HUGOTON ROYALTY TRUST - Quarter Report: 2003 March (Form 10-Q)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

Commission File Number: 1-10476

Hugoton Royalty Trust

(Exact name of registrant as specified in its charter)

Texas		58-6379215
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Bank of America, N.A., P.O. Box 830650, Dallas, Texas		75283-0650
(Address of principal executive offices)		(Zip Code)

(877) 228-5083
(Registrant’s telephone number, including area code)

NONE
(Former name, former address and former fiscal year, if change 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 ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ý No o

Indicate the number of units of beneficial interest outstanding, as of the latest practicable date:

Outstanding as of May 1, 2003

40,000,000

HUGOTON ROYALTY TRUST

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003

	TABLE OF CONTENTS

	Glossary of Terms

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Independent Accountants’ Review Report

	Condensed Statements of Assets, Liabilities and Trust Corpus at March 31, 2003 and December 31, 2002

	Condensed Statements of Distributable Income for the Three Months Ended March 31, 2003 and 2002

	Condensed Statements of Changes in Trust Corpus for the Three Months Ended March 31, 2003 and 2002

	Notes to Condensed Financial Statements

Item 2.	Trustee’s Discussion and Analysis

Item 3.	Quantitative and Qualitative Disclosures about Market Risk

Item 4.	Controls and Procedures

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings

Item 6.	Exhibits and Reports on Form 8-K

	Signatures

	Certifications

HUGOTON ROYALTY TRUST

GLOSSARY OF TERMS

The following are definitions of significant terms used in this Form 10-Q:

Bbl	Barrel (of oil)

Mcf	Thousand cubic feet (of natural gas)

MMBtu	One million British Thermal Units, a common energy measurement

net proceeds	Gross proceeds received by XTO Energy from sale of production from the underlying properties, less applicable costs, as defined in the net profits interest conveyances

net profits income	Net proceeds multiplied by the net profits percentage of 80% and paid to the trust by XTO Energy. “Net profits income” is referred to as “royalty income” for income tax purposes.

net profits interest	An interest in an oil and gas property measured by net profits from the sale of production, rather than a specific portion of production. The following defined net profits interests were conveyed to the trust from the underlying properties:

	80% net profits interests - interests that entitle the trust to receive 80% of the net proceeds from the underlying properties that are working interests in Kansas, Oklahoma and Wyoming

underlying properties	XTO Energy’s interest in certain oil and gas properties from which the net profits interests were conveyed. The underlying properties include working interests in predominantly gas-producing properties located in Kansas, Oklahoma and Wyoming.

working interest	An operating interest in an oil and gas property that provides the owner a specified share of production that is subject to all production and development costs

HUGOTON ROYALTY TRUST

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

The condensed financial statements included herein are presented, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted pursuant to such rules and regulations, although the trustee believes that the disclosures are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction with the trust’s financial statements and the notes thereto included in the trust’s Annual Report on Form 10-K. In the opinion of the trustee, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the assets, liabilities and trust corpus of the Hugoton Royalty Trust at March 31, 2003 and the distributable income and changes in trust corpus for the three-month periods ended March 31, 2003 and 2002 have been included. Distributable income for such interim periods is not necessarily indicative of the distributable income for the full year.

INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

Bank of America, N.A., as Trustee
for the Hugoton Royalty Trust:

We have reviewed the accompanying condensed statement of assets, liabilities and trust corpus of the Hugoton Royalty Trust as of March 31, 2003 and the related condensed statements of distributable income and changes in trust corpus for the three-month periods ended March 31, 2003 and 2002. These condensed financial statements are the responsibility of the trustee.

We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

The accompanying condensed financial statements are prepared on a modified cash basis as described in Note 1 which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America.

Based on our review, we are not aware of any material modifications that should be made to the condensed financial statements referred to above for them to be in conformity with the basis of accounting described in Note 1.

We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the statement of assets, liabilities and trust corpus of the Hugoton Royalty Trust as of December 31, 2002, and the related statements of distributable income and changes in trust corpus for the year then ended (not presented herein), included in the Trust’s 2002 Annual Report on Form 10-K, and in our report dated March 14, 2003, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed statement of assets, liabilities and trust corpus as of December 31, 2002 is fairly stated, in all material respects, in relation to the statement of assets, liabilities and trust corpus included in the trust’s 2002 Annual Report on Form 10-K from which it has been derived.

