**UNITED STATES**

**SECURITIES ANDEXCHANGE COMMISSION**

**Washington,D.C. 20549**

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**FORM 10-Q**

**(Mark One)**

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

**For the Quarterly PeriodEnded March 31, 2006**

**or**

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

**Commission file number 1-11450**

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**Santa FeEnergy Trust**

(Exact name of registrant as specified in its charter)

| **Texas**                                                       | **76-6081498**                       |
|-----------------------------------------------------------------|--------------------------------------|
| (State or Other Jurisdiction of Incorporation or  Organization) | (I.R.S. Employer Identification No.) |

 

**JPMorgan Chase Bank, N.A., Trustee**

**Institutional Trust Services**

**700 Lavaca**

**Austin, Texas**

(Address of Principal Executive Offices)

**78701**

(Zip Code)

Registrant’s telephone number, including area code:**(800) 852-1422**

Former name, formeraddress and former fiscal year, if changed from last report.

Not applicable

Indicate by checkmark whether the registrant (1) has filed all reports required to be filedby Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.

Yesx   No o

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer,or a non-accelerated filer. See definition of “accelerated filer and largeaccelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large acceleratedfiler o   Accelerated filer x   Non-accelerated filer o

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act).

Yeso   No x

On May 1, 2006,6,300,000 Depositary Units were outstanding.

 

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**PART I—FINANCIALINFORMATION**

**Item 1.**                     *Financial Statements*

**SAN**TA FE ENERGY TRUST

**STATEMENTS OF CASH PROCEEDS AND DISTRIBUTABLE CASH(Unaudited)**

**(Inthousands, except per unit data)**

| ** **                                      | ** ** | **Three Months Ended  March 31,** | ** ** |
|-------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                      | ** ** | **2006**                                         | ** ** | **2005** | ** ** |
| Royalty income                                  |       |                                             |       |   |   |
| ODC royalty                                     |       | $                                                | 3,404      |   | $ | 2,972 |   |
| Net profits royalty                             |       | 2,967                                            |       | 3,046 |   |
| Total royalties                                 |       | 6,371                                            |       | 6,018 |   |
| Administrative  fee to Devon Energy Corporation |       | (77                                              | )          | (74 | ) |
| Cash withheld for  trust expenses               |       | (100                                             | )          | (100 | ) |
| Distributable  cash                             |       | $                                                | 6,194      |   | $ | 5,844 |   |
| Distributable  cash per trust unit              |       | $                                                | 0.98324    |   | $ | 0.92772 |   |
| Trust units outstanding                         |       | 6,300                                            |       | 6,300 |   |

 

**STATEMENTSOF ASSETS AND TRUST CORPUS**

**(Inthousands, except unit data)**

| ** **                                                  | ** ** | **March 31,  2006** | ** ** | **December 31,  2005** | ** ** |
|-------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                                                  | ** ** | **(Unaudited)**          | ** ** | ** **                  | ** ** |
| ASSETS                                                      |       |                     |       |                        |       |   |   |   |   |
| Current  assets—cash                                   |       |                     | $          | 59                          |       |   |   | $ | 93 |   |   |
| Investment in  royalty interests, at cost                   |       |                     | 87,276     |                        |       |   | 87,276 |   |   |
| Less: accumulated  amortization                             |       |                     | (82,778    | )                           |       |   | (82,429 | ) |   |
|                                                        |       |                     | 4,498      |                        |       |   | 4,847 |   |   |
| Total assets                                                |       |                     | $          | 4,557                       |       |   |   | $ | 4,940 |   |   |
| TRUST CORPUS                                                |       |                     |       |                        |       |   |   |   |   |
| Trust corpus, 6,300,000  trust units issued and outstanding |       |                     | $          | 4,557                       |       |   |   | $ | 4,940 |   |   |

 

