================================================================================
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                   FORM 10-Q

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
      SECURITIES EXCHANGE ACT OF 1934

               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
     SECURITIES EXCHANGE ACT OF 1934

                         COMMISSION FILE NUMBER 1-11450

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

                             SANTA FE ENERGY TRUST
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                    TEXAS                               76-6081498
         (STATE OR OTHER JURISDICTION                 (I.R.S. EMPLOYER 
       OF INCORPORATION OR ORGANIZATION)             IDENTIFICATION NO.)
                                       

                   CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
                             GLOBAL TRUST SERVICES
                             600 TRAVIS, SUITE 1150
                              HOUSTON, TEXAS 77002
               (ADDRESS OF PRINCIPAL OFFICES, INCLUDING ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (713) 216-5087

                                      NONE
         (Former name or former address, if changed since last report)

     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 [ ]

         Depository Units outstanding at October 31, 1998 -- 6,300,000

================================================================================
<PAGE>
                        PART I -- FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                             SANTA FE ENERGY TRUST
         STATEMENT OF CASH PROCEEDS AND DISTRIBUTABLE CASH (UNAUDITED)
                      (IN THOUSANDS, EXCEPT PER UNIT DATA)

<TABLE>
<CAPTION>
                                            THREE MONTHS ENDED      NINE MONTHS ENDED
                                              SEPTEMBER 30,           SEPTEMBER 30,
                                          ----------------------  ----------------------
                                             1998        1997        1998        1997
                                          ----------  ----------  ----------  ----------
Royalty income
<S>                                       <C>         <C>         <C>         <C>
     ODC royalty........................  $      721  $    1,053  $    2,687  $    3,650
     Willard royalty....................         338         501       1,258       1,777
     Net profits royalty................       1,520       1,373       4,719       5,543
     Support payment (recoupment).......      --          --          --          (1,065)
                                          ----------  ----------  ----------  ----------
Total royalties.........................       2,579       2,927       8,664       9,905
Administrative fee to Santa Fe Energy
  Resources, Inc........................         (59)        (57)       (175)       (169)
Cash withheld for trust expenses........      --             (50)       (150)       (250)
                                          ----------  ----------  ----------  ----------
Distributable cash......................  $    2,520  $    2,820  $    8,339  $    9,486
                                          ==========  ==========  ==========  ==========
Distributable cash per trust unit.......  $  0.40009  $  0.44757  $  1.32368  $  1.50569
                                          ==========  ==========  ==========  ==========
Trust units outstanding.................       6,300       6,300       6,300       6,300
                                          ==========  ==========  ==========  ==========
</TABLE>

               STATEMENT OF ASSETS, LIABILITIES AND TRUST CORPUS
                                 (IN THOUSANDS)

                                           SEPTEMBER 30,     DECEMBER 31,
                                                1998             1997
                                           --------------    ------------
                                            (UNAUDITED)
                                 ASSETS
Current assets
  Cash..................................      $     79         $    177
                                           --------------    ------------
Investment in royalty interests, at
  cost..................................        87,276           87,276
Less: accumulated amortization..........       (53,143)         (47,402)
                                           --------------    ------------
                                                34,133           39,874
                                           --------------    ------------
                                              $ 34,212         $ 40,051
                                           ==============    ============
                              TRUST CORPUS
Trust corpus, 6,300,000 trust units
  issued and outstanding................      $ 34,212         $ 40,051
                                           ==============    ============

                             See accompanying notes

                                       2
<PAGE>
                             SANTA FE ENERGY TRUST
                STATEMENT OF CHANGES IN TRUST CORPUS (UNAUDITED)
                                 (IN THOUSANDS)

Balance at December 31, 1996.........  $   48,420
  Cash proceeds......................      12,654
  Cash distributions.................     (12,354)
  Trust expenses.....................        (269)
  Amortization of royalty
     interests.......................      (8,400)
                                       ----------
Balance at December 31, 1997.........      40,051
  Cash proceeds......................       8,489
  Cash distributions.................      (8,339)
  Trust expenses.....................        (247)
  Amortization of royalty
     interests.......................      (5,742)
                                       ----------
Balance at September 30, 1998........  $   34,212
                                       ==========

