**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

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**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, 2005** |
| **or**                                                      |
| **o**                                                       | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

 

**Commission File 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 incorporation or organization) | (I.R.S. Employer  Identification No.) |

 

**JPMorganChase Bank, N.A., Trustee**

**InstitutionalTrust Services**

**700Lavaca**

**Austin,Texas 78701**

(Address of principaloffices, 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

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

Yes o No x

Depository Units outstanding at September 30, 2005—6,300,000

 

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**PART I—FINANCIAL INFORMATION**

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

**SANTAFE ENERGY TRUSTSTATEMENTS OF CASH PROCEEDS AND DISTRIBUTABLE CASH (Unaudited)(In thousands, except per unit data)**

| ** **                                      | ** ** | **Three Months Ended  September 30,** | ** ** | **Nine Months Ended  September 30,** | ** ** |
|-------------------------------------------------|------------|------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                      | ** ** | **2005**                                             | ** ** | **2004**                                            | ** ** | **2005** | ** ** | **2004** | ** ** |
| Royalty income:                                 |       |                                                 |       |                                                |       |   |   |   |   |
| ODC royalty                                     |       | $                                                    | 2,958      |                                                | $          | 2,459 |   | $ | 8,753 |   | $ | 6,653 |   |
| Willard royalty                                 |       | —                                               |       | —                                              |       | — |   | 332 |   |
| Net profits royalty                             |       | 5,786                                                |       | 2,682                                               |       | 11,830 |   | 7,351 |   |
| Total royalties                                 |       | 8,744                                                |       | 5,141                                               |       | 20,583 |   | 14,336 |   |
| Administrative  fee to Devon Energy Corporation |       | (76                                                  | )          | (74                                                 | )          | (227 | ) | (220 | ) |
| Cash withheld for  trust expenses               |       | (350                                                 | )          | (225                                                | )          | (500 | ) | (425 | ) |
| Distributable  cash                             |       | $                                                    | 8,318      |                                                | $          | 4,842 |   | $ | 19,856 |   | $ | 13,691 |   |
| Distributable  cash per trust unit              |       | $                                                    | 1.32023    |                                                | $          | 0.76869 |   | $ | 3.15167 |   | $ | 2.17323 |   |
| Trust units outstanding                         |       | 6,300                                                |       | 6,300                                               |       | 6,300 |   | 6,300 |   |

 

**STATEMENTS OFASSETS AND TRUST CORPUS(In thousands, except unit data)**

| ** **                                                  | ** ** | **September 30,  2005** | ** ** | **December 31,  2004** | ** ** |
|-------------------------------------------------------------|------------|------------------------------|------------|-----------------------------|------------|
| ** **                                                  | ** ** | **(Unaudited)**              | ** ** | ** **                  | ** ** |
| ASSETS                                                      |       |                         |       |                        |       |   |   |   |   |
| Current  assets—cash                                   |       |                         | $          | 55                          |       |   |   | $ | 105 |   |   |
| Investment in  royalty interests, at cost                   |       |                         | 87,276     |                        |       |   | 87,276 |   |   |
| Less: accumulated  amortization                             |       |                         | (81,646    | )                           |       |   | (80,085 | ) |   |
|                                                        |       |                         | 5,630      |                        |       |   | 7,191 |   |   |
| Total assets                                                |       |                         | $          | 5,685                       |       |   |   | $ | 7,296 |   |   |
| TRUST CORPUS                                                |       |                         |       |                        |       |   |   |   |   |
| Trust corpus, 6,300,000  trust units issued and outstanding |       |                         | $          | 5,685                       |       |   |   | $ | 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)Nine Months Ended September 30, 2005 and 2004(In thousands)**

| Balance at  December 31, 2003  |   | $       | 10,029 |   |
|-------------------------------------|--------|---------|--------|--------|
| Cash proceeds                       |   | 14,116  |   |
| Cash distributions                  |   | (13,691 | )      |
| Trust expenses                      |   | (426    | )      |
| Amortization of royalty interests   |   | (1,912  | )      |
| Balance at  September 30, 2004 |   | $       | 8,116  |   |
| Balance at December 31, 2004   |   | $       | 7,296  |   |
| Cash proceeds                       |   | 20,356  |   |
| Cash distributions                  |   | (19,856 | )      |
| Trust expenses                      |   | (550    | )      |
| Amortization of royalty interests   |   | (1,561  | )      |
| Balance at  September 30, 2005 |   | $       | 5,685  |   |

 

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 September 30, 2005and for the three-month and nine-month periods ended September 30,2005 and 2004 are unaudited and reflect all adjustments (consisting of onlynormal and recurring adjustments) that are, in the opinion of Devon EnergyCorporation, necessary for a fair presentation of the financial position andcash proceeds and distributable cash of the Santa Fe Energy Trust for theinterim 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. Ninemonths ended September 30, 2004 production, sales and operating expensesfor the Wasson Willard Unit are related to calendar year 2003. These are thelast production, sales and operating expenses the Trust will report since theTrust’s conveyed 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 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 Interestsand after any such transfer the royalty payment attributable to the transferredproperty will be calculated separately and paid by the transferee;

·       the Trustee may establish a cash reserve for the payment ofany liability that is contingent, uncertain in amount or that is not currentlydue 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

·       the Trustee will makequarterly cash distributions to the holders of the Trust Units.

