Texas Standard Oil Co – ‘S-4/A’ on 4/3/02

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Pre-Effective Amendment to Registration of Securities Issued in a Business-Combination Transaction   —   Form S-4
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-4/A       Texas Standard Oil Company - Amendment #2            104    501K 
 2: EX-99.1     Form of Letter to Record Holders                       2±     6K 
 3: EX-99.2     Form of Letter to Clients                              2      9K 
 4: EX-99.3     Form of Letter of Transmittal                          8     41K 

S-4/A   —   Texas Standard Oil Company – Amendment #2
Document Table of Contents

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 3, 2002 

                                                      REGISTRATION NO. 333-76552
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------- 

AMENDMENT NO. 2 

TO

FORM S-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 

TEXAS STANDARD OIL COMPANY
(Exact name of registrant as specified in its charter)

                                                                [Download Table]
                                                                                  
             TEXAS                           1311                   76-0675803    
(State or other jurisdiction of  (Primary standard industrial    (I.R.S. Employer 
 incorporation or organization)  classification code number)   Identification No.)

                                                        [Enlarge/Download Table]
                                                                                                                  
            6371 RICHMOND AVENUE, SUITE 100                                    CHIP LANGSTON                      
                  HOUSTON, TEXAS 77057                                6371 Richmond Avenue, Suite 100             
                     (713) 655-1195                                         Houston, Texas 77057                  
  (Address, including zip code, and telephone number,                          (713) 655-1195                     
                       including                         (Name, address, including zip code, and telephone number,
area code, of Registrant's principal executive offices)          including area code, of agent for service)       

COPIES TO:

GEORGE G. YOUNG III 
HAYNES AND BOONE, LLP 
1000 LOUISIANA STREET, SUITE 4300 
HOUSTON, TEXAS 77002
(713) 547-2000
(713) 547-2600 (FACSIMILE)

  APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES        
EFFECTIVE.                                                                      

If the securities being registered on this form are being offered in    
connection with the formation of a holding company and there is compliance with 
General Instruction G, check the following box. [ ]                             

If this form is filed to register additional securities for an offering 
pursuant to Rule 462(b) under the Securities Act, check the following box and   
list the Securities Act registration statement number of the earlier effective  
registration statement for the same offering. [ ]  ________                     

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act   
registration statement number of the earlier effective registration statement   
for the same offering. [ ] ________                                             

CALCULATION OF REGISTRATION FEE 

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                                                                     PROPOSED MAXIMUM     PROPOSED MAXIMUM                       
               TITLE OF SHARES                    AMOUNT TO BE      OFFERING PRICE PER   AGGREGATE OFFERING       AMOUNT OF      
              TO BE REGISTERED                     REGISTERED             SHARE                PRICE         REGISTRATION FEE(2) 
---------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                 
Common Stock, par value $0.01 per share(1)...       748,770               $1.20               $898,524              $82.66       
---------------------------------------------------------------------------------------------------------------------------------
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(1) Represents the maximum number of shares of Texas Standard common stock, par 
    value $0.01 per share, estimated to be issuable upon the consummation of the
  exchange offer for units of the Freeport-McMoRan Oil and Gas Realty Trust.
The proposed maximum offering price per share was calculated pursuant to
 Rule 457(f) of the Securities Act of 1933, as amended, and solely for the
purpose of calculating the registration fee, based on the average of the
high and low sales price of $.06 on January 7, 2002 of a unit of the    
Freeport-McMoRan Oil and Gas Royalty Trust multiplied by 20 units.      

(2) A filing fee of $222.47 has been previously paid.                           

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION       
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF  
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME     
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), 
MAY DETERMINE.                                                                  
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TEXAS STANDARD OIL COMPANY

OFFER TO EXCHANGE 
COMMON STOCK OF TEXAS STANDARD OIL COMPANY
FOR 
UNITS OF THE FREEPORT-MCMORAN OIL AND GAS ROYALTY TRUST 

  Expiration Date.  The exchange offer expires at 5:00 p.m., New York City
time, on May 6, 2002, unless extended. Units tendered pursuant to the offer may 
be withdrawn at any time prior to the expiration of the offer.                  

  Exchange Ratio.  We will issue one share of our common stock in exchange
for every 20 units of the Freeport-McMoRan Oil and Gas Royalty Trust tendered to
us by holders of record of units of the Trust. We will not issue any fractional 
shares. We will determine the number of shares of common stock to be issued to  
each tendering holder by dividing the number of units tendered by 20 and        
rounding up to the nearest whole number.                                        

   Conditions.  Our obligation to complete the exchange offer is conditioned
on at least 50% of the total outstanding units being tendered for exchange and  
not withdrawn.                                                                  

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

    YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 7 OF THIS
PROSPECTUS BEFORE PARTICIPATING IN THE EXCHANGE OFFER.                          

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

  THESE ARE SPECULATIVE SECURITIES. YOU SHOULD PARTICIPATE IN THE EXCHANGE
OFFER ONLY IF YOU CAN AFFORD A COMPLETE LOSS OF YOUR INVESTMENT.                

 NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A     
CRIMINAL OFFENSE.                                                               

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

The date of this Prospectus is April 3, 2002

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TABLE OF CONTENTS 

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QUESTIONS AND ANSWERS.......................................   iv 
SUMMARY.....................................................    1 
  Information about Texas Standard and the Trust............    1 
  The Exchange Offer........................................    2 
  Our Plans for the Future..................................    2 
  Risk Factors..............................................    2 
  Method of Determining Exchange Values.....................    3 
  Appraisal Rights; Investor Lists..........................    3 
  Shareholder Approval and Regulatory Requirements..........    3 
  Accounting Treatment......................................    4 
  Tax Consequences..........................................    4 
  Recommendation of the Trustee.............................    4 
  Comparative Rights of Security Holders....................    4 
  Unaudited Pro Forma Financial Data........................    4 
  Market Price Information..................................    4 
  Comparative Per Share Data................................    5 
FORWARD-LOOKING STATEMENTS..................................    6 
RISK FACTORS................................................    7 
  Risks Related to the Transaction..........................    7 
  Risk Factors Relating to Our Business.....................    8 
  Risk Factors Related to Our Common Stock..................   14 
BACKGROUND AND REASONS FOR THE EXCHANGE OFFER...............   16 
  Background of the Trust...................................   16 
  Background of the Exchange Offer..........................   16 
  Reasons for the Exchange Offer............................   21 
  Other Transactions and Relationships......................   21 
  Alternatives to the Exchange Offer........................   22 
THE EXCHANGE OFFER..........................................   22 
  Terms of the Exchange Offer...............................   22 
  Issuance of Shares; Fractional Shares.....................   22 
  Expiration Date; Extensions; Amendments...................   23 
  Procedures for Tendering..................................   23 
  Withdrawal of Tenders.....................................   25 
  Conditions................................................   26 
  Exchange Agent............................................   27 
  Solicitation of Tenders; Fees and Expenses................   27 
  Accounting Treatment......................................   28 
  No Consents or Authorizations.............................   28 
  Regulatory Requirements...................................   28 
  No Independent Representative or Fairness Opinion.........   28 

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MATERIAL FEDERAL INCOME TAX CONSEQUENCES....................   29 
  General...................................................   29 
  Assumptions and Representations...........................   29 
  No Tax Rulings............................................   29 
  Substance Over Form Principles............................   30 
  Royalty Partnership.......................................   30 
  Royalty Trust.............................................   31 
  Unitholders...............................................   31 
RIGHTS OF DISSENTING SHAREHOLDERS...........................   31 
  Access to Investor List...................................   32 
METHOD OF DETERMINING EXCHANGE VALUES.......................   32 
RECOMMENDATION OF THE TRUSTEE...............................   32 
SELECTED FINANCIAL DATA OF THE TRUST........................   32 
TEXAS STANDARD'S DISCUSSION AND ANALYSIS OF FINANCIAL             
  CONDITION AND RESULTS OF OPERATION OF THE FREEPORT-MCMORAN      
  OIL AND GAS ROYALTY TRUST.................................   33 
  Comparison of Results of Operations for the Years Ended         
     December 31, 2001 and 2000.............................   33 
  Comparison of Results of Operations for the Years Ended         
     December 31, 2000 and 1999.............................   34 
  Liquidity and Capital Resources...........................   34 
  Legal Proceedings.........................................   34 
  Accountants...............................................   34 
PLAN OF OPERATION...........................................   35 
  Results of Operations.....................................   35 
  Liquidity and Capital Resources...........................   36 
BUSINESS AND PROPERTIES.....................................   37 
  Properties................................................   37 
  Oil and Gas Reserves......................................   38 
  Productive Wells..........................................   39 
  Leasehold Acreage.........................................   40 
  Major Customers...........................................   40 
  Title to Properties.......................................   40 
  Competition...............................................   40 
  Markets...................................................   41 
  Corporate Offices.........................................   41 
  Employees.................................................   42 
  Legal Proceedings.........................................   42 
  Environmental Regulations.................................   42 
MANAGEMENT..................................................   45 
  Officers and Directors....................................   45 
EXECUTIVE COMPENSATION......................................   46 
  Summary Compensation Table................................   46 
  Employment Agreements, Termination of Employment and            
     Change-in-Control Arrangements.........................   46 
  Stock-Based Plans.........................................   46 
  Option/SAR Grants in Last Fiscal Year.....................   47 