                             See accompanying notes

                                       3
<PAGE>
                             SANTA FE ENERGY TRUST
                 NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1.  THE TRUST

     Santa Fe Energy Trust (the "Trust") was formed on October 22, 1992, with
Chase Bank of Texas, National Association, formerly Texas Commerce Bank,
National Association, as trustee (the "Trustee"), to acquire and hold certain
royalty interests (the "Royalty Interests") in certain properties (the
"Royalty Properties") conveyed to the Trust by Santa Fe Energy Resources, Inc.
("Santa Fe"). The Royalty Interests consist of two term royalty interests in
two production units in the Wasson field in west Texas (the "Wasson
Royalties") and a net profits royalty interest in certain royalty and working
interests in a diversified portfolio of properties located in twelve states (the
"Net Profits Royalties"). The Royalty Interests are passive in nature and the
Trustee has no control over or responsibility relating to the operation of the
Royalty Properties. The Trust will be liquidated on February 15, 2008 (the
"Liquidation Date").

     In November 1992, 5,725,000 Depository Units, each consisting of beneficial
ownership of one unit of undivided beneficial interest in the Trust ("Trust
Units") and a $20 face amount beneficial ownership interest in a $1,000 face
amount zero coupon United States Treasury obligation maturing on or about
February 15, 2008, were sold in a public offering for $20 per Depository Unit. A
total of $114.5 million was received from public investors, of which $38.7
million was used to purchase the Treasury obligations and $5.7 million was used
to pay underwriting commissions and discounts. Santa Fe received the remaining
$70.1 million and 575,000 Depository Units. In the first quarter of 1994 Santa
Fe sold in a public offering the 575,000 Depository Units which it held.

     The trust agreement under which the Trust was formed (the "Trust
Agreement") provides, among other things, that:

           o   the Trustee shall not engage in any business or commercial
               activity or acquire any asset other than the Royalty Interests
               initially conveyed to the Trust;

           o   the Trustee may not sell all or any portion of the Wasson
               Royalties or substantially all of the Net Profits Royalties
               without the prior consent of Santa Fe;

           o   Santa Fe may sell the Royalty Properties, subject to and burdened
               by the Royalty Interests, without consent of the holders of the
               Trust Units; following any such transfer, the Royalty Properties
               will continue to be burdened by the Royalty Interests and after
               any such transfer the royalty payment attributable to the
               transferred property will be calculated separately and paid by
               the transferee;

           o   the Trustee may establish a cash reserve for the payment of any
               liability which is contingent, uncertain in amount or that is not
               currently due and payable;

           o   the Trustee is authorized to borrow funds required to pay
               liabilities of the Trust, provided that such borrowings are
               repaid in full prior to further distributions to the holders of
               the Trust Units;

           o   the Trustee will make quarterly cash distributions to the holders
               of the Trust Units.

NOTE 2.  BASIS OF ACCOUNTING

     The financial statements of the Trust are prepared on the cash basis of
accounting for revenues and expenses. Royalty income is recorded when received
(generally during the quarter following the end of the quarter in which the
income from the Royalty Properties is received by Santa Fe) and is net of any
cash

                                       4
<PAGE>
                             SANTA FE ENERGY TRUST
          NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

basis exploration and development expenditures and amounts reserved for any
future exploration and development costs. Expenses of the Trust, which will
include accounting, engineering, legal, and other professional fees, Trustee
fees, an administrative fee paid to Santa Fe and out-of-pocket expenses, are
recognized when paid. Under generally accepted accounting principles, revenues
and expenses would be recognized on an accrual basis. Amortization of the
Trust's investment in Royalty Interests is recorded using the unit-of-production
method in the period in which the cash is received with respect to such
production.

     The conveyance of the Royalty Interests to the Trust was accounted for as a
purchase transaction. The $87,276,000 reflected in the Statement of Assets and
Trust Corpus as Investment in Royalty Interests 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's investment in the Royalty Interests is not
necessarily indicative of the fair value of such Royalty Interests.