**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 and Trust Corpus as Investment in Royalty Interestsrepresents 6,300,000 Trust Units valued at $20 per unit less the $38,724,000paid for the Treasury obligations. The carrying value of the Trust’s investmentin the Royalty Interests is not necessarily indicative of the fair value ofsuch Royalty Interests.

The Trust is a grantor trust and as such is notsubject to income taxes and accordingly no recognition has been given to incometaxes in the Trust’s financial statements. The tax consequences of owning TrustUnits are included in the income tax returns of the individual Trust Unitholders.

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 WassonRoyalties consist of interests conveyed out of Devon’s royalty interest in theWasson ODC Unit (the “ODC Royalty”) and the Wasson Willard Unit (the “WillardRoyalty”). 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**

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)** | ** ** |
| 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 |   |   |
| Total                        |       | $                                                                 | 20,070     |              | $          | 19,595 |   |   | $ | 3.11035 |   |   |
| 2005:                        |       |                                                              |       |              |       |   |   |   |   |
| First quarter                |       | $                                                                 | 5,944      |              | $          | 5,844 |   |   | $ | 0.92772 |   |   |
| Second quarter               |       | 5,744                                                             |       | 5,694             |       |   | 0.90372 |   |   |
| Third quarter                |       | 8,668                                                             |       | 8,318             |       |   | 1.32023 |   |   |
| Total through third  quarter |       | $                                                                 | 20,356     |              | $          | 19,856 |   |   | $ | 3.15167 |   |   |

 

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

**Note 5.Oil and Gas Property Divestitures**

Includedin Net Profits Royalty income for the three and nine month periods ended September 30,2005 are proceeds of $2.4 million ($0.37372 per unit) received for the sale ofcertain Net Profits Royalties.

**Note 6.Commitments and 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.

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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 September 30, 2005, there were no outstanding advances to the Trustfrom Devon Energy Corporation.

**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 third quarter of 2005 was $42.88 per barrelcompared with $33.83 per barrel for the same period in 2004. Crude oil priceswith respect to the Trust’s results in the fourth quarter of 2005 averaged$54.11 per barrel. The Trust’s weighted average crude oil sales price for thefirst nine months of 2005 was $42.25 per barrel compared with $30.68 per barrelfor the same period of 2004.

Natural gas prices fluctuate due to weatherconditions, the level of natural gas in storage, the relative balance betweensupply and demand and other economic factors. The Trust’s weighted averageprice for natural gas in the third quarter of 2005 was $5.72 per Mcf comparedwith $5.25 per Mcf for the same period in 2004. Natural gas prices with respectto the Trust’s results in the fourth quarter of 2005 averaged $6.11 per Mcf. TheTrust’s weighted average price for natural gas in the first nine months of 2005was $5.52 per Mcf compared with $4.86 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, proceeds fromproperty sales and costs and expenses as well as changes in prices andproduction volumes. The following table reflects pertinent information with respectto the cash proceeds from the Royalty Properties and the net distributable cashof the Trust. The information presented with respect to the fourth quarter of2005 reflects revenues received and costs and expenses paid by Devon in thethird quarter of 2005. On November 30, 2005, the Trust will make a cashdistribution of $5.3 million, or $0.84909 per Trust Unit, to unitholdersof record on November 15, 2005.

