<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 June 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
                                   17th 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 August 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 June
30, 2000, the distributable income for the three-month and six-month periods
ended June 30, 2000 and 1999, and the changes in trust corpus for the six-month
periods ended June 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 June 30, 2000 and for the three-month
and six-month periods ended June 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.
  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 June 30,
2000, and the related condensed statements of distributable income for the
three-month and six-month periods ended June 30, 2000 and 1999 and the condensed
statements of changes in trust corpus for the six-month periods ended June 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
August 11, 2000

                                       3
<PAGE>   4

-------------------------------------------------------------------------------
WILLIAMS COAL SEAM GAS ROYALTY TRUST

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


<TABLE>
<CAPTION>

                                                           June 30,      December 31,
ASSETS                                                       2000            1999
                                                          -----------    ------------
<S>                                                       <C>             <C>
Current Assets -
         cash and cash equivalents                        $    17,454     $   104,693

Royalty interests in oil and gas properties (less
         accumulated amortization of $102,990,751 at
         June 30, 2000 and $98,399,040 at December
         31, 1999)                                         35,575,912      40,167,623
                                                          -----------     -----------
TOTAL ASSETS                                              $35,593,366     $40,272,316
                                                          ===========     ===========

LIABILITIES AND TRUST CORPUS

Current Liabilities - trust expenses payable              $    82,826     $    73,589

Trust corpus - 9,700,000 units of beneficial interest
         authorized and outstanding                       $35,510,540      40,198,727
                                                          -----------     -----------
TOTAL LIABILITIES AND TRUST CORPUS                        $35,593,366     $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
                                                    June 30, 2000      June 30, 1999
                                                    -------------      -------------
<S>                                                 <C>                <C>
Royalty income                                      $   3,182,530      $   2,915,880
Interest income                                            12,844              7,803
                                                    -------------      -------------
                                                        3,195,374          2,923,683
General and administrative expenses                 $    (157,060)     $    (146,841)
                                                    -------------      -------------
Distributable income                                $   3,038,314      $   2,776,842
                                                    =============      =============

Distributable income per unit (9,700,000 units)     $         .31      $         .29
                                                    =============      =============
</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>

                                                      SIX MONTHS        SIX MONTHS
                                                        ENDED              ENDED
                                                    June 30, 2000      June 30, 1999
                                                    -------------      -------------
<S>                                                 <C>                <C>
Royalty Income                                      $   7,109,912      $   7,026,665
Interest income                                     $      28,171             21,204
                                                    -------------      -------------
                                                        7,138,083          7,047,869
General and administrative expenses                      (361,488)          (314,676)
                                                    -------------      -------------
Distributable income                                $   6,776,595      $   6,733,193
                                                    =============      =============

Distributable income per unit (9,700,000 units)     $         .70      $         .69
                                                    =============      =============
</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>

                                              SIX MONTHS         SIX MONTHS
                                                 ENDED             ENDED
                                             June 30, 2000      June 30, 1999
                                             -------------      -------------
<S>                                          <C>                <C>
Trust corpus, beginning of period            $  40,198,727      $  49,769,352
Amortization of royalty interests               (4,591,711)        (6,755,985)
Distributable income                             6,776,595          6,733,193
Distributions to Unitholders                    (6,873,071)        (6,767,869)
                                             -------------      -------------

Trust corpus, end of period                  $  35,510,540      $  42,978,691
                                             =============      =============

Distributions per unit (9,700,000 units)     $         .71      $         .70
                                             =============      =============
</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 of Texas, 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 6,131,209 Units to the public through various underwriters in
January and February 1993 (the "Public Offering"). 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 3,568,791 Units to Quatro Finale IV
LLC, a Delaware limited liability company ("QFIV"), in a privately negotiated
transaction. Williams has agreed to hold the 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 thereof 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 NPI percentage is subject to
certain future downward adjustments based on a rate of return computation once
cumulative aggregate production targets are met. Based on current estimates, a
downward adjustment to the NPI is expected during the first quarter of year
2001. The complete definitions of NPI Net Proceeds and Infill Net 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 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 4).


                                       9
<PAGE>   10

         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. If
Williams, in the future, should sell all or a portion of its retained Units, at
that time, the carrying value on the Trust's statements of assets, liabilities
and trust corpus may again be adjusted from Williams's historical cost to the
subsequent sale price with respect to the Units sold.

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.

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,

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<PAGE>   11
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 June 30, 2000, the Trust declared the following
distribution:

<TABLE>
<CAPTION>

           Quarterly
            Record                Payment                Distribution
             Date                   Date                   per Unit
           ---------              ---------              ------------
<S>                               <C>                    <C>
           August 14              August 29              $    .246454
</TABLE>

         The distribution per unit decreased from $.305708 in the second
quarter of 2000 to $.246454 in the third quarter of 2000. The decrease in
distributions was mainly due to lower gas volumes sold and a one time
adjustment for lease operating expenses.

         Effective August 11, 2000, Williams sold its 3,568,791 Units to Quatro
Finale IV LLC, a Delaware limited liability company ("QFIV"), in a privately
negotiated transaction. Williams has agreed to hold the 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.

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

                                       11
<PAGE>   12

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.

         The entitlement of WPX Gas Resources to recoup the 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.

         During the second quarter of 2000, the applicable index price was
above the Minimum Purchase Price resulting in recoupments against the
outstanding balance of the price credit account established under the Gas
Purchase Contract. The remaining price credit balance was recouped in April and
May of the second quarter 2000. As of June 30, 2000, WPX Gas Resources'
aggregate price credit balance was zero.