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

     The preparation of the Trust's financial statements requires the use of
certain estimates. Actual results may differ from such estimates.

NOTE 3.  THE ROYALTY INTERESTS

     The Wasson Royalties consist of interests conveyed out of Santa Fe's
royalty interest in the Wasson ODC Unit (the "ODC Royalty") and the Wasson
Willard Unit (the "Willard Royalty"). The ODC Royalty entitles the Trust to
receive quarterly royalty payments with respect to 12.3934% of the actual gross
oil production from the Wasson ODC Unit, subject to certain quarterly
limitations set forth in the conveyance agreement, for the period from November
1, 1992 to December 31, 2007. The Willard Royalty entitles the Trust to receive
quarterly royalty payments with respect to 6.8355% of the actual gross oil
production from the Wasson Willard Unit, subject to certain quarterly
limitations set forth in the conveyance agreement, for the period from November
1, 1992 to December 31, 2003.

     The Net Profits Royalties entitle the Trust to receive, on a quarterly
basis, 90% of the net proceeds, as defined in the conveyance agreement, from the
sale of production from the properties subject to the conveyance agreement. The
Net Profits Royalties are not limited in term, although the Trustee is required
to sell such royalties prior to the Liquidation Date.

     For any calendar quarter ending on or prior to December 31, 2002, the Trust
will receive additional royalty payments ("Support Payments") to the extent it
needs such payments to distribute $0.40 per Trust Unit per quarter. Such Support
Payments are limited to Santa Fe's remaining royalty interest in the Wasson ODC
Unit. If such Support Payments are received, certain proceeds otherwise payable
to the Trust in subsequent quarters may be reduced to recoup the amount of such
Support Payments. The aggregate of the Support Payments, net of any amounts
recouped, is limited to $20,000,000 on a revolving basis. Through the end of
1995, the Trust had received Support Payments totalling $2,074,000. During 1996
and 1997 Santa Fe recouped all of such payments. In the fourth quarter of 1998,
the Trust received a Support Payment of $94,000.

                                       5
<PAGE>
                             SANTA FE ENERGY TRUST
          NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

NOTE 4.  DISTRIBUTION TO TRUST UNIT HOLDERS

The Trust has received royalty payments and made distributions as follows:

                                        ROYALTY             DISTRIBUTIONS
                                        PAYMENT       --------------------------
                                        RECEIVED      AMOUNT      PER TRUST UNIT
                                        --------      -------     --------------
                                          (IN THOUSANDS, EXCEPT PER UNIT DATA)
1997
     First quarter...................   $  2,985(a)   $ 2,835        $0.45000
     Second quarter..................      3,881(b)     3,831         0.60812
     Third quarter...................      2,870        2,820         0.44757
     Fourth quarter..................      2,918        2,868         0.45527
                                        --------      -------     --------------
                                          12,654       12,354         1.96096
                                        ========      =======     ==============
1998
     First quarter...................   $  3,108      $ 3,058        $0.48539
     Second quarter..................      2,861        2,761         0.43820
     Third quarter...................      2,520        2,520         0.40009
                                        --------      -------     --------------
                                           8,489        8,339         1.32368
                                        ========      =======     ==============

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

(a) Reduced by recoupment of Support Payment of $912,000, or $0.14473 per Trust
    Unit.

(b) Reduced by recoupment of Support Payment of $153,000, or $0.02429 per Trust
    Unit.

