Attached files
file | filename |
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EX-23 - EX-23 - SABINE ROYALTY TRUST | d79582exv23.htm |
EX-31 - EX-31 - SABINE ROYALTY TRUST | d79582exv31.htm |
EX-32 - EX-32 - SABINE ROYALTY TRUST | d79582exv32.htm |
EX-99.1 - EX-99.1 - SABINE ROYALTY TRUST | d79582exv99w1.htm |
10-K - FORM 10-K - SABINE ROYALTY TRUST | d79582e10vk.htm |
Exhibit 99.2
Report of
Independent Registered Public Accounting Firm
To the
Trustee on Behalf of Unit holders of Sabine Royalty Trust:
We have audited the accompanying Statements of Fees and Expenses
(as defined in Exhibit C to the Sabine Royalty
Trust Agreement) paid by Sabine Royalty Trust to Bank of
America, N.A., (the Trustee), as trustee and escrow
agent, for the years ended December 31, 2010, 2009 and
2008. These statements are the responsibility of the
Trustees management. Our responsibility is to express an
opinion on these statements based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain
reasonable assurance about whether the Statements of Fees and
Expenses are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the Statements of Fees and Expenses. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
As described in Note 3, the Statements of Fees and Expenses
were prepared on a modified cash basis of accounting, which is a
comprehensive basis of accounting other than accounting
principles generally accepted in the United States of America.
In our opinion, the Statements of Fees and Expenses referred to
above present fairly, in all material respects, the fees and
expenses paid by Sabine Royalty Trust to Bank of America, N.A.,
as trustee and escrow agent, for the years ended
December 31, 2010, 2009 and 2008, on the basis of
accounting described in Note 3.
/s/ PricewaterhouseCoopers LLP
Dallas, Texas
February 28, 2011
STATEMENTS
OF FEES AND EXPENSES
PAID BY SABINE ROYALTY TRUST TO
BANK OF AMERICA, N.A., AS
TRUSTEE AND ESCROW AGENT, FOR EACH OF THE THREE
YEARS IN THE PERIOD ENDED DECEMBER 31, 2010
2010 | 2009 | 2008 | ||||||||||
Trustees fee
|
$ | 320,721 | $ | 331,519 | $ | 331,898 | ||||||
Escrow agents fee
|
962,144 | 994,537 | 995,680 | |||||||||
Total fees and expenses
|
$ | 1,282,865 | $ | 1,326,056 | $ | 1,327,578 | ||||||
The accompanying notes are an integral part of these statements.
Notes
1. Sabine Royalty Trust (the Trust) is
an express trust formed under the laws of Texas by the Sabine
Corporation Royalty Trust Agreement (the Trust
Agreement) made and entered into effective as of
December 31, 1982, between Sabine Corporation
(Sabine), as trustor, and Bank of America, N.A. (the
Bank), as successor trustee (the
Trustee). Contemporaneously with the execution of
the Trust Agreement, Sabine, the Trustee and the predecessor of
the Bank, as escrow agent (the Escrow Agent),
entered into an escrow agreement which establishes an escrow
(the Escrow). Prior to distribution of units of
beneficial interest (the Units) in the Trust to
Sabines shareholders, Sabine transferred to the Trust
royalty and mineral interests, including landowners
royalties, overriding royalty interests, minerals (other than
executive rights, bonuses and delay rentals), production
payments and other similar, non-participatory interests, in
certain producing and proved undeveloped oil and gas properties
in six states (the Royalty Properties).
In May 1988, Sabine was acquired by Pacific Enterprise
(Pacific), a California corporation. Through a
series of mergers, Sabine was merged into Pacific Enterprises
Oil Company (USA) (Pacific (USA)), a California
corporation and a wholly owned subsidiary of Pacific, effective
January 1, 1990. This acquisition and the subsequent
mergers had no effect on the Units. Pacific (USA), as successor
to Sabine, has assumed by operation of law all of Sabines
rights and obligations with respect to the Trust.
The compensation agreement under the Trust Agreement provides
for a cost plus fee payable to the Bank for all
services rendered in its capacities as Trustee and as Escrow
Agent. Generally, the fees payable to the Bank are calculated by
dividing the expenses incurred by the Bank, as Trustee and as
Escrow Agent, solely for services provided by the Bank in the
administration of the Trust and the Escrow by seven-tenths
(0.7). Professional and other noncontributing (out-of-pocket)
expenses incurred by the Bank, as Trustee or as Escrow Agent, as
the case may be, in the performance of its duties in the
foregoing capacities are charged to the Trust or the Escrow, as
the case may be, at cost. These expenses do not contribute to
the fees payable to the Bank described above. Annually, the
Trustee must estimate Trust and Escrow expenses contributing to
the fee for the forthcoming year and publish this amount in the
Trusts first quarterly report to Unit holders. The Trustee
can be penalized by forfeiture of reimbursement for part of its
expenses if such expenses exceed the estimate. The Trustee also
can earn a bonus by administering the Trust for total costs that
are lower than the estimate. The Bank elected to forego bonuses
earned of $97,135, $48,944 and $47,422 in 2010, 2009, 2008,
respectively.
2. Escrow Agents fees and Trustees fees
consist of a profit margin plus all fully allocated costs
incurred by the Bank, as Trustee and as Escrow Agent, in
performing administrative services to the Trust as specified in
the Trust Agreement. Allocated costs do not include any
professional and related expenses paid to third parties.
All costs incurred by the Bank in its capacities as Trustee and
as Escrow Agent are accumulated in one account. Fees based
thereon are allocated between the Trustee function and the
Escrow Agent function according to the actual administrative
services rendered by the Bank in each capacity. Any
determinations by
the Bank as to the allocation of the fee between the Trustee and
the Escrow Agent are conclusive and binding on the Unit holders
and Pacific (USA), but in no event does the Banks
allocation affect the aggregate fee payable to the Bank.
3. The Statements of Fees and Expenses are prepared
on a modified cash basis, which is a comprehensive basis of
accounting other than accounting principles generally accepted
in the United States of America. Trust expenses include payments
made during the accounting period. Expenses are accrued to the
extent of amounts that become payable on the next monthly record
date following the end of the accounting period. These
statements differ from statements prepared in conformity with
accounting principles generally accepted in the United States of
America because expenses other than those expected to be paid on
the following monthly record date are not accrued.
This comprehensive basis of accounting other than accounting
principles generally accepted in the United States of America
corresponds to the accounting permitted for royalty trusts by
the U.S. Securities and Exchange Commission, as specified by
Staff Accounting Bulletin Topic 12:E, Financial Statements of
Royalty Trusts.