         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 June 30, 2000 and
1999, 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 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

                                       12
<PAGE>   13

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 material negative adjustments to amounts previously paid
to the Trust.

7.       EXPECTED NPI PERCENTAGE CHANGE

         The NPI generally entitles the Trust to receive 81 percent of the NPI
Net Proceeds. However, at the point that cumulative production from the
Underlying Properties exceeds 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 but not more than 14 percent, the
percentage of NPI Net Proceeds payable in respect of the NPI would be reduced
to 60 percent. If such level of production is exceeded and such internal rate
of return of the after tax cash flow per Trust Unit exceeds 14 percent, the
percentage of NPI Net Proceeds payable in respect of the NPI would be reduced
to 40 percent. WPC has advised the Trustee that the cumulative production from
the Underlying Properties to date has exceeded 210.5 Bcf. Based upon
projections by Miller and Lents, Ltd., the Trust's independent petroleum
engineers, the internal rate of return is not currently expected to be 12
percent or higher until the first quarter of 2001, although no assurance can be
made that it will not occur sooner than projected.


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, 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 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.


                                       13
<PAGE>   14
         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 Six Months Ended June 30, 2000 Compared to Three Months and
Six Months Ended June 30, 1999

         For the quarter ended June 30, 2000, royalty income received by the
Trust amounted to $3,182,530 as compared to $2,915,880 received for the same
quarter in 1999. The increase in royalty income is primarily due to higher gas
prices and lower excess capital costs, partially offset by lower gas sales
volumes. Production related to the royalty income received by the Trust in the
second quarter of 2000 was 3,002,460 MMBtu as compared to 4,434,332 MMBtu for
the same quarter in 1999. Royalty income for the six months ended June 30, 2000
was $7,109,912 as compared to $7,026,665 for the same period in 1999. Production
related to the royalty income received by the Trust for the six months ended
June 30, 2000 was 6,580,171 MMbtu as compared to 8,465,571 MMbtu for the six
months ended June 30, 1999. Higher gas prices resulted in slightly higher
royalty income for the six months ended June 30, 2000. Interest income for the
quarter ended June 30, 2000 was $12,844 compared to $7,803 for the same quarter
in 1999. Interest income for the six months ended June 30, 2000 was $28,171 as
compared to $21,204 for the same period in 1999. General and administrative
expenses during the second quarter of 2000 amounted to $157,060 compared to
$146,841 for the same quarter in 1999. General and administrative expenses for
the six months ended June 30, 2000 were $361,488 as compared to $314,676 for the
same period in 1999.

         Distributable income for the quarter ended June 30, 2000 was
$3,038,314 or $.31 per Unit compared to $2,776,842 or $.29 per Unit for the
second quarter of 1999. This increase was the result of higher gas prices and
lower costs. A distribution of $.305708 per Unit was made on May 30, 2000 to
Unitholders of record on May 15, 2000. Distributable income for the six months
ended June 30, 2000 was $6,776,595 as compared to $6,733,193 for the same
period in 1999.

         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.


                                       14
<PAGE>   15

         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 June 30, 2000 was based on production volumes and natural gas
prices for the period January 2000 through March 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 second quarter of 2000
reflects estimated production volumes from the Farmout Properties for the
months of December 1999 through February 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.

<TABLE>
<CAPTION>

                                                   Three Months         Three Months
                                                       Ended               Ended
                                                  March 31, 2000        March 31, 1999
                                                  ----------------     ----------------
<S>                                               <C>                  <C>
Production (MMBtu)(1)
   WI Properties                                      2,790,166            4,183,847(3)
   Farmout Properties                                   916,575(2)         1,236,036(4)

Blanco Hub Spot Price ($/MMBtu)(5)                $        2.30        $        1.62
Net Wellhead Price WI Properties ($/MMBtu)(5)     $         .99        $        0.97
</TABLE>

----------

(1)      Million British Thermal Units.
(2)      Reflects actual volumes for December 1998 through February 1999.
(3)      Includes prior period adjustments of 168,788 MMBtu.
(4)      Reflects estimated volumes for January 2000 through February 2000.
(5)      Simple average of 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

                                       15
<PAGE>   16

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.

         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 $1.75 per MMBtu during January,
February and March 2000. However, pursuant to the terms of the Gas Purchase
Contract, WPX Gas Resources continued to purchase gas produced from the WI
Properties at the $1.70 minimum purchase price, less certain gathering,
processing and delivery costs paid by WPX Gas Resources, established by the Gas
Purchase Contract; and WPX Gas Resources recouped previously accrued price
credits for each MMBtu of natural gas so purchased equal to the difference
between the $1.70 minimum purchase price and the applicable index price (which
price is equal to 97 percent of the applicable Blanco Hub Spot Price).

         The entitlement of WPX Gas Resources to recoup the price credits means
that if and when the applicable Blanco Hub Spot Price rises above $1.75 per
MMBtu, future royalty income paid 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 of June 30, 2000, WPX
Gas Resources' price credit account was reduced to zero.

         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.

                                       16
<PAGE>   17

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, particularly to
the extent a balance exists in the price credit account. 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 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.



                                       17
<PAGE>   18

                          PART II - OTHER INFORMATION

Item 5.  Other Information

         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 has agreed to hold the 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. It is not
anticipated that the sale of the Units in this transaction will have a material
effect on the Trust or Unitholders.

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
                                             Vice President and Administrator


              (The Trust has no directors or executive officers.)


Date:  August 14, 2000



                                       19
<PAGE>   20


                               INDEX TO EXHIBITS


<TABLE>
<CAPTION>

EXHIBIT
NUMBER            DESCRIPTION
------            -----------
<S>               <C>
 27               Financial Data Schedule
</TABLE>