KPMG LLP

Dallas, Texas
April 30, 2003

HUGOTON ROYALTY TRUST

Condensed Statements of Assets, Liabilities and Trust Corpus

	March 31, 2003		December 31, 2002
	(Unaudited)

ASSETS

Cash and short-term investments	$	6,320,240	$	3,227,840

Net profits interests in oil and gas properties - net	202,519,961		205,493,243

	$	208,840,201	$	208,721,083

LIABILITIES AND TRUST CORPUS

Distribution payable to unitholders	$	6,320,240	$	3,227,840

Trust corpus (40,000,000 units of beneficial interest authorized and outstanding)	202,519,961		205,493,243

	$	208,840,201	$	208,721,083

The accompanying notes to condensed financial statements are an integral part of these statements.

HUGOTON ROYALTY TRUST

Condensed Statements of Distributable Income (Unaudited)

	Three Months Ended March 31
	2003		2002

Net profits income	$	16,412,178	$	7,412,420

Interest income	5,578		3,727

Total income	16,417,756		7,416,147

Administration expense	52,196		63,507

Distributable income	$	16,365,560	$	7,352,640

Distributable income per unit (40,000,000 units)	$	0.409139	$	0.183816

The accompanying notes to condensed financial statements are an integral part of these statements.

HUGOTON ROYALTY TRUST

Condensed Statements of Changes in Trust Corpus (Unaudited)

	Three Months Ended March 31
	2003			2002

Trust corpus, beginning of period	$	205,493,243		$	215,346,192

Amortization of net profits interests	(2,973,282		)	(2,609,565		)

Distributable income	16,365,560			7,352,640

Distributions declared	(16,365,560		)	(7,352,640		)

Trust corpus, end of period	$	202,519,961		$	212,736,627

The accompanying notes to condensed financial statements are an integral part of these statements.

HUGOTON ROYALTY TRUST

Notes to Condensed Financial Statements (Unaudited)

1. Basis of Accounting

The financial statements of Hugoton Royalty Trust are prepared on the following basis and are not intended to present financial position and results of operations in conformity with generally accepted accounting principles (“GAAP”):

• Net profits income recorded for a month is the amount computed and paid by the interest owner, XTO Energy Inc., to Bank of America, N.A., as trustee for the trust. Net profits income consists of net proceeds received by XTO Energy from the underlying properties in the prior month, multiplied by a net profits percentage of 80%.

Costs deducted in the calculation of net proceeds for the 80% net profits interests generally include applicable taxes, transportation, marketing and legal costs, production expenses, development costs, operating charges and other costs.

• Net profits income is computed separately for each of three conveyances under which the net profits interests were conveyed to the trust. If monthly costs exceed revenues for any conveyance, such excess costs must be recovered, with accrued interest, from future net proceeds of that conveyance and cannot reduce net proceeds from the other conveyances.

• Trust expenses are recorded based on liabilities paid and cash reserves established by the trustee for liabilities and contingencies.

• Distributions to unitholders are recorded when declared by the trustee.

The trust’s financial statements differ from those prepared in conformity with GAAP because revenues are recognized when received rather than accrued in the month of production, expenses are recognized when paid rather than when incurred and certain cash reserves may be established by the trustee for contingencies which would not be recorded under GAAP.

The initial carrying value of the net profits interests of $247,066,951 represents XTO Energy’s historical net book value for the interests on December 1, 1998, the date of the transfer to the trust. Amortization of the net profits interests is calculated on a unit-of-production basis and charged directly to trust corpus. Accumulated amortization was $44,546,990 as of March 31, 2003 and $41,573,708 as of December 31, 2002.

2. Development Costs

The following summarizes actual development costs, the amount of development costs deducted in the calculation of net profits income and the cumulative actual development costs (over) under the amount deducted:

	Three Months Ended March 31
	2003			2002

Cumulative development costs (over) under the amount deducted - beginning of period	$	3,089,563		$	(4,778,880		)
Actual development costs	(2,639,695		)	(1,235,945			)
Amount deducted	3,799,343			5,783,333
Cumulative development costs (over) under the amount deducted - end of period	$	4,249,211		$		(231,492	)

Based on the 2003 budget, XTO Energy decreased the monthly development cost deduction from $1.9 million to $1 million beginning with the February 2003 distribution.

