**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

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FORM 10-Q

**x**                              QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

**Forthe Quarterly Period Ended June 30, 2005**

**or**

**o**                                 TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

**CommissionFile Number 1-11450**

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SANTA FE ENERGY TRUST

(Exact name of registrantas specified in its charter)

| **Texas**                                                                                                                                                | ** ** | **76-6081498**       |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------|
| (State or other  jurisdiction of                                                                                                                         |       | (I.R.S. Employer     |
| incorporation or  organization)                                                                                                                          |       | Identification  No.) |
| **JPMorgan Chase Bank, N.A.,  Trustee  Institutional Trust Services Austin,  700 Lavaca  Texas 78701**(Address of principal offices, including Zip Code) |

 

**Registrant’s telephone number,including area code** (512) 479-2562

**NONE**

(Former name or formeraddress, if changed since last report)

Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required tofile such reports), and (2) has been subject to such filing requirementsfor the past 90 days.

Yes x  No o

Indicate by check markwhether the registrant is an accelerated filer (as defined in Rule 12b-2of the Exchange Act).

Yes x  No o

**Depository Units outstanding at June 30,2005—6,300,000**

 

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**PART I—FINANCIAL INFORMATION**

**Item 1.**                        *Financial Statements.*

**SANTA FE ENERGYTRUSTSTATEMENTS OF CASH PROCEEDS AND DISTRIBUTABLE CASH (Unaudited)(In thousands, except per unit data)**
| ** **                                      | ** ** | **Three Months Ended  June 30,** | ** ** | **Six Months Ended  June 30,** | ** ** |
|-------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                      | ** ** | **2005**                                        | ** ** | **2004**                                      | ** ** | **2005** | ** ** | **2004** | ** ** |
| Royalty income:                                 |       |                                            |       |                                          |       |   |   |   |   |
| ODC royalty                                     |       | $                                               | 2,823      |                                          | $          | 2,276 |   | $ | 5,795 |   | $ | 4,194 |   |
| Willard royalty                                 |       | —                                          |       | —                                        |       | — |   | 332 |   |
| Net profits royalty                             |       | 2,998                                           |       | 2,225                                         |       | 6,044 |   | 4,669 |   |
| Total royalties                                 |       | 5,821                                           |       | 4,501                                         |       | 11,839 |   | 9,195 |   |
| Administrative  fee to Devon Energy Corporation |       | (77                                             | )          | (74                                           | )          | (151 | ) | (146 | ) |
| Cash withheld for  trust expenses               |       | (50                                             | )          | (100                                          | )          | (150 | ) | (200 | ) |
| Distributable  cash                             |       | $                                               | 5,694      |                                          | $          | 4,327 |   | $ | 11,538 |   | $ | 8,849 |   |
| Distributable  cash per trust unit              |       | $                                               | 0.90372    |                                          | $          | 0.68670 |   | $ | 1.83144 |   | $ | 1.40454 |   |
| Trust units outstanding                         |       | 6,300                                           |       | 6,300                                         |       | 6,300 |   | 6,300 |   |

 

**STATEMENTSOF ASSETS, LIABILITIES AND TRUST CORPUS(In thousands, except unit data)**
| ** **                                                      | ** ** | **June 30,  2005** | ** ** | **December 31,  2004** | ** ** |
|-----------------------------------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| ** **                                                      | ** ** | **(Unaudited)**         | ** ** | ** **                  | ** ** |
| ASSETS                                                          |       |                    |       |                        |       |   |   |   |   |
| Current  assets—cash                                       |       |                    | $          | 80                          |       |   |   | $ | 105 |   |   |
| Investment in royalty  interests, at cost                       |       |                    | 87,276     |                        |       |   | 87,276 |   |   |
| Less: accumulated  amortization                                 |       |                    | (81,120    | )                           |       |   | (80,085 | ) |   |
|                                                            |       |                    | 6,156      |                        |       |   | 7,191 |   |   |
| Total assets                                                    |       |                    | $          | 6,236                       |       |   |   | $ | 7,296 |   |   |
| LIABILITIES AND TRUST CORPUS                                    |       |                    |       |                        |       |   |   |   |   |
| Current  liabilities—advance from Devon Energy Corporation |       |                    | $          | 300                         |       |   |   | — |   |   |
| Trust corpus,  6,300,000 trust units issued and outstanding     |       |                    | 5,936      |                        |       |   | 7,296 |   |   |
| Total liabilities and  trust corpus                             |       |                    | $          | 6,236                       |       |   |   | $ | 7,296 |   |   |

 

The accompanying notes are an integral part of the financial statements.