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  Aggregate Option/SAR Exercise in Last Fiscal Year and           
     Fiscal Year-End Option/SAR Values......................   47 
  Long Term Incentive Plan Awards...........................   47 
BENEFICIAL OWNERSHIP OF OUR COMMON STOCK....................   47 
CERTAIN TRANSACTIONS........................................   48 
  Working Capital Loans.....................................   48 
  Services Agreements and Purchase of Assets................   48 
  Goliad County Well........................................   48 
COMPARISON OF SECURITY HOLDER RIGHTS AND CERTAIN CHANGES IN       
  THE RIGHTS OF UNITHOLDERS.................................   49 
DESCRIPTION OF CAPITAL STOCK................................   59 
  Preferred Stock...........................................   59 
  Common Stock..............................................   59 
  Texas Anti-Takeover Law and Articles of Incorporation and       
     Bylaw Provisions.......................................   60 
  Limitation of Liability; Indemnification..................   60 
  Transfer Agent and Registrar..............................   61 
MARKET FOR THE TRUST'S UNITS................................   61 
MARKET FOR OUR COMMON STOCK AND SHARES ELIGIBLE FOR FUTURE        
  SALE......................................................   61 
LEGAL MATTERS...............................................   62 
INDEPENDENT AUDITORS........................................   62 
RESERVE ENGINEERS...........................................   62 
WHERE YOU CAN FIND MORE INFORMATION ABOUT TEXAS STANDARD....   62 
GLOSSARY OF OIL AND GAS TERMS...............................   63 
INDEX TO FINANCIAL STATEMENTS...............................  F-1 

     THE EXCHANGE OFFER IS EXPECTED TO EXPIRE ON MAY 6, 2002. YOU MUST MAKE YOUR
EXCHANGE DECISION BY THIS EXPIRATION DATE.                                      

   THESE SECURITIES HAVE BEEN REGISTERED WITH THE SECURITIES COMMISSIONER OF
THE STATE OF LOUISIANA. THE SECURITIES COMMISSIONER, BY ACCEPTING REGISTRATION, 
DOES NOT IN ANY WAY ENDORSE OR RECOMMEND THE PURCHASE OF ANY OF THESE           
SECURITIES.                                                                     

The common stock of Texas Standard may not be sold to residents of the
state of Florida because Texas Standard is unable to qualify under the Florida  
Securities and Investor Protection Act (the Florida blue sky laws). Accordingly,
the offer is not being made to residents of the state of Florida, and Florida   
residents may not participate in the offer.                                     

  You should rely only on the information contained in this prospectus or,
with respect to the Trust, incorporated by reference into this prospectus. We   
have not authorized anyone else to provide you with different information. We   
are not making an offer of these securities in Florida or any other state where 
the offer is not permitted. You should not assume that the information contained
in this prospectus is accurate as of any date other than the date on the front  
of this prospectus.                                                             

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QUESTIONS AND ANSWERS 

Q: WHAT IS BEING PROPOSED?                                                      

A: We are offering to exchange one share of our common stock for every 20 units 
  of the Freeport-McMoRan Oil and Gas Royalty Trust tendered by record holders
of units of the Trust.                                                    

Q: WHY IS TEXAS STANDARD OIL COMPANY MAKING THE EXCHANGE OFFER?                 

A: On October 11, 2001, we acquired the sole asset of the Trust other than cash,
a royalty that burdens oil and gas properties located in federal waters   
   offshore Texas and Louisiana. In connection with our purchase of the royalty,
   we agreed to use commercially reasonable efforts to make this exchange offer.
The terms of this exchange offer were described in a letter from us to the
Trustee of the Trust that is included in this prospectus. The Trustee     
   included a copy of this letter in the proxy statement circulated by the Trust
relating to the dissolution of the Trust.                                 

Q: WHO IS ELIGIBLE TO PARTICIPATE IN THE EXCHANGE OFFER?                        

A: All unitholders are entitled to participate in the exchange offer.           

Q: WHAT ARE THE CONDITIONS TO CONSUMMATION OF THE EXCHANGE OFFER?               

A: Units representing at least 50% of the total outstanding units must be       
  tendered and not withdrawn in order for us to consummate the exchange offer.

Q: WHAT IS THE EXPIRATION DATE OF THE EXCHANGE OFFER?                           

A: The expiration date is May 6, 2002, unless extended.                         

Q: WHEN DO YOU EXPECT THE EXCHANGE OFFER TO BE COMPLETED?                       

A: We expect to consummate the exchange offer one day after the expiration date 
of the exchange offer. We will not complete the exchange offer if the     
requisite number of units are not tendered. Although we have the right to 
extend the exchange offer, we do not intend to extend the exchange offer  
unless we determine that an extension is necessary to comply with legal   
requirements.                                                             

Q: WHAT IF I DO NOT WANT TO PARTICIPATE IN THE EXCHANGE OFFER?                  

A: If you do not tender your units in the exchange offer, you will continue to  
own your beneficial interest in the Trust. On October 5, 2001, the        
   unitholders of the Trust voted to sell the Trust's royalty interest, its sole
asset other than cash, to us. As part of this sale, we agreed to use our  
commercially reasonable efforts to effect this exchange offer. The Trust  
 Agreement provides that the Trustee is required to terminate the Trust upon
  the sale of the Trust's sole asset. On December 26, 2001, the Trustee of the
Trust issued a press release stating that it will not terminate the Trust 
   until the earlier of the completion of our exchange offer or the depletion of
the Trust's expense reserve. The Trustee stated that it did not expect to 
  make a liquidating distribution to unitholders when the Trust is liquidated.

Q: HOW DO I PARTICIPATE IN THE EXCHANGE OFFER?                                  

A: In order to participate in the exchange offer, you must deliver to the       
exchange agent on or before the expiration date:                          

 - a completed and signed letter of transmittal, along with certificates for
the units you are tendering and any other required documentation; or  

 - a computer-generated message, known as an agent's message, transmitted by
means of the Depository Trust Company's (DTC) Automated Tender Offer  
     Program (ATOP) system that, when received by the exchange agent will form a
    part of a confirmation of book-entry transfer in which you acknowledge and
  agree to be bound by the terms of the letter of transmittal and a timely
     confirmation of book-entry transfer of your units into the exchange agent's
account at DTC.                                                       

  If you own your units in the name of a broker, dealer or other nominee, then
your broker, dealer or other nominee is the record holder of the units you
  own. The record holder must participate in the exchange offer on your behalf
for the units you wish to tender. If you wish to participate in the       

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exchange offer, please contact the record holder as soon as possible and  
instruct them to tender on your behalf and comply with the instructions in
this prospectus.                                                          

Q: WHEN AND HOW CAN I WITHDRAW TENDERED UNITS?                                  

A: You may withdraw units you tendered by furnishing a notice of withdrawal to  
 the exchange agent at any time before 5:00 p.m., New York City time, on the
   expiration date, and, unless we have previously accepted your units, they may
   be withdrawn at any time after June 6, 2002. The written notice of withdrawal
  must contain your name and address, the number of units to be withdrawn, the
certificate number of the units to be withdrawn, and the name of the      
registered holder who tendered the units.                                 

Q: WHO CAN HELP ANSWER ADDITIONAL QUESTIONS THAT I MAY HAVE?                    

A: Securities Transfer Corporation is serving as exchange agent for the exchange
  offer. The address for the exchange agent is 2591 Dallas Parkway, Suite 102,
 Frisco, Texas, 75034. If you would like more information about the exchange
offer, you should call the exchange agent at 1-888-328-6381. The facsimile
for the exchange agent is (469) 633-0088.                                 