3. Litigation

XTO Energy is a defendant in two separate lawsuits that could, if adversely determined, decrease future trust distributable income. Any damages relating to production prior to December 1, 1998, the creation date of the trust, will be borne by XTO Energy.

On April 3, 1998, a class action lawsuit, Booth, et al. v. Cross Timbers Oil Company, was filed in the District Court of Dewey County, Oklahoma by royalty owners of natural gas wells in Oklahoma. The plaintiffs allege that since 1991, XTO Energy has underpaid royalty owners as a result of reducing royalties for improper charges for production, marketing, gathering, processing and transportation costs and selling natural gas through affiliated companies at prices less favorable than those paid by third parties. The parties have entered into a settlement agreement under which the trust’s portion of the settlement will be approximately $850,000, or 2.1 cents per unit. This amount reflects the trust’s 80% share of the settlement relating to production from the underlying properties for periods since December 1, 1998. The court approved this settlement in April 2003. Assuming that no appeal is filed, and based on XTO Energy’s anticipated settlement payment date of July 2003, this amount will reduce the trust’s August 2003 distribution, which is paid to unitholders in September. The effect of the settlement on future distributions for other months will not be significant.

A second lawsuit, United States of America ex rel. Grynberg v. Cross Timbers Oil Company, et al., was filed in the United States District Court for the Western District of Oklahoma. This action alleges that XTO Energy underpaid royalties on natural gas produced from federal leases and lands owned by Native Americans in amounts in excess of 20% as a result of mismeasuring the volume of natural gas and wrongfully analyzing its heating content during at least the past ten years. The suit, which was brought under the qui tam provisions of the U.S. False Claims Act, seeks treble damages for the unpaid royalties (with interest), civil penalties between $5,000 and $10,000 for each violation of the U.S. False Claims Act, and an order for XTO Energy to cease the allegedly improper measuring practices. The cases against XTO Energy and other defendants have been consolidated in the United States District Court for

Wyoming. While XTO Energy is unable to predict the outcome of this case or estimate the amount of any possible loss, it has informed the trustee that it believes that the allegations of this lawsuit are without merit and intends to vigorously defend the action. However, an order to change measuring practices or a related settlement could adversely affect the trust by reducing net proceeds in the future by an amount that is presently not determinable, but, in XTO Energy management’s opinion, is not currently expected to be material to the trust’s annual distributable income, financial position or liquidity.

Certain of the trust properties are involved in various other lawsuits and certain governmental proceedings arising in the ordinary course of business. XTO Energy has advised the trustee that it does not believe that the ultimate resolution of these claims will have a material effect on trust annual distributable income, financial position or liquidity.

Item 2. Trustee’s Discussion and Analysis.

The following discussion should be read in conjunction with the trustee’s discussion and analysis contained in the trust’s 2002 annual report, as well as the condensed financial statements and notes thereto included in this quarterly report on Form 10-Q. The trust’s Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports are available on the trust’s web site at www.hugotontrust.com.

Distributable Income

For the quarter ended March 31, 2003 net profits income was $16,412,178, as compared to $7,412,420 for first quarter 2002. Increased net profits income is primarily the result of higher oil and gas prices. See “Net Profits Income” below.

After adding interest income of $5,578 and deducting administration expense of $52,196, distributable income for the quarter ended March 31, 2003 was $16,365,560, or $0.409139 per unit of beneficial interest. Administration expense for the quarter decreased 18% from the prior year quarter primarily because of the timing of expenditures. For first quarter 2002, distributable income was $7,352,640, or $0.183816 per unit. Distributions to unitholders for the quarter ended March 31, 2003 were:

Record Date	Payment Date	Distribution per Unit

January 31, 2003	February 14, 2003	$	0.110486
February 28, 2003	March 14, 2003	0.140647
March 31, 2003	April 14, 2003	0.158006

		$	0.409139

Net Profits Income

Net profits income is recorded when received by the trust, which is the month following receipt by XTO Energy, and generally two months after oil and gas production. Net profits income is generally affected by three major factors:

• oil and gas sales volumes,

• oil and gas sales prices, and

• costs deducted in the calculation of net profits income.