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**SANTA FE ENERGYTRUSTSTATEMENTS OF CHANGES IN TRUST CORPUS (Unaudited)Six Months Ended June 30, 2005 and 2004(In thousands)**
| Balance at  December 31, 2003 |   | $       | 10,029 |   |
|------------------------------------|--------|---------|--------|--------|
| Cash proceeds                      |   | 9,049   |   |
| Cash distributions                 |   | (8,849  | )      |
| Trust expenses                     |   | (354    | )      |
| Amortization of royalty interests  |   | (1,278  | )      |
| Balance at  June 30, 2004     |   | $       | 8,597  |   |
| Balance at December 31, 2004  |   | $       | 7,296  |   |
| Cash proceeds                      |   | 11,688  |   |
| Cash distributions                 |   | (11,538 | )      |
| Trust expenses                     |   | (475    | )      |
| Amortization of royalty interests  |   | (1,035  | )      |
| Balance at June 30,  2005     |   | $       | 5,936  |   |

 

The accompanying notes are an integral part of the financial statements.

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**SANTA FE ENERGY TRUST NOTES TO FINANCIAL STATEMENTS (Unaudited)**

**Note 1. The Trust**

The financial statements at June 30, 2005 and forthe three-month and six-month periods ended June 30, 2005 and 2004are unaudited and reflect all adjustments (consisting of only normal andrecurring adjustments) that are, in the opinion of Devon Energy Corporation,necessary for a fair presentation of the financial position and cash proceedsand distributable cash of the Santa Fe Energy Trust for the interim periods.

Santa Fe Energy Trust (the “Trust”) was formed on October 22,1992, with JPMorgan Chase Bank, N.A., formerly The Chase Manhattan Bank,successor by merger to Chase Bank of Texas, National Association formerly TexasCommerce Bank, National Association, as trustee (the “Trustee”), to acquire andhold certain royalty interests (the “Royalty Interests”) in certain properties(the “Royalty Properties”) conveyed to the Trust by Devon Energy ProductionCompany, L.P. (“Devon”), successor by merger to Devon SFS Operating, Inc.,formerly Santa Fe Snyder Corporation, formerly Santa Fe Energy Resources, Inc.Through December 31, 2003, the Royalty Interests consisted of two termroyalty interests in two production units in the Wasson field in west Texas(the “Wasson Royalties”) and a net profits royalty interest in certain royaltyand working interests in a diversified portfolio of properties located in 11states (the “Net Profits Royalties”). On December 31, 2003, the term onthe royalty interest in one of the Wasson production units terminated. Sixmonths ended June 30, 2004 production, sales and operating expenses forthe Wasson Willard Unit are related to calendar year 2003. These are the lastproduction, sales and operating expenses the Trust will report since the Trust’sconveyed ownership in the Wasson Willard Unit terminated on December 31,2003. The Royalty Interests are passive in nature and the Trustee has nocontrol over or responsibility relating to the operation of the RoyaltyProperties. The Trust will be liquidated on February 15, 2008 (the “LiquidationDate”).

In November 1992, 5,725,000 Depository Units,each consisting of beneficial ownership of one unit of undivided beneficialinterest in the Trust (“Trust Units”) and a $20 face amount beneficialownership interest in a $1,000 face amount zero coupon United States Treasuryobligation maturing on or about February 15, 2008, were sold in a publicoffering for $20 per Depository Unit. A total of $114.5 million wasreceived from public investors, of which $38.7 million was used to purchase theTreasury obligations and $5.7 million was used to pay underwritingcommissions and discounts. Devon received the remaining $70.1 million and575,000 Depository Units. In the first quarter of 1994, Devon sold, in a publicoffering, the 575,000 Depository Units which it held.