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SUMMARY 

     The following summary highlights material information from this prospectus.
To understand all of the terms of this exchange offer and for a more complete   
understanding of our business, you should carefully read this entire prospectus 
and the documents to which we have referred you, particularly the section       
entitled "Risk Factors." When we use the terms "Texas Standard," "we," "us" or  
"our," we are referring to Texas Standard Oil Company, unless the context       
otherwise requires. If you are not familiar with the terms used to describe the 
quantities, present value and other information about oil and gas reserves,     
please see "Glossary of Oil and Gas Terms."                                     

INFORMATION ABOUT TEXAS STANDARD AND THE TRUST                                  

TEXAS STANDARD OIL COMPANY
6371 RICHMOND AVENUE, SUITE 100 
HOUSTON, TEXAS 77057
PHONE: (713) 655-1195 

     Texas Standard Oil Company was incorporated in Texas in March 2001. We were
formed to acquire from the Trust the net overriding royalty interests on three  
properties located in federal waters offshore Louisiana and to acquire the      
working interests burdened by the royalty interests from IMC Global, Inc. We    
acquired the royalty interests and related working interests in October 2001. As
of September 30, 2001, there were eight productive oil wells and five productive
gas wells on these properties. In addition, in October, 2001, we acquired a 21% 
working interest in a gas well onshore Texas which is currently not producing   
and is scheduled to be plugged and abandoned. These are the only oil and gas    
properties we own. As of September 30, 2001, our estimated net proved reserves, 
on a pro forma basis, were 938,134 barrels of oil equivalent, or BOE, all of    
which were proved developed.                                                    

FREEPORT-MCMORAN OIL AND GAS ROYALTY TRUST
C/O CHASE MANHATTAN BANK, AS TRUSTEE
700 LAVACA, 5TH FLOOR 
AUSTIN, TEXAS 77002 
PHONE: (512) 479-2562 

The Freeport-McMoRan Oil and Gas Royalty Trust was formed in September
1983. The Trust owned, through a general partnership, a net overriding royalty  
interest that burdened working interests in offshore oil and gas properties. The
Trust is a passive entity. Chase Manhattan Bank is the Trustee and has only such
powers as are necessary for the collection and distribution of revenues         
attributable to the royalty, the payment of Trust liabilities and the protection
of Trust assets. The Trustee cannot allow the Trust to engage in any business or
investment activity and cannot acquire any assets other than its interest in the
partnership and cash being held for payment of liabilities or distribution to   
unitholders.                                                                    

  The Trusts sole activity was to receive royalty payments attributable to
the sale of production from the working interests burdened by the net overriding
royalty interest held by the Trust, and distribute these royalty payments to    
owners of units of beneficial interest in the Trust. The royalty owned by the   
Trust entitled the Trust to receive 90% of the "net proceeds" attributable to   
sale of oil and gas from the burdened working interests. Net proceeds means the 
gross proceeds received for sale of oil and gas less "production costs."        
Production costs include all cost attributable to the working interest,         
including capital costs to develop the properties. If production costs exceed   
gross proceeds, the working interest owner is required to pay the excess cost.  
The royalty provides that the working interest owner may recover these excess   
costs, with interest, from the future proceeds of the sale of oil and gas.      
Because of substantial development expenditures during the early 1990s,         
production costs substantially exceeded gross proceeds from the sale of oil and 
gas.                                                                            

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 Because of the substantial production costs incurred, the Trust has not
receive any royalty payments or made any distributions to holders of units since
1995. The Trust Agreement originally stated that the Trustee must sell the      
Trust's interest in the partnership or cause the partnership to sell the royalty
and liquidate the Trust if the amount of cash per year received by the Trust for
each of three successive years was less than $3 million. This condition was     
satisfied at the end of 1998. However, at a special meeting of the unitholders  
held on March 12, 1999, the unitholders approved a unitholder proposal to amend 
the Trust Agreement to extend the life of the Trust for at least another two    
years. The Trust did not receive any royalty payments in 1999 or 2000.          
Therefore, the Trust Agreement required the Trustee to sell the Trust's interest
in the partnership or to cause the partnership to sell the royalty. On October  
5, 2001, the unitholders of the Trust approved the sale of the royalty, the sole
asset of the Trust, to us for $1,000. On October 11, 2001, we purchased the     
royalty from the Trust. As part of our agreement to purchase the royalty, we    
agreed to make this exchange offer.                                             

THE EXCHANGE OFFER (SEE PAGES 22-28)                                            

We are offering to exchange one share of our common stock for every 20
units of the Trust tendered by record holders of units of the Trust. Assuming   
all unitholders participate in the exchange offer, we will issue 748,770 shares 
of our common stock, representing 37% of our outstanding shares immediately     
following consummation of the exchange offer. If the conditions to the exchange 
offer are satisfied, we will accept for exchange any and all units that are     
properly tendered before the expiration date. If we close the exchange offer,   
certificates representing shares of our common stock will be delivered promptly 
following the expiration date. If we do not close the exchange offer, we will   
promptly return any units tendered.                                             

OUR PLANS FOR THE FUTURE (SEE PAGES 35-37)                                      

    Our current plans are to operate as an independent oil and gas company. We
will use our cash flows and, if available, borrowings, to seek to acquire       
working interests in oil and gas properties to increase our reserves and cash   
flows.                                                                          

RISK FACTORS (SEE PAGES 7-15)                                                   

There are numerous risks associated with the exchange offer which are 
summarized below. For a more complete description of these risk factors, please 
see "Risk Factors".                                                             

RISKS RELATED TO THE EXCHANGE OFFER                                         

    - We may not be required to file reports with the SEC in the future, which
    would substantially reduce the availability of information about us to
you.                                                              

- Because the number of shares of our common stock to be exchanged for
  Trust units was determined by our existing shareholders, and was not
     based on the relative values of the common stock and Trust units, it is
     difficult to evaluate whether or not the consideration offered by us in
the exchange offer is adequate.                                   

  - It is impossible to objectively compare the consideration paid for our
      common stock by our existing shareholders and that to be paid by holders
of units who accept the exchange offer.                           

- Because the Trustee did not participate in the preparation of the   
    Trust's financial statements and other information regarding the Trust
      included in this prospectus, such information may differ from that which
would have been disclosed by the Trust.                           

RISKS RELATED TO OUR BUSINESS                                               

    - Our limited operating history and accumulated shareholders' deficit make
     it difficult to assess our ability to successfully operate our company.

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  - As a consequence of our management's lack of technical training in the
       oil and gas industry, we may miss business opportunities that technically
trained managers would recognize.                                 

- Because our CEO and Chairman of the Board is also President and sole
     owner of a private oil and gas company, he may be subject to conflicts of
interests.                                                          

  - Oil and natural gas prices fluctuate widely, and a decrease in oil and
     gas prices may adversely affect our results of operations and financial
condition.                                                        

- A significant part of the value of our production and reserves is   
      concentrated in a single offshore property, and any production problems,
     adverse weather conditions or inaccuracies in reserve estimates related
to those properties would adversely impact our business.          

  - Unless we are able to replace reserves that we have produced, our cash
flows and production will decrease over time.                     

  - Because we do not control operations on any of our properties, we have
limited influence over their development.                         

- Our reserve information represents estimates that may turn out to be
   incorrect if the assumptions upon which these estimates are based are
 inaccurate. Any material inaccuracies in these reserve estimates or
      underlying assumptions will materially affect the quantities and present
value of our reserves.                                            

RISKS RELATED TO OUR COMMON STOCK                                           

- We do not expect an active market to develop for our common stock.  

- No assurances can be made regarding the value of our common stock.  

  - We have never paid dividends on our common stock and do not anticipate
paying dividends in the foreseeable future.                       

  - Timothy M. Roberson and Joseph F. Langston, Jr. will control us and we
will not be able to take any actions without their approval.      

     - Because our common stock will trade at a market price of less than $5 per
      share, it will be deemed a "penny stock" and you may be unable to resell
it in the secondary market.                                       

METHOD OF DETERMINING EXCHANGE VALUES (SEE PAGE 32)                             

     We were willing to offer unitholders up to 36% of our common stock in order
to induce unitholders to approve the sale of the royalty to us. We did not use  
any valuation formula to determine the number of shares of common stock to be   
offered to unitholders. The exchange ratio of one share of our common stock for 
every 20 units tendered was selected primarily because it would result in the   
issuance of approximately one-third of the shares of our common stock to        
unitholders, if all unitholders accepted the offer. Our decision was not based  
on an analysis of the relative value of our stock and the Trust's units or of   
the value of our assets and the Trust's assets. Therefore, the exchange ratio   
could be deemed arbitrary.                                                      

APPRAISAL RIGHTS; INVESTOR LISTS (SEE PAGES 31-32)                              

Under Texas law, unitholders are not entitled to any appraisal or     
dissenters' rights.                                                             

A unitholder may inspect the list of unitholders of the Trust during  
reasonable business hours at the offices of the Trustee located at 700 Lavaca,  
5th Floor, Austin, Texas 77002.                                                 

SHAREHOLDER APPROVAL AND REGULATORY REQUIREMENTS (SEE PAGE 28)                  

The proposed exchange offer does not require the approval of our      
shareholders or the Trust's unitholders. Other than compliance with federal and 
state securities laws, we are not required to comply                            

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with any other federal or state regulatory requirements and no other federal or 
state regulatory approvals are required in connection with the consummation of  
the exchange offer.                                                             

ACCOUNTING TREATMENT (SEE PAGE 28)                                              

   The exchange offer will be accounted for as an acquisition of oil and gas
interests in exchange for an issuance of equity, using the purchase method of   
accounting.                                                                     

TAX CONSEQUENCES (SEE PAGES 29-31)                                              

     We believe that, for federal income tax purposes, the shares we are issuing
pursuant to the exchange offer are, in substance, part of the consideration for 
the royalty we purchased from the partnership on October 5, 2001. The           
partnership is the entity that held the royalty for the Trust. The shares we are
issuing in the exchange offer should be treated as if they were issued to the   
partnership and ultimately distributed to the unitholders in liquidation of the 
partnership. As a result, the partnership, and ultimately the unitholders,      
should recognize any gain or loss upon the transfer of the royalty to us. Any   
gain or loss recognized by the unitholders should be treated as long-term       
capital gain or loss. However, the unitholders must treat a portion of such     
gain, if any, as ordinary income to recapture prior depletion. Based upon       
treating the shares received in the exchange offer as consideration paid to the 
partnership for the royalty, a unitholder should not recognize any gain or loss 
upon the exchange of such holder's units for our common stock. You should       
consult your own tax advisor regarding the specific consequences of any federal,
state, local or other tax applicable to you and any tax return filing or other  
reporting requirements that you may have.                                       

RECOMMENDATION OF THE TRUSTEE (SEE PAGE 32)                                     

  The Trust is a passive entity and does not engage in an active business.
The Trust Agreement does not require the Trustee to accept or reject the        
exchange offer or take any actions with respect to the offer. The Trustee,      
therefore, has not expressed an opinion regarding the exchange offer or made a  
recommendation regarding the acceptance of the offer.                           