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| ** **                                                                       | ** ** | **Three Months Ended  September 30,** | ** ** | **Nine Months Ended  September 30,** | ** ** | **Fourth   Quarter** | ** ** |
|----------------------------------------------------------------------------------|------------|------------------------------------------------------|------------|-----------------------------------------------------|------------|---------------------------|------------|
| ** **                                                                       | ** ** | **2005**                                             | ** ** | **2004**                                            | ** ** | **2005**                  | ** ** | **2004** | ** ** | **2005** | ** ** |
| ***Volumes  and Prices***                                                        | * *   | * *                                             | * *   | * *                                            | * *   | * *                  | * *   | * * | * * |   | * * |   |   |
| Oil volumes (Bbls):                                                              |       |                                                 |       |                                                |       |                      |       |   |   |   |   |   |   |
| Wasson ODC royalty                                                               |       | 66,400                                               |       | 74,900                                              |       | 207,700                   |       | 221,900 |   |   | 66,400 |   |   |
| Wasson Willard royalty(1)                                                        |       | —                                               |       | —                                              |       | —                    |       | 12,000 |   |   | — |   |   |
| Net profits royalties                                                            |       | 58,992                                               |       | 46,161                                              |       | 148,177                   |       | 143,361 |   |   | 35,209 |   |   |
| Gas volumes (Mcf):                                                               |       |                                                 |       |                                                |       |                      |       |   |   |   |   |   |   |
| Net profits royalties                                                            |       | 329,763                                              |       | 368,353                                             |       | 1,092,002                 |       | 1,025,071 |   |   | 194,271 |   |   |
| Oil average prices ($/Bbl):                                                      |       |                                                 |       |                                                |       |                      |       |   |   |   |   |   |   |
| Wasson ODC royalty                                                               |       | $                                                    | 46.79      |                                                | $          | 35.43                     |       | $ | 44.60 |   | $ | 32.26 |   |   | $ | 58.63 |   |   |
| Wasson Willard royalty(1)                                                        |       | —                                               |       | —                                              |       | —                    |       | 28.50 |   |   | — |   |   |
| Net profits royalty                                                              |       | 38.47                                                |       | 31.23                                               |       | 38.95                     |       | 28.43 |   |   | 45.57 |   |   |
| Gas average prices ($/Mcf):                                                      |       |                                                 |       |                                                |       |                      |       |   |   |   |   |   |   |
| Net profits royalties                                                            |       | $                                                    | 5.72       |                                                | $          | 5.25                      |       | $ | 5.52 |   | $ | 4.86 |   |   | $ | 6.11 |   |   |
| ***Cash  Proceeds and Distributable Cash (in thousands, except per unit data)*** |       |                                                 |       |                                                |       |                      |       |   |   |   |   |   |   |
| Wasson ODC royalty:                                                              |       |                                                 |       |                                                |       |                      |       |   |   |   |   |   |   |
| Sales                                                                            |       | $                                                    | 3,107      |                                                | $          | 2,653                     |       | $ | 9,263 |   | $ | 7,158 |   |   | $ | 3,893 |   |   |
| Operating expenses                                                               |       | (149                                                 | )          | (194                                                | )          | (510                      | )          | (505 | ) |   | (185 | ) |   |
|                                                                             |       | 2,958                                                |       | 2,459                                               |       | 8,753                     |       | 6,653 |   |   | 3,708 |   |   |
| Wasson Willard  royalty(1):                                                      |       |                                                 |       |                                                |       |                      |       |   |   |   |   |   |   |
| Sales                                                                            |       | —                                               |       | —                                              |       | —                    |       | 342 |   |   | — |   |   |
| Operating expenses                                                               |       | —                                               |       | —                                              |       | —                    |       | (10 | ) |   | — |   |   |
|                                                                             |       | —                                               |       | —                                              |       | —                    |       | 332 |   |   | — |   |   |
| Net profits  royalty:                                                            |       |                                                 |       |                                                |       |                      |       |   |   |   |   |   |   |
| Sales                                                                            |       | 4,156                                                |       | 3,376                                               |       | 11,804                    |       | 9,054 |   |   | 2,800 |   |   |
| Proceeds from property sales                                                     |       | 2,354                                                |       | —                                              |       | 2,354                     |       | — |   |   | — |   |   |
| Operating expenses                                                               |       | (653                                                 | )          | (686                                                | )          | (2,239                    | )          | (1,874 | ) |   | (529 | ) |   |
| Capital (expenditures) recoveries                                                |       | (71                                                  | )          | (8                                                  | )          | (89                       | )          | 171 |   |   | (453 | ) |   |
|                                                                             |       | 5,786                                                |       | 2,682                                               |       | 11,830                    |       | 7,351 |   |   | 1,818 |   |   |
| Total royalties                                                                  |       | 8,744                                                |       | 5,141                                               |       | 20,583                    |       | 14,336 |   |   | 5,526 |   |   |
| Administrative fee  to Devon Energy Corporation                             |       | (76                                                  | )          | (74                                                 | )          | (227                      | )          | (220 | ) |   | (77 | ) |   |
| Payment received                                                                 |       | 8,668                                                |       | 5,067                                               |       | 20,356                    |       | 14,116 |   |   | 5,449 |   |   |
| Cash withheld for  trust expenses                                                |       | (350                                                 | )          | (225                                                | )          | (500                      | )          | (425 | ) |   | (100 | ) |   |
| Distributable cash                                                               |       | $                                                    | 8,318      |                                                | $          | 4,842                     |       | $ | 19,856 |   | $ | 13,691 |   |   | 5,349 |   |   |
| Distributable cash  per unit                                                     |       | $                                                    | 1.32023    |                                                | $          | 0.76869                   |       | $ | 3.15167 |   | $ | 2.17323 |   |   | $ | 0.84909 |   |   |

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(1)          Nine months ended September 30, 2004production, sales and operating expenses for the Wasson Willard Unit arerelated to calendar year 2003. These are the last production, sales andoperating expenses the Trust will report since the Trust’s conveyed ownershipin the Wasson Willard Unit terminated on December 31, 2003.