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

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**SANTA FE ENERGYTRUSTSTATEMENTS OF CHANGES IN TRUST CORPUS (Unaudited)Three Months Ended March 31, 2006 and 2005(In thousands)**

| Balance at  December 31, 2004 |   | $      | 7,296  |   |
|------------------------------------|--------|--------|--------|--------|
| Cash proceeds                      |   | 5,944  |   |
| Cash distributions                 |   | (5,844 | )      |
| Trust expenses                     |   | (198   | )      |
| Amortization of royalty interests  |   | (554   | )      |
| Balance at  March 31, 2005    |   | $      | 6,644  |   |
| Balance at December 31, 2005  |   | $      | 4,940  |   |
| Cash proceeds                      |   | 6,294  |   |
| Cash distributions                 |   | (6,194 | )      |
| Trust expenses                     |   | (134   | )      |
| Amortization of royalty interests  |   | (349   | )      |
| Balance at March 31,  2006    |   | $      | 4,557  |   |

 

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.Summary of Significant Accounting Policies**

The financial statementsof the Trust are prepared on the cash basis of accounting for revenues andexpenses. Royalty income is recorded when received (generally during thequarter following the end of the quarter in which the income from the RoyaltyProperties is received by Devon) and is net of any cash basis exploration anddevelopment expenditures and amounts reserved for any future exploration anddevelopment costs. Expenses of the Trust, which include accounting,engineering, legal and other professional fees, Trustee fees, an administrativefee paid to Devon and out-of-pocket expenses, are recognized when paid. Underaccounting principles generally accepted in the United States of America,revenues and expenses would be recognized on an accrual basis. Amortization ofthe Trust’s investment in Royalty Interests is recorded using theunit-of-production method in the period in which the cash is received withrespect to such production; therefore, a statement of cash flows is notpresented.

The Trust is a grantortrust and as such is not subject to income taxes and accordingly no recognitionhas been given to income taxes in the Trust’s financial statements. The taxconsequences of owning Trust Units are included in the income tax returns ofthe individual Trust Unit holders.

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

In the opinion of theTrustee and Devon Energy Corporation (“Devon”), all adjustments (all of whichare normal and recurring) have been made which are necessary to fairly statethe financial position, cash proceeds and distributable cash of the Trust.

The accompanying financial statements and notes theretoshould be read in conjunction with the financial statements and notes theretoincluded in the Trust’s 2005 Annual Report on Form 10-K.

**Note 2.Distribution to Trust Unit Holders**

TheTrust has received royalty payments net of administrative fees paid to Devonand made distributions as follows:

| ** **     | ** ** | **Royalty  Payment**                                              | ** ** | **Distributions** | ** ** |
|----------------|------------|-------------------------------------------------------------------|------------|-------------------|------------|
| ** **     | ** ** | **Received**                                                      | ** ** | **Amount**        | ** ** | **Per Trust Unit** | ** ** |
| ** **     | ** ** | **(in thousands, except per unit data)** | ** ** |
| 2005           |       |                                                              |       |              |       |   |   |   |   |
| First quarter  |       | $                                                                 | 5,944      |              | $          | 5,844 |   |   | $ | 0.92772 |   |   |
| Second quarter |       | 5,744                                                             |       | 5,694             |       |   | 0.90372 |   |   |
| Third quarter  |       | 8,668                                                             | (a)        | 8,318             |       |   | 1.32023 |   |   |
| Fourth quarter |       | 5,449                                                             |       | 5,349             |       |   | 0.84909 |   |   |
|           |       | $                                                                 | 25,805     |              | $          | 25,205 |   |   | $ | 4.00076 |   |   |
| 2006           |       |                                                              |       |              |       |   |   |   |   |
| First quarter  |       | $                                                                 | 6,294      |              | $          | 6,194 |   |   | $ | 0.98324 |   |   |

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(a)           Includesproceeds from the sale of Net Profits properties of $2.4 million or $0.37372per Trust Unit.

