (formerly known as WFS Gas Resources, as successor in interest to
Williams Gas Marketing Company) (as amended, the "Gas Purchase Contract"). The
Gas Purchase Contract provides certain protections for WPX Gas Resources in the
form of price credits (for production purchased by WPX Gas Resources on or after
January 1, 1994) and for Unitholders when the applicable Blanco Hub Spot Price
falls below $1.75 per MMBtu and provides certain benefits for WPX Gas Resources
when the Blanco Hub Spot Price exceeds $2.00 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 -- The Royalty Interests -- Gas Purchase
Contract" in the 1999 Annual Report for detailed information about the Gas
Purchase Contract and its impact on Trust income.

         The initial five-year term ("Primary Term") of the Gas Purchase
Contract expired on December 31, 1997. Following the expiration of the Primary
Term, the Gas Purchase Contract 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 fifteen
days prior to the end of each Contract Year, to discontinue purchasing gas from
WPC under the terms of the Gas Purchase Contract and instead purchase gas at a
monthly price equal to the index price of 97 percent of the Blanco Hub Spot
Price. For each of the contract years 1998, 1999 and 2000, WPX Gas Resources did
not exercise this option and the pricing mechanism of the Primary Term therefore
has and will continue to remain in effect through at least December 31, 2000.

         The Blanco Hub Spot Price was above $2.00 per MMBtu during the third
quarter of 2000. In general, under the Gas Purchase Contract, the Trust only
receives the benefit of 50 percent of any



                                       16
<PAGE>   17

amount by which the Blanco Hub Spot Price exceeds $2.00 per MMBtu. Consequently,
pursuant to the terms of the Gas Purchase Contract, WPX Gas Resources paid
Quatro Finale (as successor to WPC) an amount for gas purchased equal to $2.00
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 Blanco Hub Spot Price over $2.00 per MMBtu. The Blanco Hub Spot Price
remained above $2.00 per MMBtu in October 2000.

         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 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 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
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 Quatro Finale
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. See "Item 2 -- The Royalty
Interests -- Gas Purchase Contract" in the 1999 Annual Report for detailed
information about the Gas Purchase Contract and its impact on the Trust and
Unitholders.

         The Trust is a passive entity 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



                                       17
<PAGE>   18

these borrowings and investments and certain limitations upon the types of such
investments which 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 which could expose the Trust or Unitholders
to any foreign currency related market risk.


                           PART II - OTHER INFORMATION

Item 5. Other Information

Notice of Reduction in NPI Percentage

         Under the terms of the Conveyance, the Trust was generally entitled to
receive 81 percent of the NPI Net Proceeds until the cumulative production from
the Underlying Properties exceeded 178.5 Bcf of gas and the internal rate of
return of the "after tax cash flow per Trust Unit" (as defined in the
Conveyance) was equal to or greater than 12 percent, at which time the
percentage of NPI Net Proceeds payable in respect of the NPI would be
automatically and permanently reduced to 60 percent. Cumulative production from
the Underlying Properties has exceeded 178.5 since 1999. Although the 12 percent
internal rate of return that would trigger the NPI percentage reduction was
previously not projected to be reached until the first quarter of 2001, the
Trust received notice from WPC on October 31, 2000 that this internal rate of
return will be reached or exceeded sometime during the fourth quarter of 2000.
Consequently, the Trustee expects the reduction of the NPI percentage from 81
percent to 60 percent to occur during fourth quarter 2000.

         The reduction in the NPI percentage is expected to substantially reduce
the distributions paid to the Trust, and in turn the Quarterly Distribution
Amount payable to the Unitholders, beginning with the Quarterly Distribution
Amount for the first quarter of 2001, which generally relates to proceeds from
production occurring during fourth quarter 2000.

Item 6. Exhibits and Reports on Form 8-K.

         (a)   Exhibit No.               Description

                  27                     Financial Data Schedule

         (b) No reports on Form 8-K were filed during the quarter for which this
report is filed.



                                       18
<PAGE>   19

                                   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 TRUST

                                     By: BANK OF AMERICA, N.A., Trustee



                                     By: /s/ Ron Hooper
                                        ----------------------------------------
                                         Ron Hooper
                                         Senior Vice President and Administrator


               (The Trust has no directors or executive officers.)


Date: November 13, 2000



                                       19

<PAGE>   20
                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
         EXHIBIT
           NO.             DESCRIPTION
         -------           -----------
<S>                        <C>
           27              Financial Data Schedule
</TABLE>