COMPARATIVE RIGHTS OF SECURITY HOLDERS (SEE PAGES 49-58)                        

    For a comparison of the rights of our shareholders under Texas law and our
articles of incorporation and bylaws with rights of the unitholders of the Trust
under Texas law and the Trust Agreement, please see "Comparison of Security     
Holder Rights and Certain Changes in the Rights of Unitholders."                

UNAUDITED PRO FORMA FINANCIAL DATA (SEE PAGES F-14 - F-18)                      

     Unaudited pro forma financial information based on our historical financial
statements, adjusted to give effect to our acquisition of the working interests 
from IMC Global, is included at pages F-14 through F-18. The pro forma financial
data is not necessarily indicative of results that actually would have occurred 
if we had owned the working interests on the dates indicated or which may be    
obtained in the future. The exchange offer will not affect our financial        
statements.                                                                     

MARKET PRICE INFORMATION (SEE PAGES 61-62)                                      

 Our common stock is privately held, and is not listed on any securities
exchange, the NASDAQ stock market or otherwise publicly traded. We do not expect
a market for our shares to develop. On April 2, 2001, the last trading day prior
to the public announcement of the terms of our proposed exchange offer, units in
the Trust were trading at $.08 per unit. Units of the Trust were trading at $.05
per unit on April 2, 2002.                                                      

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COMPARATIVE PER SHARE DATA                                                      

The following table sets forth pro forma per share data for us giving 
effect to our acquisition of the working interests from IMC Global, historical  
per unit data for the Trust, and unaudited pro forma per share data for us after
giving effect to the closing of the exchange offer.                             

                                                        [Enlarge/Download Table]

                                                   NINE MONTHS ENDED   THREE MONTHS ENDED
                                                   SEPTEMBER 30, 2001  DECEMBER 31, 2001 
                                                   ------------------  ------------------
                                                                                         
Pro Forma -- Texas Standard Earnings (Loss) Per                                          
  Share:                                                                                 
     Basic........................................      $ 22.05              $  .09      
     Diluted......................................      $ 22.05              $  .09      
  Book Value Per Share -- Diluted.................      $(14.66)             $(1.41)     

                                                        [Enlarge/Download Table]

                                                         YEAR ENDED         YEAR ENDED    
                                                     DECEMBER 31, 2000   DECEMBER 31, 2001
                                                     ------------------  -----------------
                                                                                          
Historical -- Freeport-McMoRan Oil and Gas Royalty                                        
  Trust Earnings (Loss) Per Unit:                                                         
     Basic..........................................      $  (.02)            $  (.04)    
     Diluted........................................      $  (.02)            $  (.04)    
  Book Value Per Unit -- Diluted....................      $   .04             $     *     

                                                        [Enlarge/Download Table]

                                                   NINE MONTHS ENDED   THREE MONTHS ENDED
                                                   SEPTEMBER 30, 2001  DECEMBER 31, 2001 
                                                   ------------------  ------------------
                                                                                         
Pro Forma Combined -- Texas Standard Earnings                                            
  (Loss) Per Share:                                                                      
     Basic........................................      $  1.84              $ (.15)     
     Diluted......................................      $  1.84              $ (.15)     
  Book Value Per Share -- Diluted.................      $   .99              $ 1.91      

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

* less than $.01                                                                

  We have not paid any dividends since our incorporation in March 2001 and
the Trust has not made a distribution to unitholders since 1995.                

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FORWARD-LOOKING STATEMENTS

In this prospectus, we make many forward-looking statements. We cannot
assure you that the plans, intentions or expectations upon which our            
forward-looking statements are based will occur. Our forward-looking statements 
are subject to risks, uncertainties and assumptions, including those discussed  
elsewhere in this prospectus. Some of the risks which could affect our future   
results and could cause results to differ materially from those expressed in our
forward-looking statements include:                                             

- the uncertainty of our ability to attract capital;                  

- the volatility of oil and natural gas prices;                       

- the uncertainty of estimates of oil and natural gas reserves;       

- the impact of competition;                                          

     - difficulties encountered during the exploration for and production of oil
and natural gas;                                                  

- the difficulties encountered in delivering oil and natural gas to   
commercial markets;                                               

- changes in customer demand;                                         

 - changes in the extensive government regulations regarding the oil and
natural gas business; and                                         

- compliance with environmental regulations.                          

     The information contained in this prospectus, including the information set
forth under the heading "Risk Factors," identifies additional factors that could
affect our operating results and performance. We urge you to carefully consider 
those factors.                                                                  

     Our forward-looking statements are expressly qualified in their entirety by
this cautionary statement.                                                      

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RISK FACTORS

    Investing in our common stock will provide you with an equity ownership in
our company. As one of our shareholders, you will be subject to risks inherent  
in our business. The value of your shares will be affected by the performance of
our business relative to, among other things, competition, market conditions and
general economic and industry conditions. The value of your investment may      
decrease, resulting in a loss. You should carefully consider the following      
factors as well as other information contained in this prospectus before        
deciding to participate in the exchange offer.                                  

RISKS RELATED TO THE TRANSACTION                                                

 WE MAY NOT BE REQUIRED TO FILE REPORTS WITH THE SEC IN THE FUTURE WHICH WOULD
SUBSTANTIALLY REDUCE THE INFORMATION AVAILABLE TO YOU ABOUT US.             

    We will be required to file annual, quarterly and current reports with the
SEC following the consummation of the exchange offer. However, our obligation to
file reports with the SEC will cease if, one year following the consummation of 
our exchange offer, we have fewer than 300 shareholders. If all of the Trust's  
unitholders participate in the exchange offer, we expect to have more than 8,000
shareholders following the consummation of the exchange offer. If our reporting 
obligations cease, you will have little or no access to information about us and
our financial condition and will lose legal remedies available to you under the 
Exchange Act of 1934.                                                           

BECAUSE THE NUMBER OF SHARES OF OUR COMMON STOCK TO BE EXCHANGED FOR TRUST  
UNITS WAS DETERMINED BY OUR EXISTING SHAREHOLDERS, AND WAS NOT BASED ON THE 
RELATIVE VALUES OF THE COMMON STOCK AND TRUST UNITS, IT IS DIFFICULT TO     
 EVALUATE WHETHER OR NOT THE CONSIDERATION OFFERED BY US IN THE EXCHANGE OFFER
IS ADEQUATE.                                                                

As described under "Background and Reasons for the Exchange           
Offer -- Background of the Exchange Offer", in March 2001, the Trustee agreed to
submit our offer to purchase the net profits royalty interest owned by the Trust
to unitholders for approval. To induce unitholders to approve the sale of the   
royalty to us, we offered to exchange our common stock for units of the Trust.  
We did not use any valuation formula to determine the number of shares of common
stock to be offered to unitholders. The decision to offer one share of common   
stock for every 20 units tendered was made primarily because it would result in 
the issuance of approximately one-third of the shares of our common stock to    
unitholders, if all unitholders accepted the offer. We believed that this was a 
sufficient interest in the company to induce unitholders to approve the sale of 
the royalty to us.                                                              

  We did not employ a more objective valuation criteria because it was not
practical to place a meaningful value on the units or our common stock for      
purposes of establishing an exchange ratio for Trust units.                     

  As a result, it is difficult for you to objectively evaluate whether the
exchange ratio of one share of common stock for 20 Trust units is an appropriate
exchange ratio. See "Method of Determining Exchange Values."                    

