Item 1.01 Entry into a Material Definitive Agreement.
On November 8, 2007, The Bank of New York Trust Company, N.A., as
trustee (the Trustee) of Santa Fe Energy Trust entered into a Purchase and
Sale Agreement (the Purchase Agreement) with Amen Properties, Inc. (Amen),
pursuant to which Amen has agreed to purchase all of the net profits royalties
held by the Trust for approximately $50.4 million, subject to certain
adjustments, and subject to customary closing conditions. The assets to be sold consist of the Trusts
interests in certain royalty interests and working interests in oil and gas
properties located in a number of different states.
The effective date of the sale under the Purchase Agreement will be
October 1, 2007. Subject to various
limitations, the Purchase Agreement provides for potential adjustments to the
purchase price resulting from, among other things, title and environmental
issues, if any, affecting the interests to be sold, adjustments for
overproduction or underproduction of natural gas from the properties to which
the interests relate, and changes in excess of specified amounts to the price
of West Texas Intermediate Crude Oil for December 2008 as of the business day
prior to the closing date. The Purchase
Agreement also provides for an increase to the purchase price in the event that
a revised reserve report (the Revised Reserve Report) relating to the interests
being sold to be prepared and delivered to the parties prior to closing
reflects an increase in the aggregate net present value of the interests as of
December 31, 2006, when compared to the currently available reserve report, and
after making certain adjustments to the Revised Reserve Report in accordance
with the Purchase Agreement. The
Purchase Agreement further provides that if any such increase to the purchase
price (based on the Revised Reserve Report) exceeds $4 million, each of the
Trustee and Amen have will the right to terminate the Purchase Agreement. Investors should be aware that the Revised
Reserve Report may not result in any increase to the purchase price at all, and
that the aggregate effects of the adjustments to the purchase price contemplated
by the Purchase Agreement could be positive or negative.
The closing is conditioned on, among other things, the Trustees
receipt of an opinion from a nationally recognized investment banking firm
regarding the fairness, from a financial point of view, of the transactions
contemplated by the Purchase Agreement. The
Purchase Agreement includes other conditions, representations, warranties,
covenants and other customary provisions, including provisions limiting the
types and amounts of any claims the parties might otherwise assert against each
other and providing limitations on the time after the closing during which any
such claims may be made.
The description herein of the material terms of the Purchase Agreement
is qualified in its entirety by reference to the Purchase Agreement, which is
attached hereto as Exhibit 10.1 and is incorporated herein by reference.
The Trustee is required by the documents governing the Trust to sell
the properties. The parties intend to
consummate the transaction on or about December 17, 2007. If the sale closes as anticipated, the
Trustee intends to distribute the net proceeds of the sale (after deducting
amounts necessary to pay any fees,
expenses, liabilities and other obligations of the Trust, and after setting
aside any amounts the Trustee determines to hold in reserve) to unitholders as
part of the quarterly Trust distribution for the quarter ending December 31,
2007.
Amen owns 139,500 units of the Trust and is part of an affiliated
ownership group that owns 701,393 units of the Trust, approximately 11% of the
outstanding units. Amen will continue to
receive regular distributions from the Trust until its liquidation on or before
February 15, 2008.
The
Trust will be liquidated on or before February 15, 2008. The Trustee will instruct the Trusts
transfer agent to stop transfer of the Trusts units immediately following the
termination of the Trust.
On
November 8, 2007, the Trustee issued a press release regarding the Purchase and
Sale Agreement described above, a copy of which is furnished herewith and
incorporated herein by reference.
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