The trust agreementunder which the Trust was formed (the “Trust Agreement”) provides, among otherthings, that:

·       theTrustee shall not engage in any business or commercial activity or acquire anyasset other than the Royalty Interests initially conveyed to the Trust;

·       theTrustee may not sell all or any portion of the Wasson Royalties orsubstantially all of the Net Profits Royalties without the prior consent ofDevon;

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**SANTA FE ENERGY TRUST NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)**

·       Devonmay sell the Royalty Properties, subject to and burdened by the RoyaltyInterests, without consent of the holders of the Trust Units; following anysuch transfer, the Royalty Properties will continue to be burdened by theRoyalty Interests and after any such transfer the royalty payment attributableto the transferred property will be calculated separately and paid by thetransferee;

·       theTrustee may establish a cash reserve for the payment of any liability that iscontingent, uncertain in amount or that is not currently due and payable;

·       theTrustee is authorized to borrow funds required to pay liabilities of the Trust,provided that such borrowings are repaid in full prior to further distributionsto the holders of the Trust Units; and

·       theTrustee will make quarterly cash distributions to the holders of the TrustUnits.

**Note 2. Basis of Accounting**

The financial statements of the Trust are prepared onthe cash basis of accounting for revenues and expenses. Royalty income isrecorded when received (generally during the quarter following the end of thequarter in which the income from the Royalty Properties is received by Devon)and is net of any cash basis exploration and development expenditures andamounts reserved for any future exploration and development costs. Expenses ofthe Trust, which include accounting, engineering, legal and other professionalfees, Trustee fees, an administrative fee paid to Devon and out-of-pocketexpenses, are recognized when paid. Under accounting principles generallyaccepted in the United States of America, revenues and expenses would berecognized on an accrual basis. Amortization of the Trust’s investment inRoyalty Interests is recorded using the unit-of-production method in the periodin which the cash is received with respect to such production; therefore, astatement of cash flows is not presented.

The conveyance of the Royalty Interests to the Trustwas accounted for as a purchase transaction. The $87,276,000 reflected in theStatements of Assets, Liabilities and Trust Corpus as Investment in RoyaltyInterests represents 6,300,000 Trust Units valued at $20 per unit less the$38,724,000 paid for the Treasury obligations. The carrying value of the Trust’sinvestment in the Royalty Interests is not necessarily indicative of the fairvalue of such Royalty Interests.

The Trust is a grantor trust and as such is not subjectto income taxes and accordingly no recognition has been given to income taxesin the Trust’s financial statements. The tax consequences of owning Trust Unitsare included in the income tax returns of the individual Trust Unit holders.

The preparation of theTrust’s financial statements requires the use of certain estimates. Actualresults may differ from such estimates.

**Note 3. The Royalty Interests**

The Wasson Royalties consist of interests conveyed outof Devon’s royalty interest in the Wasson ODC Unit (the “ODC Royalty”) and theWasson Willard Unit (the “Willard Royalty”). On December 31, 

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**SANTA FE ENERGY TRUST NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)**

2003, the term on theroyalty interest in the Wasson Willard Unit terminated. The first quarter of2004 was the last quarter in which production from the Wasson Willard Unit wasreceived. The ODC Royalty entitles the Trust to receive quarterly royaltypayments with respect to 12.3934% of the actual gross oil production from theWasson ODC Unit, subject to certain quarterly limitations set forth in theconveyance agreement, for the period from November 1, 1992 to December 31,2007. The Willard Royalty entitled the Trust to receive quarterly royaltypayments with respect to 6.8355% of the actual gross oil production from theWasson Willard Unit, subject to certain quarterly limitations set forth in theconveyance agreement, for the period from November 1, 1992 to December 31,2003.

The Net Profits Royaltiesentitle the Trust to receive, on a quarterly basis, 90% of the net proceeds, asdefined in the conveyance agreement, from the sale of production from theproperties subject to the conveyance agreement. The Net Profits Royalties arenot limited in term, although the Trustee is required to sell such royaltiesprior to the Liquidation Date.