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

**Note 3. Commitmentsand Contingencies**

The Royalty Propertiesrelated to the Trust are the subject of lawsuits and governmental proceedingsfrom time to time arising in the ordinary course of business. While the outcomeof lawsuits or other proceedings involving the Royalty Properties cannot bepredicted with certainty, these matters are not expected to have a materialadverse effect on the financial position or cash proceeds and distributablecash of the Trust.

**Note 4. PropertyDivestiture**

On March 1, 2006, theTrust sold its interest in the Adobe and Crouch wells in Ward County, Texas,for proceeds of $0.4 million, or $0.05643 per Trust Unit.

**Note 5. Remittanceof Prior Period Operating Expenses**

In the second quarter of 2006, Devon determined thatin prior periods, it had overstated certain of the Trust’s operating expensesin the calculations of the Net Profits Royalties. Accordingly, in the secondquarter of 2006, Devon remitted $1.3 million or $0.20973 per Trust Unit tothe Trust to adjust for the prior periods’ overstatement of expenses.

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

The following discussion addresses material changes inresults of operations for the three months ended March 31, 2006, comparedto the three months ended March 31, 2005 and in financial condition since December 31,2005. It is presumed that readers have read or have access to the Trust’s 2005Annual Report on Form 10-K which includes disclosures regardingcritical accounting policies as part of Management’sDiscussion and Analysis of Financial Condition and Results of Operations.

The Trust will terminateand the Net Profits Royalties are to be sold on or before the Liquidation Date,February 15, 2008. Each holder of Depositary Units of record as of the daynext preceding the Liquidation Date will be entitled to receive a liquidatingdistribution equal to (1) $20 per Depositary Unit from the proceeds of thematured Treasury Obligations, plus (2) a pro rata portion of the netproceeds from the sale of Net Profits Royalties, to the extent not previouslydistributed. Following the Liquidation Date, Holders will no longer receivequarterly distributions and the Depositary Units will no longer trade. Underthe Trust Agreement, the Trustee is to use all reasonable efforts to completesales of all Net Profit Royalties on any date after June 30, 2006 and onor before June 30, 2007. The timing of sales of Net Profits Royalties,future oil and gas prices and future production levels are uncertain. These andother factors make uncertain the ultimate liquidation value of the Trust formatters unrelated to the Treasury obligations. Please read “Description of theTrust Units and Depositary Units—Termination and Liquidation of the Trust” inthe Trust’s 2005 Annual Report on Form 10-K. 

**General; Liquidityand Capital Resources**

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 equivalent basis, the majority of theTrust’s proved reserves are crude oil, even relatively modest changes in crudeoil prices may significantly affect the Trust’s revenues and results ofoperations. Crude oil prices are subject to significant changes in response tofluctuations in the domestic and world supply and demand and other marketconditions as well as the world political situation as it affects OPEC andother oil producing countries. In addition, a substantial portion of the Trust’srevenues come from properties which produce sour (i.e., high sulfur content)crude oil which sells at prices lower than sweeter (i.e., low sulfur content)crude oils.

Natural gas prices fluctuate due to weatherconditions, the level of natural gas in storage, the relative balance betweensupply and demand and other economic factors.

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 March 31, 2006, Devon had no outstanding advances to the Trust.

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**Results ofOperations**

Royaltyincome is recorded by the Trust when received, generally during the quarterfollowing the end of the quarter in which revenues are received and costs andexpenses are paid by Devon. Cash proceeds from the Royalty Properties mayfluctuate from quarter to quarter due to the timing of receipts and payment ofrevenues and costs and expenses as well as changes in prices and productionvolumes. The following table reflects pertinent information with respect to thecash proceeds from the Royalty Properties and the net distributable cash of theTrust. The information presented with respect to the second quarter of 2006reflects revenues received and costs and expenses paid by Devon in the firstquarter of 2006. On May 31, 2006, the Trust will make a cash distributionof $7.4 million, or $1.17243 per Trust Unit, to unitholders of record on May 15,2006.