Sales increased $1.2 million from the third quarter of2004 to the third quarter of 2005. Sales increased $1.3 million due to a $9.05per barrel increase in the average price of oil from $33.83 per barrel in the2004 quarter to $42.88 per barrel in the 2005 quarter and due to a $0.47 perMcf increase in the average gas price from $5.25 in the 2004 quarter to $5.72in the 2005 quarter. A production decrease of 

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approximately 2,100barrels of oil equivalent (“Boe”) in the third quarter of 2005 caused sales todecrease $0.1 million.

Sales increased $4.5 million from the first ninemonths of 2004 to the first nine months of 2005. Sales increased $4.8 milliondue to a $11.57 per barrel increase in the average price of oil from $30.68 perbarrel in the first nine months of 2004 to $42.25 per barrel in the first ninemonths of 2005 and due to an $0.66 per Mcf increase in the average gas pricefrom $4.86 in the first nine months of 2004 to $5.52 during the first ninemonths of 2005. A decrease in the first nine months production of approximately10,200 Boe caused sales to decrease by $0.3 million. This production decreasewas due mainly to the termination of the Trust’s conveyed ownership in theWasson Willard Unit.

Sales decreased $0.6 million from the third quarter of2005 to the fourth quarter of 2005. Sales decreased $1.8 million due to adecrease in production of approximately 46,300 Boe. The production decrease wasprimarily due to the sale of certain Net Profits Royalties in the third quarterof 2005. Sales increased $1.2 million due to an $11.23 per barrel increase inthe average price of oil from $42.88 per barrel in the third quarter to $54.11per barrel in the fourth quarter and due to a $0.39 per Mcf increase in theaverage gas price from $5.72 in the third quarter to $6.11 in the fourthquarter.

Proceeds from the sales of property were $2.4 millionduring the third quarter of 2005 due to the sale of certain Net ProfitsRoyalties in the period.

Operating expenses decreased $0.1 million from thethird quarter of 2004 to the third quarter of 2005 and from the third quarterof 2005 to the fourth quarter of 2005. Operating expenses increased $0.4million from the first nine months of 2004 to the first nine months of 2005primarily due to increases in recurring lease operating expenses and ad valoremtaxes. Operating expenses may fluctuate from quarter to quarter due to thetiming of payments.

Proceeds from the Net Profits Royalties are net ofcapital expenditures with respect to the development of the Net ProfitsProperties. Capital expenditures were $71,000, $8,000, $89,000 and $453,000 forthe third quarter of 2005, the third quarter of 2004, the nine months ended2005 and the fourth quarter of 2005, respectively. Capital recoveries were$171,000 for the nine months ended 2004. The increase in capital expendituresfrom the third quarter of 2005 to the fourth quarter of 2005 is primarily dueto increased recompletion activity.

Cash withheld for trustexpenses decreased $250,000 from the third quarter of 2005 to the fourthquarter of 2005 because the third quarter included cash withheld for therepayment of advances from Devon Energy Corporation.

** **

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**ForwardLooking Statements**

Management’s Discussion and Analysis of FinancialCondition and Results of Operations includes certain statements (other thanstatements of historical fact) that constitute forward-looking statementswithin the meaning of Section 27A of the Securities Act of 1933 andSection 21E of the Securities Exchange Act of 1934. When used herein, thewords “anticipates,” “expects,” “believes,” “intends” or “projects” and similarexpressions are intended to identify forward-looking statements. It isimportant 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 independent reserve engineers. Neitherthe Trustee, the Trust nor the Holders will be able to influence or 

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control the operation orfuture development of the Royalty Properties. See Item 1 “Business—OtherMatters” in the Trust’s Form 10-K for the year ended December 31,2004 for a description of certain risks relating to these arrangements andreliance.

**Changes in Internal Controls.**Tothe knowledge of the Trustee, there have not been any changes in the Trust’sinternal control over financial reporting during the fiscal quarter ended September 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 IIOTHER INFORMATION**

**Items1, 2, 3, 4 & 5 of Part II are not applicable and have beenomitted.**

**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   th day of November,2005.

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

 

Date: November 4, 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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