**Note 4.Distribution to Trust Unit Holders**

The Trust has received royalty payments net ofadministrative fees paid to Devon and made distributions as follows:
| ** **     | ** ** | ** **                               | ** ** | ** **        | ** ** |
|----------------|------------|------------------------------------------|------------|-------------------|------------|
| ** **     | ** ** | **Royalty**                              | ** ** | ** **        | ** ** | ** ** | ** ** |
| ** **     | ** ** | **Payment**                              | ** ** | **Distributions** | ** ** |
| ** **     | ** ** | **Received**                             | ** ** | **Amount**        | ** ** | **Per Trust Unit** | ** ** |
| ** **     | ** ** | **(in thousands, except per unit data)** | ** ** |
| 2004           |       |                                     |       |              |       |   |   |   |   |
| First quarter  |       | $ 4,622                             |       | $ 4,522      |       |   | $ 0.71784 |   |   |
| Second quarter |       | 4,427                                    |       | 4,327             |       |   | 0.68670 |   |   |
| Third quarter  |       | 5,067                                    |       | 4,842             |       |   | 0.76869 |   |   |
| Fourth quarter |       | 5,954                                    |       | 5,904             |       |   | 0.93712 |   |   |
|           |       | $ 20,070                            |       | $ 19,595     |       |   | 3.11035 |   |   |
| 2005           |       |                                     |       |              |       |   |   |   |   |
| First quarter  |       | $ 5,944                             |       | $ 5,844      |       |   | $ 0.92772 |   |   |
| Second quarter |       | $ 5,744                             |       | $ 5,694      |       |   | $ 0.90372 |   |   |

 

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**Item 2.**                        *Management’s Discussion and Analysis of Financial Condition and Resultsof Operations*

**General;Liquidity and Capital Resources**

The Trust was formed on October 22, 1992. TheTrust holds Royalty Interests in Royalty Properties (“Royalty Properties”) conveyedto the Trust by Devon. The Trust is a passive entity that collects royaltyincome generated by the Royalty Properties. Through December 31, 2003, theRoyalty Interests consisted of two term royalty interests in two productionunits (the “Wasson ODC Unit” and the “Wasson Willard Unit”) in the Wasson fieldin West Texas, and a net profits royalty interest (the “Net Profits Royalties”)in certain royalty and working interests in a diversified portfolio ofproperties located predominantly in Texas, Louisiana and Oklahoma (the “NetProfits Properties”). On December 31, 2003, the term on the royaltyinterest in the Wasson Willard Unit terminated. The Royalty Interests arepassive in nature and the Trustee has no control over or responsibilityrelating to the operation of the Royalty Properties. Under the terms of theTrust Agreement, the Trustee cannot engage in any other business or commercialactivity or acquire any asset other than the Royalty Interests initiallyconveyed to the Trust. Therefore, the Royalty Interests are the sole source offunds for the Trust from which to pay expenses and liabilities and makedistributions to the Holders. The Trust will be liquidated on or before February 15,2008 (the “Liquidation Date”).

The royalty interest in the Wasson ODC Unit (the “WassonODC Royalty”) is a fixed percentage royalty interest in specified levels ofquarterly maximum production from the underlying properties in each year duringthe term of the royalty. The Wasson ODC Royalty terminates on December 31,2007. The Net Profits Royalties are life-of-property interests that will besold by the Trust prior to the Liquidation Date. The Net Profits Royaltiesentitle the Trust to receive 90% of the net proceeds (after deducting, amongother things, the costs of production and marketing and capital expenditures)from the sale of production from the Net Profits Properties. The Net ProfitsProperties generally are mature producing oil and gas properties and theproduction and reserves attributable to such properties are expected to declinesubstantially over the life of the Trust. The Net Profits Royalties areexpected to have a relatively small liquidation value at the Liquidation Date.

Trust expenses includeaccounting, engineering, legal and other professional fees, Trustee fees, anadministrative fee paid to Devon and other out-of-pocket expenses. The Trust’sability to pay expenses primarily depends on receipt of royalty income. Devonmay, at its sole discretion and without obligation to do so, advance funds tothe Trust to enable the Trust to pay expenses. The Trustee is authorized toborrow funds required to pay liabilities of the Trust, provided that any suchborrowings are repaid in full prior to making further distributions to Holders.As of June 30, 2005, there was an outstanding advance to the Trust fromDevon Energy Corporation of $300,000.