                                       6

<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

GENERAL; LIQUIDITY AND CAPITAL RESOURCES

     Santa Fe Energy Trust (the "Trust") was formed on October 22, 1992 with
Chase Bank of Texas, National Association, formerly Texas Commerce Bank,
National Association, as trustee (the "Trustee"), to acquire and hold certain
royalty interests (the "Royalty Interests") in certain properties (the
"Royalty Properties") conveyed to the Trust by Santa Fe Energy Resources, Inc.
("Santa Fe"). The Trust is a passive entity with the Trustee's primary
responsibility being the collection and distribution of proceeds from the
Royalty Interests and the payment of Trust liabilities and expenses (see Note 1
to the financial statements of the Trust). The Royalty Interests consist of two
term royalty interests in two production units (the Wasson ODC Unit and the
Wasson Willard Unit) in the Wasson field in west Texas (the "Wasson
Royalties") and a net profits royalty interest (the "Net Profits Royalties")
in certain royalty and working interest properties in a diversified portfolio of
properties located predominantly in Texas, Louisiana and Oklahoma (the "Net
Profits Properties"). Under the terms of the Trust Agreement, the Trustee
cannot engage in any other business or commercial activity or acquire any asset
other than the Royalty Interests initially conveyed to the Trust. Therefore, the
Royalty Interests are the sole source of funds for the Trust from which to pay
expenses and liabilities and make distributions to the holders of the Trust
Units. The Trust will be liquidated on or before February 15, 2008 (the
"Liquidation Date").

     The Wasson Royalties are fixed percentage royalty interests in specified
levels of quarterly maximum production from the underlying properties in each
year during the term of the respective royalty. The Wasson ODC Royalty and the
Wasson Willard Royalty terminate on December 31, 2007 and December 31, 2003,
respectively. The Net Profits Royalties are life-of-property interests which
will be sold by the Trust prior to the Liquidation Date. The Net Profits
Royalties entitle the Trust to receive 90% of the net proceeds (after deducting,
among other things, the costs of production and marketing and capital
expenditures) from the sale of production from the Net Profits Properties. The
Net Profits Properties are generally mature producing oil and gas properties and
the production and reserves attributable to such properties are expected to
decline substantially over the life of the Trust. The Net Profits Royalties are
expected to have a relatively small liquidation value at the Liquidation Date.

     For any calendar quarter ending on or prior to December 31, 2002, the Trust
will receive additional royalty payments ("Support Payments") to the extent it
needs such payments to distribute $0.40 per Trust Unit per quarter. Such Support
Payments are limited to Santa Fe's remaining royalty interest in the Wasson ODC
Unit. If Support Payments are received, certain proceeds otherwise payable to
the Trust in subsequent quarters may be reduced to recoup the amount of such
Support Payments. The aggregate amount of Support Payments, net of any amounts
recouped, is limited to $20,000,000 on a revolving basis. Through the end of
1995, Support Payments received by the Trust totaled $2,074,000. In 1996 and
1997 Santa Fe recouped all such Support Payment. In the fourth quarter of 1998
the Trust received a Support Payment totaling $94,000. Future recoupments will
be made only to the extent of that Support Payment and future Support Payments.
Depending on factors such as sales prices and volumes and the level of operating
costs and capital expenditures, Support Payments may be required in subsequent
quarters to allow the Trust to make distributions of $0.40 per Trust Unit per
quarter.

     Trust expenses include accounting, engineering, legal and other
professional fees, Trustee fees, an administrative fee paid to Santa Fe and
other out-of-pocket expenses. From time to time Santa Fe may, at its sole
discretion and without any obligation to do so, advance funds to the Trust for
the timely payment of such expenses and receive reimbursement therefore in later
periods. In addition, the Trustee is authorized to borrow funds required to pay
liabilities of the Trust, provided that such borrowings are repaid in full prior
to

                                       7
<PAGE>
making further distributions to the holders of the Trust Units. Currently there
are no such borrowings outstanding or contemplated other than the
above-described advances which Santa Fe has made or may continue to make.

     The Trust's results of operations are dependent upon the sales prices and
quantities of oil and gas produced from the Royalty Properties, the costs of
producing such resources and the amount of capital expenditures made with
respect to such properties. Royalty income is recorded by the Trust when
received, generally during the quarter following the end of the quarter in which
revenues are received and costs and expenses are paid by Santa Fe. Cash proceeds
from the Royalty Properties may fluctuate from quarter to quarter due to the
timing of receipts and payments of revenues and expenses as well as changes in
prices and production volumes. In addition, amounts for future exploration and
development costs may be reserved from time to time.