| ** **                                                                       | ** **   | **Three Months Ended  March 31,** | ** **   | **Second  Quarter** | ** **   |
|----------------------------------------------------------------------------------|--------------|--------------------------------------------------|--------------|---------------------|--------------|
| ** **                                                                       | ** **   | **2006**                                         | ** **   | **2005**            | ** **   | **2006** | ** ** |
| ***Volumes  and Prices***                                                        | *** *** | *** ***                                     | *** *** | *** ***        | *** *** | *** *** | *** *** |
| Oil volumes  (Bbls):                                                             |         |                                             |         |                |         |   |   |
| Wasson ODC royalty                                                               |         | 66,400                                           |         | 74,900              |         | 62,200 |   |
| Net profits royalties                                                            |         | 38,928                                           |         | 47,075              |         | 33,147 |   |
| Gas volumes  (Mcf):                                                              |         |                                             |         |                |         |   |   |
| Net profits royalties                                                            |         | 197,048                                          |         | 408,521             |         | 185,791 |   |
| Oil average  prices ($/Bbl):                                                     |         |                                             |         |                |         |   |   |
| Wasson ODC royalty                                                               |         | $                                                | 53.83        |                | $            | 42.61 |   | $ | 55.73 |   |
| Net profits royalty                                                              |         | 53.82                                            |         | 39.62               |         | 53.55 |   |
| Gas average  prices ($/Mcf):                                                     |         |                                             |         |                |         |   |   |
| Net profits royalties                                                            |         | $                                                | 7.98         |                | $            | 5.10 |   | $ | 9.36 |   |
| ***Cash  Proceeds and Distributable Cash (in thousands, except per unit data)*** | *** *** | *** ***                                     | *** *** | *** ***        | *** *** | *** *** | *** *** |
| Wasson ODC  royalty:                                                             |         |                                             |         |                |         |   |   |
| Sales                                                                            |         | $                                                | 3,574        |                | $            | 3,191 |   | $ | 3,466 |   |
| Operating expenses                                                               |         | (170                                             | )            | (219                | )            | (241 | ) |
|                                                                             |         | 3,404                                            |         | 2,972               |         | 3,225 |   |
| Net profits  royalty:                                                            |         |                                             |         |                |         |   |   |
| Sales                                                                            |         | 3,676                                            |         | 3,950               |         | 3,523 |   |
| Proceeds from the sale of property                                               |         | —                                           |         | —              |         | 356 |   |
| Operating (expenses) recoveries                                                  |         | (674                                             | )            | (898                | )            | 584 |   |
| Capital expenditures                                                             |         | (35                                              | )            | (6                  | )            | (122 | ) |
|                                                                             |         | 2,967                                            |         | 3,046               |         | 4,341 |   |
| Total royalties                                                                  |         | 6,371                                            |         | 6,018               |         | 7,566 |   |
| Administrative fee to Devon                                                      |         | (77                                              | )            | (74                 | )            | (79 | ) |
| Payment received                                                                 |         | 6,294                                            |         | 5,944               |         | 7,487 |   |
| Cash withheld for trust expenses                                                 |         | (100                                             | )            | (100                | )            | (100 | ) |
| Distributable cash                                                               |         | $                                                | 6,194        |                | $            | 5,844 |   | $ | 7,387 |   |
| Distributable  cash per unit                                                     |         | $                                                | 0.98324      |                | $            | 0.92772 |   | $ | 1.17243 |   |

 

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Sales increased $0.1 million from the firstquarter of 2005 to the first quarter of 2006. Sales increased $1.9 milliondue to a $12.37 per barrel increase in the average price of oil from $41.45 perbarrel in the first quarter of 2005 to $53.82 per barrel in the first quarterof 2006 and due to a $2.88 per Mcf increase in the average gas price from $5.10per Mcf in the first quarter of 2005 to $7.98 in the first quarter of 2006.Production on a barrels of oil equivalent (“Boe”) basis from the first quarterof 2005 to the first quarter of 2006 decreased approximately 52,000 Boe,causing sales to decrease $1.8 million. This decrease in production wasprimarily the result of the sale of certain Net Profits Properties in 2005,timing of receipts and natural production declines.