**Results of Operations**

The Trust’s results of operations are dependent uponthe sales prices and quantities of oil and gas produced from the RoyaltyProperties, the costs of producing such resources and the amount of capitalexpenditures made with respect to such properties. Since, on an equivalentbasis, the majority of the Trust’s proved reserves are crude oil, evenrelatively modest changes in crude oil prices may significantly affect theTrust’s revenues and results of operations. Crude oil prices are subject tosignificant changes in response to fluctuations in the domestic and worldsupply and demand and other market conditions as well 

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as the world politicalsituation as it affects OPEC and other oil producing countries. In addition, asubstantial portion of the Trust’s revenues come from properties which producesour (i.e., high sulfur content) crude oil which sells at prices lower thansweeter (i.e., low sulfur content) crude oils. The Trust’s weighted averagecrude oil sales price for the second quarter of 2005 was $42.41 per barrelcompared with $30.97 per barrel for the same period in 2004. Crude oil priceswith respect to the Trust’s results in the third quarter of 2005 averaged$42.88 per barrel. The Trust’s weighted average crude oil sales price for thefirst six months of 2005 was $41.90 per barrel compared with $29.20 per barrelfor the same period of 2004.

Natural gas prices fluctuate due to weather conditions,the level of natural gas in storage, the relative balance between supply anddemand and other economic factors. The Trust’s weighted average price fornatural gas in the second quarter of 2005 was $5.83 per Mcf compared with $4.85per Mcf for the same period in 2004. Natural gas prices with respect to theTrust’s results in the third quarter of 2005 averaged $5.72 per Mcf. The Trust’sweighted average price for natural gas in the first six months of 2005 was$5.44 per Mcf compared with $4.63 per Mcf for the same period of 2004.

Royalty income is recordedby the Trust when received, generally during the quarter following the end ofthe quarter in which revenues are received and costs and expenses are paid byDevon. Cash proceeds from the Royalty Properties may fluctuate from quarter toquarter due to the timing of receipts and payment of revenues and costs andexpenses as well as changes in prices and production volumes. The followingtable reflects pertinent information with respect to the cash proceeds from theRoyalty Properties and the net distributable cash of the Trust. The informationpresented with respect to the third quarter of 2005 reflects revenues receivedand costs and expenses paid by Devon in the second quarter of 2005. On August 31,2005, the Trust will make a cash distribution of $8.3 million, or $1.32023per Trust Unit, to unitholders of record on August 15, 2005.