     Since, on an equivalent basis, the majority of the Trust's proved reserves
are crude oil, even relatively modest changes in crude oil prices may
significantly affect the Trust's revenues and results of operations. Crude oil
prices are subject to significant changes in response to fluctuations in the
domestic and world supply and demand and other market conditions as well as the
world political situation as it affects OPEC, the Middle East and other
producing countries. In addition, a substantial portion of the Trust's revenues
comes 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 oil.
The Trust's average crude oil sales price (excluding the effect of Support
Payments and recoupments) for the third quarter of 1998 was 30% lower than for
the same period in 1997 (see Results of Operations). Crude oil prices with
respect to the Trust's results in the fourth quarter of 1998 fell to $11.59 per
barrel on the Royalty Properties. Crude oil prices received by Santa Fe on the
Royalty Properties in October 1998 averaged $12.23 per barrel.

     Natural gas prices fluctuate due to weather conditions, the level of
natural gas in storage, the relative balance between supply and demand and other
economic factors. The Trust's average price for natural gas in the third quarter
of 1998 was $2.18 per Mcf, approximately 8% lower than the $2.36 per Mcf
received in the third quarter of 1997. Natural gas prices with respect to the
Trust's results in the fourth quarter of 1998 averaged $2.16 per Mcf on the
Royalty Properties. Natural gas prices received by Santa Fe on the Royalty
Properties in October 1998 averaged $1.95 per Mcf.

                                       8
<PAGE>
RESULTS OF OPERATIONS

     Royalty income is recorded by the Trust when received, generally during the
quarter following the end of the quarter in which revenues are received and
costs and expenses are paid by Santa Fe. Cash proceeds from the Royalty
Properties may fluctuate from quarter to quarter due to the timing of receipts
and payment of revenues and costs and expenses as well as changes in prices and
production volumes. The following table reflects pertinent information with
respect to the cash proceeds from the Royalty Properties and the net
distributable cash of the Trust. The information presented with respect to the
fourth quarter of 1998 reflects revenues received and costs and expenses paid by
Santa Fe in the third quarter of 1998. In the fourth quarter of 1998 the Trust
received a payment of $2,520,000 and on November 30, 1998 the Trust will make a
cash distribution of $2,520,000, or $0.40 per Trust Unit, to unitholders of
record on November 16, 1998.

<TABLE>
<CAPTION>
                                         THREE MONTHS ENDED        NINE MONTHS ENDED
                                           SEPTEMBER 30,             SEPTEMBER, 30,          FOURTH
                                       ----------------------  --------------------------   QUARTER
                                          1998        1997         1998          1997         1998
                                       ----------  ----------  ------------  ------------   --------
VOLUMES AND PRICES
<S>                                    <C>         <C>         <C>           <C>            <C> 
  Oil volumes (Bbls):
     Wasson ODC royalty..............      65,900      66,800       198,600       198,200     65,900
     Wasson Willard royalty..........      29,900      31,100        90,900        94,600     29,900
     Net profits royalty.............      65,169      74,694       198,618       228,178     66,802
  Gas volumes (Mcf):
     Net profits royalty.............     676,643     506,444     2,218,064     1,776,869    668,775
  Oil average prices ($/Bbl):
     Wasson ODC royalty..............  $    12.14  $    17.69  $      14.72  $      20.47   $  12.18
     Wasson Willard royalty..........       12.09       17.69         14.77         20.52      12.14
     Net profits royalty.............       12.30       16.96         14.67         19.46      10.75
  Gas average prices ($/Mcf):
     Net profits royalty.............        2.18        2.36          2.43          2.48       2.16
CASH PROCEEDS AND DISTRIBUTABLE CASH
  (IN THOUSANDS, EXCEPT PER UNIT
  DATA)
  Wasson ODC royalty:
     Sales...........................  $      800  $    1,182  $      2,923  $      4,058   $    803
     Operating expenses..............         (79)       (129)         (236)         (408)       (79)
                                       ----------  ----------  ------------  ------------   --------
                                              721       1,053         2,687         3,650        724
                                       ----------  ----------  ------------  ------------   --------
  Wasson Willard royalty:
     Sales...........................         361         550         1,342         1,941        363
     Operating expenses..............         (23)        (49)          (84)         (164)       (23)
                                       ----------  ----------  ------------  ------------   --------
                                              338         501         1,258         1,777        340
                                       ----------  ----------  ------------  ------------   --------
  Net profits royalty:
     Sales...........................       2,279       2,528         8,315         8,942      2,161
     Operating expenses..............        (745)       (797)       (2,309)       (2,580)      (713)
     Capital expenditures............         (14)       (358)       (1,287)         (819)       (27)
                                       ----------  ----------  ------------  ------------   --------
                                            1,520       1,373         4,719         5,543      1,421
                                       ----------  ----------  ------------  ------------   --------
  Support payment (recoupment).......      --          --           --             (1,065)        94
                                       ----------  ----------  ------------  ------------   --------
  Total royalties....................       2,579       2,927         8,664         9,905      2,579
  Administrative fee to Santa Fe.....         (59)        (57)         (175)         (169)       (59)
                                       ----------  ----------  ------------  ------------   --------
  Payment received...................       2,520       2,870         8,489         9,736      2,520
  Cash withheld for trust expenses...      --             (50)         (150)         (250)     --
                                       ----------  ----------  ------------  ------------   --------
  Distributable cash.................  $    2,520  $    2,820  $      8,339  $      9,486   $  2,520
                                       ==========  ==========  ============  ============   ========
  Distributable cash per unit........  $  0.40009  $  0.44757  $    1.32368  $    1.50569   $0.40000
                                       ==========  ==========  ============  ============   ========
</TABLE>