IT IS IMPOSSIBLE TO OBJECTIVELY COMPARE THE CONSIDERATION PAID FOR COMMON   
  STOCK BY OUR EXISTING SHAREHOLDERS AND THAT TO BE PAID BY HOLDERS OF UNITS WHO
ACCEPT THE EXCHANGE OFFER.                                                  

  Neither our existing shareholders nor unitholders who tender their units
will have paid material cash consideration for our common stock. Our existing   
shareholders paid an immaterial amount for their common stock. Similarly,       
because it is unlikely that unitholders will receive any additional             
distributions from the Trust, the units tendered by unitholders in exchange for 
our common stock have no value to us. It is therefore impossible to objectively 
determine whether unitholders are paying more or less for their common stock    
than was paid by our initial shareholders.                                      

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BECAUSE THE TRUSTEE DID NOT PARTICIPATE IN THE PREPARATION OF THE TRUST'S   
FINANCIAL STATEMENTS AND OTHER INFORMATION REGARDING THE TRUST INCLUDED IN  
THIS PROSPECTUS, SUCH INFORMATION MAY DIFFER FROM THAT WHICH WOULD HAVE BEEN
DISCLOSED BY THE TRUST.                                                     

    We retained our own auditors to audit the Trust's financial statements for
the year ended December 31, 2001. The information necessary to audit the        
financial statements of the Trust was provided to our auditors by the Trustee.  
However, our auditors did not have the degree of access to the employees of the 
Trustee who manage the Trust that is normally provided to independent auditors. 
In addition, the Discussion and Analysis of Financial Condition and Results of  
Operation with respect to the Trust included in this prospectus was prepared by 
us, not the Trustee. Although Texas Standard is responsible for the disclosures 
contained in this prospectus, as a result of the Trustee's lack of participation
in the preparation of this information, information regarding the Trust         
contained in this prospectus may differ from the information that would have    
been disclosed by the Trustee if it had participated in the preparation of this 
prospectus.                                                                     

RISK FACTORS RELATING TO OUR BUSINESS                                           

OUR LIMITED OPERATING HISTORY AND ACCUMULATED SHAREHOLDERS' DEFICIT MAKE IT 
DIFFICULT TO ASSESS OUR ABILITY TO SUCCESSFULLY OPERATE OUR COMPANY.        

We are a newly formed entity created in March 2001 for the purpose of 
acquiring and combining the working interests owned by IMC Global and the       
royalty interests burdening the properties operated by the working interests.   
See "Plan of Operation" and "Business and Properties." Consequently, we have no 
operating history on which you can base your investment decision regarding      
whether to accept shares of our common stock in the exchange offer. As of       
September 30, 2001, we had an accumulated shareholders' deficit of $381,006.    
Further, our management team has not worked together for an extended period of  
time. In addition, period-to-period comparisons of our operating results to date
may not be meaningful. You should not rely on our results of operations for any 
prior period as an indication of our future performance or prospects.           

   As a newly-formed company in the highly competitive oil and gas industry,
we are subject to risks and uncertainties inherent in companies at such an early
stage of development, including:                                                

     - the risks associated with operating in markets that are subject to a high
degree of competition;                                            

    - the risk that we will have inadequate management resources to capitalize
on market opportunities and execute our strategy;                 

   - the risk that we will be unable to execute successfully each portion of
our business strategy on schedule;                                

   - the risk that we may not identify prospects with sufficient reserves to
justify our investment in those prospects; and                    

     - the risk that adequate capital may not be available to fund our continued
development.                                                      

AS A CONSEQUENCE OF OUR MANAGEMENT'S LACK OF TECHNICAL TRAINING IN THE OIL AND
GAS INDUSTRY, WE MAY MISS BUSINESS OPPORTUNITIES THAT TECHNICALLY TRAINED     
MANAGERS WOULD RECOGNIZE.                                                     

  None of the members of our management team possess technical training in
the oil and gas industry. This lack of technical training may cause them to fail
to recognize the full potential of prospects or other opportunities that        
technically trained managers would recognize. Because our management team lacks 
technical training, they will be forced to rely on the opinions of operators of 
our properties or to pay consultants that may not be completely familiar with   
our properties. The lack of our management's technical training may negatively  
impact our operations and financial success.                                    

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 BECAUSE OUR CEO AND CHAIRMAN OF THE BOARD IS ALSO PRESIDENT AND SOLE OWNER OF
A PRIVATE OIL AND GAS COMPANY, HE MAY BE SUBJECT TO CONFLICTS OF INTERESTS. 

     Mr. Roberson, our CEO and Chairman of the Board, is also President and sole
owner of Roberson Oil Company. As a result he owes fiduciary duties to both us  
and Roberson Oil Company. Mr. Roberson's duties to us may conflict with his     
duties to Roberson Oil Company. For a period of two years after the consummation
of the exchange offer, we will not enter into any transactions with Roberson Oil
Company unless such transactions are approved by at least two independent,      
disinterested directors. However, we do not currently anticipate appointing any 
independent directors during such period and consequently will not enter into   
any transactions with Roberson Oil Company unless and until such independent    
directors are appointed. Our interests could otherwise conflict with the        
interests of Roberson Oil Company, and in such case our directors will have a   
fiduciary duty to resolve such conflicts in a manner that is in our best        
interest.                                                                       

OIL AND NATURAL GAS PRICES FLUCTUATE WIDELY, AND A DECREASE IN OIL AND GAS  
  PRICES MAY ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

Our revenues, profitability and future growth are highly dependent on 
prices for oil and gas, which are extremely volatile. For example based on      
Koch's Crude Oil Postings, the price for West Texas intermediate crude oil has  
decreased from approximately $26.40 per barrel in January 2001 to approximately 
$16.52 per barrel in January 2002. Over the same time period, the spot price for
natural gas delivered to Texas Eastern Transmission Corp.'s West Louisiana zone 
has decreased from approximately $9.80 per Mcf to approximately $2.52 per Mcf.  
Any substantial or extended decline in the price of oil or gas would have a     
material adverse effect on us. Oil and gas markets are both seasonal and        
cyclical. The prices of oil and gas depend on factors we cannot control, such   
as:                                                                             

- the level of consumer product demand;                               

- weather conditions;                                                 

- domestic and foreign governmental regulations;                      

- the price and availability of alternative fuels;                    

- political conditions in oil and gas producing regions;              

- the domestic and foreign supply of oil and gas;                     

- the price of foreign imports; and                                   

- overall economic conditions.                                        

  Prices of oil and gas will affect the following aspects of our business:

- our revenues, cash flows and earnings;                              

- the amount of oil and gas that we are economically able to produce; 

    - our ability to attract capital to finance our operations and our cost of
that capital;                                                     

- the value of our oil and gas properties; and                        

     - the profit or loss we incur in exploring for and developing our reserves.

WEATHER, UNEXPECTED SUBSURFACE CONDITIONS, AND OTHER UNFORESEEN OPERATING   
HAZARDS MAY ADVERSELY IMPACT OUR ABILITY TO CONDUCT BUSINESS.               

 There are many operating hazards in exploring for and producing oil and
gas, including:                                                                 

    - our drilling operations may encounter unexpected formations or pressures
      which could cause damage to equipment or reservoirs, or personal injury;

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  - we may experience equipment failures which curtail or stop production;
and                                                               

- we could experience blowouts or other damages to the productive     
     formations that may require a well to be re-drilled or other corrective
action to be taken.                                               

   In addition, any of the foregoing may result in environmental damages for
which we will be liable. Moreover, a substantial portion of our operations are  
offshore and are subject to a variety of risks peculiar to the marine           
environment such as capsizing, collisions, hurricanes and other adverse weather 
conditions. These conditions can cause substantial damages to facilities and    
interrupt production. Offshore operations are also subject to more extensive    
governmental regulation.                                                        

For some risks, we may not obtain insurance if we believe the cost of 
available insurance is excessive relative to the risks presented. In addition,  
pollution and environmental risks generally are not fully insurable. If a       
significant accident or other event occurs and is not fully covered by          
insurance, it could adversely affect our operations.                            

  A SIGNIFICANT PART OF THE VALUE OF OUR PRODUCTION AND RESERVES IS CONCENTRATED
IN A SINGLE OFFSHORE PROPERTY, AND ANY PRODUCTION PROBLEMS, ADVERSE WEATHER 
CONDITIONS OR INACCURACIES IN RESERVE ESTIMATES RELATED TO THOSE PROPERTIES 
WOULD ADVERSELY IMPACT OUR BUSINESS.                                        

For 2001, all of our pro forma daily production came from our two     
properties in the Gulf of Mexico. This concentration of activity makes us more  
vulnerable than many of our competitors to the risks associated with the Gulf of
Mexico, including delays and increased costs relating to offshore operations.   
Moreover, one property, West Cameron 498, consisting of ten wells, accounted for
95% of our production during this period. As of September 30, 2001, one well on 
this property comprised more than half of the oil production from the property. 
If mechanical problems, storms or other events curtailed a substantial portion  
of this production, our results of operations would be adversely affected.      