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| ** **                                                                       | ** **   | **Three Months Ended  June 30,** | ** **   | **Six Months Ended  June 30,** | ** **   | **Third  Quarter** | ** **   |
|----------------------------------------------------------------------------------|--------------|-------------------------------------------------|--------------|-----------------------------------------------|--------------|--------------------|--------------|
| ** **                                                                       | ** **   | **2005**                                        | ** **   | **2004**                                      | ** **   | **2005**           | ** **   | **2004** | ** ** | **2005** | ** ** |
| ***Volumes  and Prices***                                                        | *** *** | *** ***                                    | *** *** | *** ***                                  | *** *** | *** ***       | *** *** | *** *** | *** *** | *** *** | *** *** |
| Oil volumes  (Bbls):                                                             |         |                                            |         |                                          |         |               |         |   |   |   |   |
| Wasson ODC royalty                                                               |         | 66,400                                          |         | 74,900                                        |         | 141,300            |         | 147,000 |   | 66,400 |   |
| Wasson Willard royalty(1)                                                        |         | —                                          |         | —                                        |         | —             |         | 12,000 |   | — |   |
| Net profits royalties                                                            |         | 42,110                                          |         | 47,376                                        |         | 89,185             |         | 97,200 |   | 58,992 |   |
| Gas volumes  (Mcf):                                                              |         |                                            |         |                                          |         |               |         |   |   |   |   |
| Net profits royalties                                                            |         | 353,718                                         |         | 317,414                                       |         | 762,239            |         | 656,718 |   | 329,763 |   |
| Oil average  prices ($/Bbl):                                                     |         |                                            |         |                                          |         |               |         |   |   |   |   |
| Wasson ODC royalty                                                               |         | $                                               | 44.65        |                                          | $            | 32.71              |         | $ | 43.57 |   | $ | 30.64 |   | $ | 46.79 |   |
| Wasson Willard royalty(1)                                                        |         | —                                          |         | —                                        |         | —             |         | 28.50 |   | — |   |
| Net profits royalty                                                              |         | 38.88                                           |         | 28.23                                         |         | 39.27              |         | 27.10 |   | 38.47 |   |
| Gas average  prices ($/Mcf):                                                     |         |                                            |         |                                          |         |               |         |   |   |   |   |
| Net profits royalties                                                            |         | $                                               | 5.83         |                                          | $            | 4.85               |         | $ | 5.44 |   | $ | 4.63 |   | $ | 5.72 |   |
| ***Cash  Proceeds and Distributable Cash (in thousands, except per unit data)*** | *** *** | *** ***                                    | *** *** | *** ***                                  | *** *** | *** ***       | *** *** | *** *** | *** *** | *** *** | *** *** |
| Wasson ODC  royalty:                                                             |         |                                            |         |                                          |         |               |         |   |   |   |   |
| Sales                                                                            |         | $                                               | 2,965        |                                          | $            | 2,450              |         | $ | 6,156 |   | $ | 4,505 |   | $ | 3,107 |   |
| Operating expenses                                                               |         | (142                                            | )            | (174                                          | )            | (361               | )            | (311 | ) | (149 | ) |
|                                                                             |         | 2,823                                           |         | 2,276                                         |         | 5,795              |         | 4,194 |   | 2,958 |   |
| Wasson Willard  royalty(1):                                                      |         |                                            |         |                                          |         |               |         |   |   |   |   |
| Sales                                                                            |         | —                                          |         | —                                        |         | —             |         | 342 |   | — |   |
| Operating expenses                                                               |         | —                                          |         | —                                        |         | —             |         | (10 | ) | — |   |
|                                                                             |         | —                                          |         | —                                        |         | —             |         | 332 |   | — |   |
| Net profits  royalty:                                                            |         |                                            |         |                                          |         |               |         |   |   |   |   |
| Sales                                                                            |         | 3,698                                           |         | 2,875                                         |         | 7,648              |         | 5,678 |   | 4,156 |   |
| Proceeds from property sales                                                     |         | —                                          |         | —                                        |         | —             |         | — |   | 2,354 |   |
| Operating expenses                                                               |         | (688                                            | )            | (637                                          | )            | (1,586             | )            | (1,188 | ) | (653 | ) |
| Capital (expenditures) recoveries                                                |         | (12                                             | )            | (13                                           | )            | (18                | )            | 179 |   | (71 | ) |
|                                                                             |         | 2,998                                           |         | 2,225                                         |         | 6,044              |         | 4,669 |   | 5,786 |   |
| Total royalties                                                                  |         | 5,821                                           |         | 4,501                                         |         | 11,839             |         | 9,195 |   | 8,744 |   |
| Administrative fee to Devon Energy Corporation                                   |         | (77                                             | )            | (74                                           | )            | (151               | )            | (146 | ) | (76 | ) |
| Payment received                                                                 |         | 5,744                                           |         | 4,427                                         |         | 11,688             |         | 9,049 |   | 8,668 |   |
| Cash withheld for trust expenses                                                 |         | (50                                             | )            | (100                                          | )            | (150               | )            | (200 | ) | (350 | ) |
| Distributable cash                                                               |         | $                                               | 5,694        |                                          | $            | 4,327              |         | $ | 11,538 |   | $ | 8,849 |   | $ | 8,318 |   |
| Distributable cash per unit                                                      |         | $                                               | 0.90372      |                                          | $            | 0.68670            |         | $ | 1.83144 |   | $ | 1.40454 |   | $ | 1.32023 |   |

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(1)          Sixmonths ended June 30, 2004 production, sales and operating expenses forthe Wasson Willard Unit are related to calendar year 2003. These are the lastproduction, sales and operating expenses the Trust will report since the Trust’sconveyed ownership in the Wasson Willard Unit terminated on December 31,2003.

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Sales increased $1.3 million from the second quarterof 2004 to the second quarter of 2005. Sales increased $1.6 million due to an$11.44 per barrel increase in the average price of oil from $30.97 per barrelin the 2004 quarter to $42.41 per barrel in the 2005 quarter and due to a $0.98per Mcf increase in the average gas price during the same period. A decrease inthe second quarter 2005’s production of approximately 7,700 barrels of oilequivalent (“Boe”) caused sales to decrease $0.3 million.