Sales decreased $0.3 million from the first quarter of2006 to the second quarter of 2006. A production decrease of approximately12,000 Boe in the second quarter of 2006, as compared to the first quarter of2006, caused sales to decrease by $0.6 million. The decrease in production wasdue to a 4,200 barrel reduction in the Wasson ODC royalty due to certainquarterly limitations set forth in the conveyance agreement, natural productiondeclines and timing of receipts. This was partially offset by an increase insales of $0.3 million due to a $1.38 per Mcf increase in the average gas pricefrom $7.98 per Mcf in the first quarter of 2006 to $9.36 per Mcf in the secondquarter of 2006 as well as a $1.15 per barrel increase in the average price ofoil from $53.82 per barrel in the first quarter of 2006 to $54.97 per barrel inthe second quarter of 2006.

Proceeds from the sale of property were $0.4 million,or $0.05643 per Trust Unit, due to the sale of certain Net Profits Propertieson March 1, 2006.

Operating expenses decreased $0.3 million from thefirst quarter of 2005 to the first quarter of 2006 primarily related to thesale of certain Net Profits Properties in 2005, partially offset by increasedrecurring lease operating expenses and ad valorem taxes. Operating expensesdecreased $1.2 million from the first quarter of 2006 to the second quarter of2006 primarily due to an out-of-period adjustment related to the Net ProfitsRoyalties. In the second quarter of 2006, Devon determined that in priorperiods, it had overstated certain of the Trust’s operating expenses in thecalculations of the Net Profits Royalties. Accordingly, in the second quarterof 2006, Devon remitted $1.3 million or $0.20973 per Trust Unit to the Trust toadjust for the prior periods’ overstatement of expenses.

Proceeds from the Net Profits Royalties are net ofcapital expenditures with respect to the development of the Net ProfitsProperties. Capital expenditures were $35,000 for the first quarter of 2006compared to $6,000 for the first quarter of 2005. Capital expenditures were$122,000 for the second quarter of 2006.

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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.

**Item4.**                        *Controls and Procedures*

**Evaluation of Disclosure Controls and Procedures**

The Trustee maintainsdisclosure controls and procedures designed to ensure that information requiredto be disclosed by the Trust in the reports that it files or submits under theExchange Act of 1934, as amended, is recorded, processed, summarized andreported within the time periods specified in the SEC’s rules andregulations. Disclosure controls and procedures include controls and proceduresdesigned to ensure that information required to be disclosed by the Trust isaccumulated and communicated by Devon to JPMorgan Chase Bank, N.A., as Trusteeof the Trust, and its employees who participate in the preparation of the Trust’speriodic reports as appropriate to allow timely decisions regarding requireddisclosure.

As of the end of theperiod covered by this report, the Trustee carried out an evaluation of theTrustee’s disclosure controls and procedures. Mike Ulrich, as Trust Officer ofthe Trustee, has concluded that the disclosure controls and procedures areeffective.

Due to the contractualarrangements of (i) the Trust Agreement and (ii) Devon’s conveyancesof the Royalty Interests to the Trust regarding information furnished by theworking interest owners, the Trustee relies on (i) information provided byDevon and the working interest owners, including all information relating tothe Royalty Properties burdened by the Royalty Interests, such as operatingdata, data regarding operating and capital expenditures, geological datarelating to reserves, information regarding environmental and other conditionsrelating to the Royalty Properties, liabilities and potential liabilitiespotentially affecting the revenues to the Trust’s interest, the effects ofregulatory changes and of the compliance of the operators of the RoyaltyProperties with applicable laws, rules and regulations, the 

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numberof producing wells and acreage, and plans for future operating and capitalexpenditures, and (ii) conclusions of independent reserve engineersregarding reserves. The conclusions of the independent reserve engineers arebased on information received from Devon and the working interest owners.