                                       9
<PAGE>
     The Trust's crude oil sales price averaged $12.12 per barrel for the Wasson
Royalties and $12.30 per barrel for the Net Profits Royalties in the third
quarter of 1998 compared with $17.69 per barrel and $16.96 per barrel,
respectively, in the third quarter of 1997. Crude oil prices for the first nine
months of 1998 averaged $14.73 per barrel for the Wasson Royalties and $14.67
per barrel for the Net Profit Royalties compared with $20.49 per barrel and
$19.46 per barrel, respectively, for the same period in 1997. Oil prices in the
fourth quarter of 1998 averaged $12.17 per barrel for the Wasson Royalties and
$10.75 per barrel for the Net Profits Royalties. Crude oil prices received by
Santa Fe on the Royalty Properties in October 1998 averaged $12.23 per barrel.

     Natural gas prices in the third quarter of 1998 averaged $2.18 per Mcf
compared with $2.36 per Mcf in the third quarter of 1997. Natural gas prices
averaged $2.43 per Mcf in the first nine months of 1998 compared with $2.48 per
Mcf for the same period in 1997. Natural gas sales prices averaged $2.16 per Mcf
in the fourth quarter of 1998. Natural gas volumes increased in the third
quarter and first nine months of 1998 compared with the same periods in 1997
primarily due to the addition of new production from ongoing development
activities on the Net Profit Properties.

     Cash proceeds in the first and second quarters of 1997 were reduced by
Support Payment recoupments of $912,000 and $153,000, respectively. Future
recoupments will be made only to the extent of the Support Payment of $94,000
received by the Trust in the fourth quarter of 1998 and future Support Payments.
(see -- General; Liquidity and Capital Resources).

     Proceeds from the Net Profits Royalties are net of capital expenditures
with respect to the development of the Net Profits Properties. Capital
expenditures in the Trust's first nine months of 1998 totalled $1,287,393.
Capital expenditures in the first nine months of 1998 include reserves of
$357,942 which were expended in the fourth quarter of 1998. Operating expenses
for the Net Profits Royalties averaged $4.19 per barrel of oil equivalent
("BOE") in the third quarter of 1998 compared with $5.01 per BOE in the third
quarter of 1997. Operating expenses for the fourth quarter of 1998 averaged
$4.00 per BOE. Operating expenses may fluctuate from quarter to quarter due to
the timing of payments.