Sales increased $3.3 million from the first half of2004 to the first half of 2005. Sales increased $3.5 million due to a$12.70 per barrel increase in the average price of oil from $29.20 per barrelin the first half of 2004 to $41.90 per barrel in the first half of 2005 anddue to an $0.81 per Mcf increase in the average gas price from $4.63 in thefirst half of 2004 to $5.44 during the first half of 2005. A decrease in firsthalf 2005’s production of approximately 8,100 Boe caused sales to decrease by$0.2 million. This decrease was due mainly to the termination of the Trust’sconveyed ownership in the Wasson Willard Unit.

Sales increased $0.6 million from the second quarterof 2005 to the third quarter of 2005 due to an increase in production ofapproximately 12,900 Boe. The increase was primarily due to an increase inproduction from the Net Profits Royalty properties. The $0.47 per barrelincrease in the average price of oil from $42.41 per barrel in the second quarterof 2005 to $42.88 per barrel in the third quarter of 2005 and the $0.11 per Mcfdecrease in the average gas price from $5.83 in the second quarter of 2005 to$5.72 in the third quarter of 2005 did not have a significant effect on thechange in sales.

Proceeds from the sales of property were $2.4 millionduring the third quarter of 2005 due to the sale of certain Net Profits Royaltyproperties in the period. As a result of the property divestitures, it isexpected that production will decrease in the fourth quarter of 2005.

Operating expenses remained essentially flat from thesecond quarter of 2004 to the second quarter of 2005 and from the secondquarter of 2005 to the third quarter of 2005. Operating expenses increased $0.4 millionfrom the first half of 2004 to the first half of 2005. Operating expenses mayfluctuate from quarter to quarter due to the timing of payments.

Proceeds from the Net Profits Royalties are net ofcapital expenditures with respect to the development of the Net ProfitsProperties. Capital expenditures were $12,000, $13,000, $18,000 and $71,000 forthe second quarter of 2005, the second quarter of 2004, the six months ended2005 and the third quarter of 2005, respectively. Capital recoveries were$179,000 for the six months ended 2004.

Cash withheld for trustexpenses increased $250,000 from the second quarter of 2005 to the thirdquarter of 2005 to repay advances from Devon Energy Corporation.

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**Forward Looking Statements**

Management’s Discussionand Analysis of Financial Condition and Results of Operations includes certainstatements (other than statements of historical fact) that constitute forward-lookingstatements within the meaning of Section 27A of the Securities Act of 1933and Section 21E of the Securities Exchange Act of 1934. When used herein,the words “anticipates,” “expects,” “believes,” “intends” or “projects” andsimilar expressions are intended to identify forward-looking statements.It is important to note that actual results could differ materially from thoseprojected by such forward-looking statements. Although it is believedthat the expectations reflected in such forward-looking statements arereasonable and such forward-looking statements are based upon the bestdata available at the time this report is filed with the Securities andExchange Commission, no assurance can be given that such expectations willprove correct. Factors that could cause results to differ materially from theresults discussed in such forward-looking statements include: productionvariances from expectations, volatility of oil and gas prices, the need todevelop and replace reserves, capital expenditures required to fund operations,environmental risks, uncertainties about estimates of reserves, competition andgovernment regulation and political risks. All such forward-lookingstatements in this document are expressly qualified in their entirety by thecautionary statements in this paragraph.

**Item 3.**                        *Quantitative and Qualitative Disclosures About Market Risk*

**Disclosures About Market Risk**

Not applicable.

**Item 4.**                        *Controls and Procedures*

**Evaluationof Disclosure Controls and Procedures**

The Trustee maintains disclosure controls andprocedures designed to ensure that information required to be disclosed by theTrust in the reports that it files or submits under the Exchange Act of 1934,as amended, is recorded, processed, summarized and reported within the timeperiods specified in the SEC’s rules and regulations. Disclosure controlsand procedures include controls and procedures designed to ensure thatinformation required to be disclosed by the Trust is accumulated andcommunicated by Devon from the working interest owners to JPMorgan Chase Bank,N.A., as Trustee of the Trust, and its employees who participate in thepreparation of the Trust’s periodic reports as appropriate to allow timelydecisions regarding required disclosure.