The following is a summary of the calculation of net profits income received by the trust:

	Three Months Ended March 31 (a)						Increase (Decrease)
	2003			2002
Sales Volumes

Gas (Mcf) (b)
Underlying properties	8,168,421			9,027,411			(10	)%
Average per day	88,787			98,124			(10	)%
Net profits interests	4,329,031			3,118,267			39	%

Oil (Bbls) (b)
Underlying properties	86,159			90,107			(4	)%
Average per day	937			979			(4	)%
Net profits interests	47,447			34,686			37	%

Average Sales Prices
Gas (per Mcf)	$	3.80		$	2.38		60	%
Oil (per Bbl)	$	28.76		$	18.80		53	%

Revenues
Gas sales	$	31,039,748		$	21,445,257		45	%
Oil sales	2,477,575			1,694,435			46	%
	33,517,323			23,139,692			45	%
Costs
Taxes, transportation and other	3,261,979			1,690,475			93	%
Production expense	3,999,585			4,401,573			(9	)%
Development costs (c)	3,799,343			5,783,333			(34	)%
Overhead	1,941,676			1,998,786			(3	)%
Total Costs	13,002,583			13,874,167			(6	)%

Other Proceeds
Property sales	482			—			100	%

Net Proceeds	20,515,222			9,265,525			121	%

Net Profits Percentage	80		%	80		%

Net Profits Income	$	16,412,178		$	7,412,420		121	%

(a) Because of the two-month interval between time of production and receipt of net profits income by the trust, oil and gas sales for the quarter ended March 31 generally represent production for the period November through January.

(b) Oil and gas sales volumes are allocated to the net profits interests based upon a formula that considers oil and gas prices and the total amount of production expenses and development costs. Changes in any of these factors may result in disproportionate fluctuations in volumes allocated to the net profits interests. Therefore, comparative discussion of oil and gas sales volumes is based on the underlying properties.

(c) See Note 2 to Financial Statements.

The following are explanations of significant variances from first quarter 2002 to 2003:

Sales Volumes

First quarter gas sales volumes decreased 10% and oil sales volumes decreased 4% primarily because of natural production decline and timing of cash receipts, partially offset by increased production from new wells and workovers. In addition, decreased gas sales volumes were partially offset by prior period volume adjustments recorded in first quarter 2002.

Sales Prices

Gas

The first quarter 2003 average gas price was $3.80 per Mcf, a 60% increase from the first quarter 2002 average gas price of $2.38. The winter of 2001-2002 was one of the warmest on record, resulting in higher than average gas storage levels and lower gas prices in first quarter 2002. Prices gradually climbed in 2002 as a result of low levels of drilling activity, increased industrial demand, colder weather late in 2002 and international instability. With colder than normal weather and seasonally low gas storage levels, gas prices have continued to rise in 2003. The average NYMEX price for February through April 2003 was $5.92 per MMBtu. At May 1, 2003, the average NYMEX futures price for the following twelve months was $5.35 per MMBtu. Recent trust gas prices have averaged approximately $2.10 per MMBtu lower than the NYMEX price.

Oil

The first quarter 2003 average oil price was $28.76 per Bbl, a 53% increase from the first quarter 2002 average oil price of $18.80. OPEC members agreed to cut daily production by 1.5 million barrels during 2002 to support oil prices affected by weak demand and excess supply. Oil prices increased during 2002 largely because of OPEC production discipline and rising uncertainty surrounding the Middle East. OPEC members agreed to increase daily oil production 1.5 million barrels beginning February 1, 2003, to help stabilize a volatile world market. Oil prices have remained volatile in 2003, however, because of the war in Iraq and anticipated resumption of Iraqi oil exports. On April 24, 2003, OPEC members tentatively agreed to reduce daily oil production by 2 million barrels beginning June 1, 2003. The average NYMEX price for February through April 2003 was $32.38 per Bbl. At May 1, 2003, the average NYMEX futures price for the following twelve months was $25.22 per Bbl. Recent trust oil prices have approximated the NYMEX price.

Costs

Taxes

Taxes, transportation and other increased 93% for the first quarter primarily because of increased Kansas property taxes, the timing of Wyoming property tax disbursements and higher production taxes related to increased revenues.

Production

Production expense decreased 9% primarily because of decreased labor costs related to timing of disbursements.

Development

Development costs deducted in the calculation of net profits income are based on the 2003 budget. These development costs decreased 34% for first quarter 2003 from the prior year quarter because of reduced drilling activity. During the first three months of 2003, three wells were started on the underlying properties and were pending completion at March 31. XTO Energy plans to drill approximately 23 wells during 2003. All 2003 drilling is expected to be in western Oklahoma and southwestern Wyoming.