**Changes in Internal Controls**

To the knowledge of theTrustee, there have been no significant changes in the Trustee’s internalcontrols or in other factors that could significantly affect the Trustee’sinternal controls subsequent to the date the Trustee completed its evaluation.The Trustee notes for purposes of clarification that it has no authority over,and makes no statement concerning, the internal controls of Devon and theworking interest owners.

Due tothe nature of the Trust, as well as the nature of the underlying RoyaltyInterests, there may be inherent weaknesses that are not subject to change ormodification by the Trustee or its employees. Devon operates only a smallnumber of the Royalty Properties and is not expected to be able to significantlyinfluence the operations of future development of the Royalty Properties  that are royalty interests or that consist ofrelatively small working interests. Such operations will generally becontrolled by persons unaffiliated with the Trustee and Devon. Devon, however,owns a working interest in the Wasson ODC Unit and may be able to exercise someinfluence, though not control, over unit operations. The contractuallimitations creating inherent weaknesses in disclosure controls and proceduresmay be deemed to include:

·       Theworking interest owners alone control (i) historical operating data,including production volumes, marketing of products, operating and capitalexpenditures, environmental and other liabilities, the effects of regulatorychanges and the number of producing wells and acreage, (ii) plans forfuture operating and capital expenditures, (iii) geological data relatingto reserves and (iv) projected production. Neither the Trustee nor Devon(to the extent Devon is not also the working interest owner) control thisinformation, and they rely entirely on the working interest owners to provideaccurate and timely information when requested for use in the Trust’s reports.

·       TheTrustee relies on information provided by Devon that is collected by Devon fromworking interest owners. While the Trustee may request information throughDevon, only Devon has authority to request and receive financial informationregarding the Royalty Properties from the working interest owners. The Trusteegenerally does not have any direct contact with working interest owners, otherthan Devon, and relies on Devon to request and obtain information for use inthe Trust’s reports.

·       Underthe terms of the Trust Agreement, the Trustee is entitled to, and in fact doesrely, upon certain experts in good faith, including the independent reserveengineer with respect to the annual reserve report. The conveyances alsorestrict access to and the review of confidential data provided by Devon andworking interest owners. While the Trustee has no reason to believe itsreliance upon experts is unreasonable, this reliance on experts and restrictedaccess to information may be viewed as a weakness.

·       TheTrustee does not intend to expand its responsibilities beyond those permittedor required by the Trust Agreement.

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**PART IIOTHER INFORMATION**

**Item 1.**                        *Legal Proceedings*

The Royalty Propertiesrelated to the Trust are the subject of lawsuits and governmental proceedingsfrom time to time arising in the ordinary course of business. While the outcomeof lawsuits or other proceedings involving the Royalty Properties cannot bepredicted with certainty, these matters are not expected to have a materialadverse effect on the financial position or cash proceeds and distributablecash of the Trust.

**Item 1A.**                *Risk Factors*

There have been nomaterial changes to risk factor information included in Item 1A. “Risk Factors”in our 2005 Annual Report on Form 10-K.

**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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**SIGNATURE**

Pursuant to the requirements of the SecuritiesExchange Act 1934, the Registrant has duly caused this report to be signed onits behalf by the undersigned, thereunto duly authorized, on the 9th day of May, 2006.

|            | SANTA FE ENERGY TRUST |
|------------|-----------------------|
| ** ** | ** **            | ** ** | **(Registrant)** |
| ** ** | By                    | JPMORGAN  CHASE BANK, N.A., TRUSTEE |
|       | By                    | /s/  MIKE ULRICH |
|       |                  | Mike Ulrich |
|       |                  | *Vice President and Trust Officer* |

 

Date: May 9, 2006

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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