YEAR 2000

     The risks associated with the Year 2000 problem are the results of computer
technology utilizing two digits rather than four to define a specific year.
Absent corrective action, a computer program or embedded chip that is date
sensitive may recognize a date using "00" as the year 1900 rather than the
year 2000. This could result in system failures or miscalculations causing
disruptions to various activities and operations.

     Santa Fe is the operator of a small number of the Royalty Properties and
has developed a plan to identify those risks related to the Year 2000 problem,
to remediate systems and equipment where required and to test for Year 2000
compliance. Santa Fe has identified all critical computer systems and determined
the remediation to be performed and has already made the required modifications
to its accounting system. Santa Fe is in the process of developing a business
contingency plan in order to mitigate the extent of potential disruption to
business operations and expects to complete this plan by the second quarter of
1999 with continued refinement throughout 1999. Santa Fe has stated that the
costs to the Trust for Year 2000 compliance is covered under the administrative
fee paid by the Trust to Santa Fe.

     Santa Fe is primarily reliant on the performance of third party vendors for
the receipt of Royalty income, payment of expenses and disbursement of income
distributable to the Trust. The worst case scenario would involve failure of
third party production equipment in the field, which would result in disruption
of operations until the problem is resolved. Santa Fe can provide no assurance
as to whether third party vendors will successfully address the Year 2000 issue.
With regard to risk relating to third parties, Santa Fe

                                       10
<PAGE>
has implemented a program to request Year 2000 certification or other assurance
from its significant customers, transporters, partners and suppliers. Failure to
successfully address the Year 2000 issue by third party vendors could have a
material adverse impact on the trust and its Unit holders.

     Chase Bank of Texas, National Association, ("Chase"), has developed and
is implementing a program to prepare its systems and applications for the Year
2000, including those used to render services to the Trust. In that connection,
Chase intends to have such systems and applications capable of processing, on
and after January 1, 2000, date, and date-related data consistent with the
functionality of such systems and applications, without a material adverse
effect upon its performance of services as Trustee.

FORWARD LOOKING STATEMENTS

     Management's Discussion and Analysis of Financial Condition and Results of
Operations includes certain statements (other than statements of historical
fact) that constitute forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. When used herein, the words "anticipates," "expects," "believes,"
"intends" or "projects" and similar expressions are intended to identify
forward-looking statements. It is important to note that actual results could
differ materially from those projected by such forward-looking statements.
Although it is believed that the expectations reflected in such forward-looking
statements are reasonable and such forward-looking statements are based upon the
best data available at the time this report is filed with the Securities and
Exchange Commission, no assurance can be given that such expectations will prove
correct. Factors that could cause results to differ materially from the results
discussed in such forward-looking statements include, but are not limited to,
the following: production variances from expectations, volatility of oil and gas
prices, the need to develop and replace reserves, the capital expenditures
required to fund operations, environmental risks, uncertainties about estimates
of reserves, competition and government regulation and political and litigation
risks. All such forward-looking statements in this document are expressly
qualified in their entirety by the cautionary statements in this paragraph.

                                       11
<PAGE>
                                    PART II.
                               OTHER INFORMATION

ITEMS 1, 2, 3, 4 & 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

                                                        SEC FILE OR
                                                        REGISTRATION    EXHIBIT
                                                           NUMBER       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
     27        Financial Data Schedules
               (*)  Indicates exhibit filed incorporated herein by reference

(b)  Reports on Form 8-K

     None

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<PAGE>
                                   SIGNATURE

     Pursuant to the requirements Section 13 or 15 (d) of the Securities
Exchange Act 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 13th day of
November, 1998.

                                        SANTA FE ENERGY TRUST
                                             (REGISTRANT)

                                        By  CHASE BANK OF TEXAS, NATIONAL
                                             ASSOCIATION, TRUSTEE

Date:  November 13, 1998                /s/ PETE FOSTER
                                            PETE FOSTER
                                            SENIOR VICE PRESIDENT & TRUST 
                                            OFFICER

     The Registrant, Santa Fe Energy Trust, has no principal executive officer,
principal financial officer, controller or principal accounting officer, board
of directors or persons performing similar functions. Accordingly, no additional
signatures are available and none have been provided.

                                       13