     In addition, at September 30, 2001, on a pro forma basis, all of our proved
reserves were located in two fields in the Gulf of Mexico. If the actual        
reserves associated with any one of these two properties are less than our      
estimated reserves, our results of operations and financial condition could be  
adversely affected.                                                             

UNLESS WE ARE ABLE TO REPLACE RESERVES THAT WE HAVE PRODUCED, OUR CASH FLOWS
AND PRODUCTION WILL DECREASE OVER TIME.                                     

  Our future success depends upon our ability to find, develop and acquire
oil and gas reserves that are economically recoverable. Production of reserves  
from reservoirs in the Gulf of Mexico generally declines more rapidly than from 
reservoirs in many other producing regions of the world. This rapid decline     
results in our recovery of a relatively higher percentage of reserves from      
properties in the Gulf of Mexico during the initial few years of production. As 
a result, we must continually locate and develop or acquire new oil and gas     
reserves to replace those being depleted by production. In addition, our oil and
gas properties are mature properties that do not have significant development   
opportunities. Therefore, our current properties will decline in production and 
revenues. Without successful exploration or acquisition activities, our         
reserves, production and revenues will decline rapidly.                         

The successful acquisition and development of oil and gas properties  
requires an assessment of recoverable reserves, future oil and gas prices and   
operating costs, potential environmental and other liabilities and other        
factors. The costs of exploitation and development may materially exceed initial
estimates. As a result, we may not recover the purchase price of a property from
the sale of production from the property, or may not recognize an acceptable    
return from properties we acquired.                                             

We intend to finance any capital expenditures necessary to develop our
existing reserves and the capital expenditures necessary to discover new oil and
gas reserves primarily with cash from operations, proceeds from bank borrowings 
and proceeds from the sale of debt and equity securities. We also intend to make
offers to acquire oil and gas properties in the ordinary course of our business.
If these offers are accepted, our capital needs may increase substantially. We  
cannot be certain that additional financing will                                
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be available to us on acceptable terms or at all. In the event additional       
capital resources are unavailable, we may curtail our drilling, development and 
other activities or be forced to sell some of our assets on an untimely or      
unfavorable basis.                                                              

  BECAUSE WE DO NOT CONTROL OPERATIONS ON ANY OF OUR PROPERTIES, WE HAVE LIMITED
INFLUENCE OVER THEIR DEVELOPMENT.                                           

     We do not operate any of our properties and have limited influence over the
operations of some of these properties. Our lack of control could result in the 
following:                                                                      

- the operator may initiate exploration or development on a faster or 
slower pace than we prefer;                                       

    - the operator may propose to drill more wells or build more facilities on
     a project than we have funds for or than we deem appropriate, which may
   mean that we are unable to participate in the project or share in the
revenues generated by the project even though we paid our share of
exploration costs;                                                

    - if an operator refuses to initiate a project, we may be unable to pursue
the project; and                                                  

- an operator could elect to abandon a property sooner than we have   
anticipated or budgeted, resulting in our incurring plugging and  
      abandonment liabilities that may exceed the amount of funds that we have
   available to pay such expenses or that may require us to forego other
planned capital expenditures in order to pay such expenses.       

Any of these events could materially reduce the value of our properties.        

COMPETITIVE INDUSTRY CONDITIONS MAY NEGATIVELY AFFECT OUR ABILITY TO CONDUCT
OPERATIONS.                                                                 

We operate in the highly competitive areas of oil and gas exploration,
development and production. See "Business and Properties -- Competition." We    
expect to compete with independent oil and gas companies for property           
acquisitions. We also compete for the equipment and labor required to operate   
and develop these properties. Most of our competitors have substantially greater
financial and other resources than us. In addition, larger competitors may be   
able to absorb the burden of any changes in federal, state and local laws and   
regulations more easily than we can, which would adversely affect our           
competitive position. These competitors may be able to pay more for exploratory 
prospects and productive oil and gas properties and may be able to define,      
evaluate, bid for and purchase a greater number of properties and prospects than
we can. Our ability to explore for oil and gas prospects and to acquire         
additional properties in the future will depend on our ability to conduct       
operations, to evaluate and select suitable properties and to consummate        
transactions in this highly competitive environment. In addition, most of our   
competitors have been operating in the oil and gas business for a much longer   
time than we have and have demonstrated the ability to operate through industry 
cycles.                                                                         

 OUR COMPETITORS WILL USE SUPERIOR TECHNOLOGY THAT WE WILL BE UNABLE TO AFFORD
OR THAT WOULD REQUIRE COSTLY INVESTMENT BY US IN ORDER TO COMPETE.          

Our industry is subject to rapid and significant advancements in      
technology, including the introduction of new products and services using new   
technologies. As our competitors use or develop new technologies, we may be     
placed at a competitive disadvantage, and competitive pressures may force us to 
implement new technologies at a substantial cost. In addition, our competitors  
may have greater financial, technical and personnel resources that allow them to
enjoy technological advantages and may in the future allow them to implement new
technologies before we can. We cannot be certain that we will be able to        
implement technologies on a timely basis or at a cost that is acceptable to us. 
One or more of the technologies that we currently use or that we may implement  
in the future may become obsolete, and our operating results may be adversely   
affected.                                                                       

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  OUR RESERVE INFORMATION REPRESENTS ESTIMATES THAT MAY TURN OUT TO BE INCORRECT
IF THE ASSUMPTIONS UPON WHICH THESE ESTIMATES ARE BASED ARE INACCURATE. ANY 
MATERIAL INACCURACIES IN THESE RESERVE ESTIMATES OR UNDERLYING ASSUMPTIONS  
WILL MATERIALLY AFFECT THE QUANTITIES AND PRESENT VALUE OF OUR RESERVES.    

The process of estimating oil and gas reserves is complex. It requires
interpretations of available technical data and various assumptions, including  
assumptions relating to economic factors. Any significant inaccuracies in these 
interpretations or assumptions could materially affect the estimated quantities 
and present value of reserves shown in this prospectus. See "Business and       
Properties -- Oil and Gas Reserves."                                            

   In order to prepare these estimates, we must project production rates and
the timing of development expenditures. We must also analyze available          
geological, geophysical, production and engineering data, the extent, quality   
and reliability of which can vary. The process also requires economic           
assumptions, such as oil and gas prices, drilling and operating expenses,       
capital expenditures, taxes and availability of funds. Therefore, estimates of  
oil and gas reserves are inherently imprecise.                                  

    Actual future production, oil and gas prices, revenues, taxes, development
expenditures, operating expenses and quantities of recoverable oil and gas      
reserves most likely will vary from our estimates. Any significant variance     
could materially affect the estimated quantities and present value of reserves  
shown in this prospectus. In addition, we may adjust estimates of proved        
reserves to reflect production history, results of exploration and development, 
prevailing oil and gas prices and other factors, many of which are beyond our   
control.                                                                        

    You should not assume that the present value of future net cash flows from
our proved reserves referred to in this prospectus is the current market value  
of our estimated oil and gas reserves. In accordance with SEC requirements, we  
generally base the estimated discounted future net cash flows from our proved   
reserves on prices and costs on the date of the estimate. Actual future prices  
and costs may differ materially from those used in the present value estimate.  

 Information about reserves constitutes forward-looking information. See
"Forward-Looking Statements" for information regarding forward-looking          
information. The discounted present value of our oil and gas reserves is        
prepared in accordance with guidelines established by the SEC. A purchaser of   
reserves would use numerous other factors to value our reserves. The discounted 
present value of reserves, therefore, does not represent the fair market value  
of those reserves.                                                              

HEDGING OUR PRODUCTION MAY RESULT IN LOSSES.                                

     To reduce our exposure to fluctuations in the prices of oil and gas, we may
enter into hedging arrangements. See "Plan of Operation -- Liquidity and Capital
Resources -- Financial Instruments." Hedging arrangements would expose us to    
risk of financial loss in some circumstances, including the following:          

- if production is less than expected;                                

- if the other party to the hedging contract defaults on its contract 
obligations; or                                                   

    - if there is a change in the expected differential between the underlying
price in the hedging agreement and actual prices received.        

In addition, these hedging arrangements may limit the benefit we would
receive from increases in the prices for oil and gas.                           

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  COMPLIANCE WITH ENVIRONMENTAL AND OTHER GOVERNMENT REGULATIONS COULD BE COSTLY
AND COULD NEGATIVELY IMPACT PRODUCTION.                                     

   Our operations are subject to numerous laws and regulations governing the
operation and maintenance of our facilities and the discharge of materials into 
the environment or otherwise relating to environmental protection. For a        
discussion of the environmental regulations applicable to us, see "Business and 
Properties -- Environmental Regulations." These laws and regulations may:       

- require that we acquire permits before commencing drilling;         

- restrict the substances that can be released into the environment in
connection with drilling and production activities;               

     - limit or prohibit drilling activities on protected areas such as wetlands
or wilderness areas; and                                          

   - require remedial measures to mitigate pollution from former operations,
such as dismantling abandoned production facilities.              