As of December 31, 2002, cumulative development costs deducted exceeded actual costs by $3.1 million. In calculating net profits income for the quarter ended March 31, 2003, XTO Energy deducted budgeted development costs of $3.8 million. After considering actual development costs of $2.6 million for the quarter, cumulative development costs deducted exceeded actual costs by $4.3 million. This excess is expected to be reduced as 2003 development activity is billed and paid.

Overhead

Overhead decreased 3% primarily because of the annual rate adjustment based on an industry index.

Forward-Looking Statements

This Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact included in this Form 10-Q, including, without limitation, statements regarding the net profits interests, underlying properties, development activities, development, production and other costs, oil and gas prices, future drilling plans and industry and market conditions, are forward-looking statements that are subject to risks and uncertainties which are detailed in Part II, Item 7 of the trust’s Annual Report on Form 10-K for the year ended December 31, 2002, which is incorporated by this reference as though fully set forth herein. Although XTO Energy and the trustee believe that the expectations reflected in such forward-looking statements are reasonable, neither XTO Energy nor the trustee can give any assurance that such expectations will prove to be correct.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

There have been no material changes in the trust’s market risks, as disclosed in Part II, Item 7a of the trust’s Annual Report on Form 10-K for the year ended December 31, 2002.

Item 4. Controls and Procedures.

Within the 90 days prior to the date of this report, the trustee carried out an evaluation of the effectiveness of the design and operation of the trust’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the trustee concluded that the trust’s disclosure controls and procedures are effective in timely alerting the trustee to material information relating to the trust required to be included in the trust’s periodic filings with the Securities and Exchange Commission. In its evaluation of disclosure controls and procedures, the trustee has relied, to the extent considered reasonable, on information provided by XTO Energy. No significant changes in the trust’s internal controls or other factors that could affect these controls have occurred subsequent to the date of such evaluation.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Items 2 through 5. Not applicable.

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits.

Exhibit Number
and Description

(15) Awareness letter of KPMG LLP

(99) Items 7 and 7a to the Annual Report on Form 10-K for Hugoton Royalty Trust filed with the Securities and Exchange Commission on March 31, 2003 (incorporated herein by reference)

(99.1) Trustee Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K.

On January 22, 2003, the trust filed a report on Form 8-K dated January 21, 2003, to report that XTO Energy’s 2003 development cost budget for the underlying properties is approximately $16 million, which will be deducted in the calculation of net profits income at a monthly rate of $1,000,000 for the February 2003 through March 2004 distributions.

On March 20, 2003, the trust filed a report on Form 8-K dated March 20, 2003, to announce XTO Energy’s settlement of the Booth lawsuit, the trust’s portion of which is approximately $850,000, or 2.1 cents per unit, and is anticipated to reduce the trust’s August 2003 distribution which will be paid to unitholders in September 2003, after court approval.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

	HUGOTON ROYALTY TRUST
	By BANK OF AMERICA, N.A., TRUSTEE


	By	/s/ NANCY G. WILLIS
		Nancy G. Willis
		Assistant Vice President


	XTO ENERGY INC.


Date: May 6, 2003	By	/s/ LOUIS G. BALDWIN
		Louis G. Baldwin
		Executive Vice President and Chief Financial Officer

CERTIFICATIONS

I, Nancy G. Willis, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Hugoton Royalty Trust, for which Bank of America, N.A. acts as Trustee;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, distributable income and changes in trust corpus of the registrant as of, and for, the periods presented in this quarterly report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14), or for causing such procedures to be established and maintained, for the registrant and I have:

a) designed such disclosure controls and procedures, or caused such controls and procedures to be designed, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report my conclusions about the effectiveness of the disclosure controls and procedures based on my evaluation as of the Evaluation Date;

5. I have disclosed, based on my most recent evaluation, to the registrant’s auditors:

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves persons who have a significant role in the registrant’s internal controls; and

6. I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of my most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

In giving the certifications in paragraphs 4, 5 and 6 above, I have relied to the extent I consider reasonable on information provided to me by XTO Energy Inc.

Date: May 6, 2003	By	/s/ NANCY G. WILLIS
		Nancy G. Willis
		Assistant Vice President Bank of America, N.A.