As of the end of the period covered by this report,the Trustee carried out an evaluation of the Trust’s disclosure controls andprocedures. Mike Ulrich, as Trust Officer of the Trustee, has concluded thatthe disclosure controls and procedures of the Trust are effective.

Due to the contractual arrangements of (i) theTrust Agreement and (ii) Devon’s conveyances of the Royalty Interests tothe Trust regarding information furnished by the working interest owners, theTrustee relies on (A) information provided directly by the workinginterest owners, including historical operating data, plans for futureoperating and capital expenditures, reserve information and informationrelating to projected production, (B) information from Devon, includinginformation that is collected by Devon from the working interest owners, and (C) conclusionsand reports regarding reserves by the Trust’s 

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independent reserveengineers. Neither the Trustee, the Trust nor the Holders will be able toinfluence or control the operation or future development of the RoyaltyProperties. See Item 1 “Business—Other Matters” in the Trust’s Form 10-Kfor the year ended December 31, 2004 for a description of certain risksrelating to these arrangements and reliance.

**Changes in Internal Controls.**Tothe knowledge of the Trustee, there have not been any changes in the Trust’s internalcontrol over financial reporting during the fiscal quarter ended June 30,2005 that have materially affected, or are reasonably likely to materiallyaffect, the Trust’s internal control over financial reporting. The Trusteenotes for purposes of clarification that it has no authority over, and makes nostatement concerning, the internal controls of Devon and the working interestowners.

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**PART II**

**OTHER INFORMATION**

**Items 1, 2, 3, 4 & 5 of Part II are notapplicable and have been omitted.**

**Item 6.**                        *Exhibits*

(a)           Exhibits
| ** **     | ** ** | ** **                                                                                                                                                 | ** ** | SEC File or  Registration Number | ** ** | **Exhibit  Number** | ** ** |
|----------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------|------------|---------------------|------------|
| 3(a)*          |       | Form of  Trust Agreement of Santa Fe Energy Trust                                                                                                     |       |                                            | 33-51760   |                |       |   | 3.1 |   |   |
| 4(a)*          |       | Form of  Custodial Deposit Agreement                                                                                                                  |       |                                            | 33-51760   |                |       |   | 4.2 |   |   |
| 4(b)*          |       | Form of  Secure Principal Energy Receipt (included as Exhibit A to  Exhibit 4(a))                                                           |       |                                            | 33-51760   |                |       |   | 4.1 |   |   |
| 10(a)*         |       | Form of Net  Profits Conveyance (Multi-State)                                                                                                         |       |                                            | 33-51760   |                |       |   | 10.1 |   |   |
| 10(b)*         |       | Form of  Wasson Conveyance                                                                                                                            |       |                                            | 33-51760   |                |       |   | 10.2 |   |   |
| 10(c)*         |       | Form of  Louisiana Mortgage                                                                                                                           |       |                                            | 33-51760   |                |       |   | 10.3 |   |   |
| 31   |       | Certification required by Rule 13a-14(a) or  Rule 15d-14(a) under the Securities Exchange Act of 1934                                  |       |                                            |       |                |       |   |   |   |   |
| 32   |       | Certification  required by Rule 13a-14(b) or Rule 15d-14(b) under  the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 |       |                                            |       |                |       |   |   |   |   |

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*                    Indicatesexhibit previously filed with the SEC as indicated and incorporated herein byreference.

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**SIGNATURE**

Pursuantto the requirements of the Securities Exchange Act 1934, the Registrant hasduly caused this report to be signed on its behalf by the undersigned,thereunto duly authorized, on the 8th day of August, 2005.
|            | SANTA FE ENERGY  TRUST | ** **                               |
|------------|------------------------|------------------------------------------|
|       | **(Registrant)**       |                                     |
| ** ** | By                     | JPMORGAN CHASE BANK,  N.A., TRUSTEE      |
|       | By                     |                                          |
| * *   |                   | Mike Ulrich                              |
| * *   |                   | *Vice  President and Trust Officer* |
|            |                        |                                          |  |

 

Date: August 8, 2005

The Registrant, Santa Fe Energy Trust, has noprincipal or chief executive officer, principal or chief financial officer,controller or principal accounting officer, board of directors or personsperforming similar functions. Accordingly, no additional signatures areavailable and none have been provided.

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