  Under these laws and regulations, we could be liable for personal injury
and clean-up costs and other environmental and property damages, as well as     
administrative, civil and criminal penalties. We maintain limited insurance     
coverage for sudden and accidental environmental damages. We do not believe that
insurance coverage for environmental damages that occur over time is available  
at a reasonable cost. Also, we do not believe that insurance coverage for the   
full potential liability that could be caused by sudden and accidental          
environmental damages is available at a reasonable cost. Accordingly, we may be 
subject to liability or we may be required to cease production from properties  
in the event of environmental damages.                                          

FACTORS BEYOND OUR CONTROL AFFECT OUR ABILITY TO MARKET PRODUCTION AND OUR  
FINANCIAL RESULTS.                                                          

The ability to market oil and gas from our wells depends upon numerous
factors beyond our control. These factors include:                              

- the extent of domestic production and imports of oil and gas;       

- the proximity of the gas production to gas pipelines;               

- the availability of pipeline capacity;                              

- the demand for oil and gas by utilities and other end users;        

- the availability of alternative fuel sources;                       

- the effects of inclement weather;                                   

- state and federal regulation of oil and gas marketing; and          

 - federal regulation of gas sold or transported in interstate commerce.

    Because of these factors, we may be unable to market all of the oil or gas
we produce. In addition, we may be unable to obtain favorable prices for the oil
and gas we produce.                                                             

  WE MAY BE REQUIRED TO TAKE WRITEDOWNS OF THE CARRYING VALUE OF OUR OIL AND GAS
PROPERTIES AS A RESULT OF A DECREASE IN OIL AND GAS PRICES.                 

We may be required to writedown the carrying value of our oil and gas 
properties in the future if oil and gas prices decline or if we have substantial
downward adjustments to our estimated net proved reserves, increases in our     
estimates of development costs or deterioration in our exploration results.     
Under the full cost method we use to account for our oil and gas properties, the
net capitalized costs of our oil and gas properties may not exceed the present  
value, discounted at 10%, of future net cash flows from estimated net proved    
reserves, using period end oil and gas prices and costs, plus the lower of cost 
or fair market value of our unproved properties. If net capitalized costs of our
oil and gas properties exceed this limit, we must charge the amount of the      
excess to earnings. This type of charge will not affect our cash                

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flows, but will reduce the book value of our shareholders' equity. We review the
carrying value of our properties quarterly, based on prices in effect as of the 
end of each quarter or at the time of reporting our results. Once incurred, a   
writedown of oil and gas properties is not reversible at a later date, even if  
prices increase.                                                                

RISK FACTORS RELATED TO OUR COMMON STOCK                                        

WE DO NOT EXPECT AN ACTIVE MARKET TO DEVELOP FOR OUR COMMON STOCK.          

  Before this offering, there has been no market for our common stock. Our
common stock will not be listed on any national securities exchange or the      
NASDAQ stock market. We have not arranged for any broker-dealers to make a      
market in our stock. We do not expect that an active trading market for our     
shares will develop. Accordingly, we cannot offer you any assurances as to the  
liquidity of the market for our common stock or the prices at which you may be  
able to sell our common stock.                                                  

NO ASSURANCES CAN BE MADE REGARDING THE VALUE OF OUR COMMON STOCK.          

 Upon completion of the exchange offer, we will have 2,005,241 shares of
common stock outstanding if all unitholders participate in the exchange offer.  
We anticipate that, to the extent trading in our common stock occurs, it will be
sporadic and relatively infrequent. If a trading market in our common stock     
develops, we anticipate that the price of our common stock will be discounted to
reflect its reduced liquidity. The limited nature of any market for our stock   
that may develop will also cause greater price volatility. The sale of a        
material number of our shares of common stock in the public market or the       
perception that such sales could occur could have a material adverse effect on  
the trading price of our common stock.                                          

 WE HAVE NEVER PAID DIVIDENDS ON OUR COMMON STOCK AND DO NOT ANTICIPATE PAYING
DIVIDENDS IN THE FORESEEABLE FUTURE.                                        

   We have never declared or paid cash dividends on our common stock, and we
do not anticipate that we will pay dividends in the foreseeable future. We      
anticipate that future earnings, if any, will be retained for development of our
business.                                                                       

TIMOTHY M. ROBERSON AND JOSEPH F. LANGSTON, JR. WILL CONTROL US AND WE WILL 
NOT BE ABLE TO TAKE ANY ACTIONS WITHOUT THEIR APPROVAL.                     

   Following the exchange offer, assuming all unitholders participate in the
exchange offer, Mr. Roberson will own 37.3% of our outstanding common stock and 
Mr. Langston will own 25.4% of our outstanding common stock. As a result,       
together they will be able to determine all of the members of our board of      
directors and will be able to approve all corporate actions requiring the       
approval of only a majority of the shares present and entitled to vote at a     
meeting of shareholders. Mr. Roberson and Mr. Langston will be permitted to take
shareholder action without soliciting the proxies of other shareholders. In     
addition, Mr. Roberson will be able to prevent any corporate action that        
requires a supermajority vote of shareholders. This will allow Mr. Roberson to  
prevent a change of control or other business combination that would be         
economically beneficial to our other shareholders.                              

BECAUSE OUR COMMON STOCK WILL TRADE AT A MARKET PRICE OF LESS THAN $5 PER   
  SHARE, IT WILL BE DEEMED A "PENNY STOCK" AND YOU MAY BE UNABLE TO RESELL IT IN
THE SECONDARY MARKET.                                                       

   A "penny stock" is an equity security with a market price of less than $5
per share that is not listed on the NASDAQ stock market or a national securities
exchange. Due to the extra risks involved in an investment in penny stocks,     
federal securities laws and regulations require broker-dealers to deliver a     
standardized risk disclosure document that provides information about penny     
stocks and the nature and level of risks in the penny stock market prior to     
effecting transactions in penny stocks for a customer. In                       

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addition, prior to entering into a transaction in a penny-stock with or on      
behalf of a customer, a broker-dealer must:                                     

- have made a special written determination that the penny stock is a 
suitable investment for the customer;                             

- receive the customer's written agreement to the transaction;        

- provide current bid and offer quotations for the penny stock; and   

   - disclose the compensation the broker-dealer and persons associated with
the broker-dealer will receive in the penny stock transaction.    

     Broker-dealers that effect transactions in penny stocks for their customers
must also provide their customers with monthly account statements showing the   
market value of each penny stock held in a customer's account. These additional 
penny stock disclosure requirements limit the ability of broker-dealers to sell 
penny stocks and may reduce the trading activity in the market for our common   
stock since it will be a penny stock. Because of these extra requirements, many 
broker-dealers are unwilling to sell penny stocks at all. As a result of our    
common stock being deemed a penny stock, you may be unable to resell our stock  
and could lose your entire investment.                                          

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BACKGROUND AND REASONS FOR THE EXCHANGE OFFER 

BACKGROUND OF THE TRUST                                                         

    The Freeport-McMoRan Oil and Gas Royalty Trust was formed on September 30,
1983. On that date, Freeport-McMoRan, Inc. transferred to a general partnership 
a net overriding royalty interest that burdened working interests in 18         
productive and 12 undeveloped oil and gas properties in exchange for a 99.9%    
interest in the partnership. The royalty entitled the partnership to receive 90%
of the net proceeds attributable to the sale of oil and gas from the working    
interests owned by Freeport-McMoRan. The net overriding royalty interest is     
referred to in this prospectus as the "royalty."                                

Immediately after Freeport-McMoRan transferred the royalty to the     
partnership, it conveyed its 99.9% general partnership interest to the Trust in 
exchange for units of the Trust. Freeport-McMoRan then distributed the units of 
beneficial interest in the Trust to its stockholders. Units of beneficial       
interest in the Trust are traded on the over the counter market under the       
trading symbol "FMOLS."                                                         

    IMC Global, Inc. acquired the working interests burdened by the royalty in
December 1997 from Freeport-McMoRan. On October 11, 2001, the Trust sold the    
royalty to us. IMC Global sold the working interests to us on October 12, 2001. 

     The general partnership that held title to the royalty was formed under the
laws of the State of Texas. The partnership existed for the purpose of holding  
the royalty, paying the liabilities and expenses of the partnership and         
disbursing the remaining revenues from the royalty to the Trustee and the       
managing general partner, who held a 0.1 percent interest in the partnership.   

  The Trust is passive, with Chase Manhattan Bank, as Trustee, having only
such powers as are necessary for the collection and distribution of revenues    
attributable to the royalty, the payment of Trust liabilities and the protection
of Trust assets. The Trustee cannot engage in any business or investment        
activity and cannot acquire any asset other than its interest in the partnership
and cash being held for payment of liabilities or distribution to unitholders.  
The Trust Agreement provides generally that the Trust shall terminate upon the  
sale of all the Trust's interest in the partnership, or the sale by the         
partnership of all the assets of the partnership, including the royalty. As a   
result of the sale of the royalty to us, the Trustee is in the process of       
terminating the Trust.                                                          

  The royalty is a non-operating interest which means that the holder does
not have any authority to make, or responsibility for making, decisions         
regarding oil and gas operations. The royalty entitles the owner to receive 90% 
of the "net proceeds" attributable to the sale of oil and gas from the working  
interests. Net proceeds is defined as the excess of the sales proceeds of oil   
and gas less production costs. Production costs consist of all costs incurred in
the development, production and marketing of oil and gas, including capital     
costs. If production costs during any period exceed the proceeds of sales of oil
and gas, the royalty owner is not liable for the costs. Such costs must be paid 
by the owner of the working interests. The owner of the working interests is    
entitled to carry-forward such costs, plus interest, and recover them in future 
periods when the proceeds of the sale of oil and gas exceed production costs.   

     As a result of capital costs incurred by the working interests in the early
1990s, production costs have greatly exceeded proceeds from the sale of oil and 
gas and a substantial cost carry-forward has been created. Since 1995, because  
of the cost carry-forward, there have not been any distributions with respect to
the royalty. On September 30, 2001, the cost carry-forward was $13.7 million.   
Based on the reserve report for the working interests and the royalty, the      
Trustee determined that the future proceeds from the sale of oil and gas        
attributable to the working interests would probably be insufficient to fully   
pay the cost carry-forward. As a result, the Trustee concluded that it was      
unlikely any amounts would be paid with respect to the royalty prior to the     
depletion of the working interests.                                             

BACKGROUND OF THE EXCHANGE OFFER                                                

The Trust has not received any royalty payments since 1995. The Trust 
Agreement originally stated that the Trustee must sell the Trust's interest in  
the partnership or cause the partnership to sell the royalty                    
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if the amount of cash per year received by the Trust for each of three          
successive years was less than $3 million. This condition was satisfied at the  
end of 1998. However, at a special meeting of the unitholders held on March 12, 
1999, the unitholders approved a unitholder proposal to amend the Trust         
Agreement to extend the life of the Trust for at least another two years. The   
Trust did not receive any royalty payments in 1999 or 2000. Therefore, the Trust
Agreement required the Trustee to sell the Trust's interest in the partnership  
or to cause the partnership to sell the royalty.                                

     According to the proxy statement filed by the Trust in August 2001, several
unitholders contacted the Trustee in September 2000 to request or demand that   
the Trustee call a special meeting of unitholders to vote on a proposal for a   
further extension of the life of the Trust. Most unitholders proposed an        
extension for an additional five years. The unitholders apparently believed that
if the Trust's life were extended the Trust might eventually begin receiving    
royalty payments once again. However, the Trustee was unwilling to approve such 
an extension because the Trust's expense reserve was inadequate to provide for  
the Trust's administrative expenses for such a long period, and it was not clear
that there would ever be payments made with respect to the royalty. A           
representative of the Trustee had a number of conversations with the requesting 
unitholders regarding possible extensions, suggesting that the Trustee might    
submit an extension proposal to a unitholder vote if the proposal stated that   
the Trust would terminate on the earlier of the end of a specified extension    
period or depletion of the Trust's expense reserve below $100,000. These        
conversations took place over a period of several weeks, but the Trustee reached
no clear understanding with any requesting unitholder regarding an extension    
proposal.                                                                       

   In December 2000, Roberson Oil Company approached the Trustee regarding a
possible transaction whereby Texas Standard, a company to be formed, would      
effect an exchange offer, registered under the Securities Act of 1933, in which 
common stock and warrants of Texas Standard would be exchanged for the          
outstanding units. Texas Standard also offered to issue common stock to the     
working interest owner in exchange for the working interests. On December 29,   
2000, the Trustee received a letter from Roberson Oil detailing its proposal.   
The letter indicated that Roberson Oil, on behalf of Texas Standard, had offered
to purchase the working interest from the working interest owner. The letter    
requested that the Trustee agree to the proposal by January 3, 2001. Through its
counsel, the Trustee responded by informing Roberson Oil that there was no need 
for the Trustee to agree to the proposal because the transactions described in  
the letter involved the unitholders and not the Trust itself. In response,      
Roberson Oil indicated that it needed the cooperation of the Trustee because    
otherwise the Trustee might proceed to auction the royalty as required by the   
Trust Agreement. Roberson Oil did not want to proceed with the transaction      
unless Texas Standard could acquire the royalty as well as the working interest.
The terms of the royalty prohibited Texas Standard from acquiring the working   
interests. Therefore, it was necessary for Texas Standard to acquire the royalty
in order to waive the restrictions on its purchase of the working interests.    
Counsel for the Trustee pointed out that an exchange offer by itself, even if   
successful, would not result in ownership of the royalty by Texas Standard      
because the Trustee would be required to act in accordance with the Trust       
Agreement. The Trust Agreement required the Trustee to auction the royalty and  
terminate the Trust. Thus, it appeared unlikely that Texas Standard could       
accomplish its objectives without a vote of unitholders to amend the Trust      
Agreement. Counsel for the Trustee indicated that the Trustee might be willing  
to entertain a unitholder proposal on amendments to the Trust Agreement if the  
unitholder proposal were properly presented in accordance with SEC rules and if 
the Trustee did not find the proposal objectionable.                            

     On February 2, 2001, counsel to IMC Global called the Trustee's counsel and
indicated that IMC Global had received two non-binding offers for the working   
interest, one of which was from Roberson Oil on behalf of Texas Standard.       
Counsel for IMC Global indicated that neither proposal was for an amount in     
excess of $3 million, that both proposals were contingent on the ability of the 
acquiring company to acquire the royalty and that the working interest owner    
wanted to pursue the Roberson Oil proposal, which IMC Global believed was the   
more well thought out of the two proposals. The Trustee's representatives agreed
to meet with representatives of Roberson Oil and IMC Global to discuss Roberson 
Oil's proposal. On February 5, 2001, representatives of the Trustee and its     
counsel met with representatives of Roberson Oil and IMC Global to discuss the  
proposed transaction. At the meeting, the representatives of Roberson           

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Oil and IMC Global indicated that the two companies had entered into a          
non-binding letter of intent relating to the acquisition of the working         
interests by Texas Standard. The representatives of Roberson Oil presented to   
the Trustee's representatives their ideas regarding a transaction that might    
lead to the acquisition of the royalty by Texas Standard. They suggested that   
the Trustee enter into an agreement to sell the royalty to Texas Standard upon  
completion of an exchange offer in which a specified number of unitholders      
accepted Texas Standard common stock in exchange for units. The representatives 
of the Trustee indicated that the Trustee would not be willing to enter into any
agreement to sell the royalty or to delay the liquidation and termination of the
Trust without being instructed to do so by a unitholder vote. They stated that  
the Trustee's role as a passive Trustee, with only such powers as are granted to
it pursuant to the Trust Agreement, prevented it from sponsoring or advocating  
any such transaction. The Trustee stated that it would be willing to entertain a
unitholder proposal to amend the Trust Agreement in order to provide an         
opportunity for the unitholders to make a decision regarding whether to accept  
an exchange offer. The representatives of Roberson Oil expressed an             
unwillingness to incur the expenses of registration of the exchange offer with  
the SEC unless the Trustee committed that it would not auction the royalty      
unless and until the exchange offer proved to be unsuccessful.                  

 After this meeting, the parties continued communications concerning the
details of a possible transaction that would satisfy their respective concerns. 
Roberson Oil concluded that it would be unwilling for Texas Standard to incur   
the expenses of registration of the exchange offer until unitholders approved   
appropriate amendments to the Trust Agreement. The Trustee and its counsel      
cooperated with representatives of Roberson Oil and its counsel in formulating a
proposal from Texas Standard and a related unitholder proposal that would be    
unobjectionable to the Trustee. Additionally, a representative of Roberson Oil  
inquired if the Trustee was aware of any unitholders that met the requirements  
for submitting a unitholder proposal under SEC rules and who might be interested
in presenting the unitholder proposal relating to amendments to the Trust       
Agreement in order to provide an opportunity for the unitholders to make a      
decision regarding whether to accept an exchange offer. The representative of   
the Trustee indicated that it was unaware of any such unitholder, but referred  
Roberson Oil to Robert J. DeBeer, a broker with Paine Webber whose clients      
included several unitholders. Roberson Oil approached Mr. DeBeer and explained  
the potential transaction, the Trust's role as a passive trust and the need for 
a unitholder proposal. Mr. DeBeer agreed to arrange a meeting with Roberson Oil 
and a client that might be interested in presenting a unitholder proposal. On   
March 28, 2001, Mr. DeBeer, representatives of Roberson Oil and Greg Haskin, a  
unitholder, met to discuss the proposed transaction and unitholder proposal. Mr.
Haskin subsequently agreed to present the proposed transaction to the Trust as a
unitholder proposal. Mr. Haskin and Roberson Oil had no prior relationship or   
affiliation with each other.                                                    

On March 30, 2001, the Trustee received a letter from Texas Standard, 
setting forth a proposal relating to its proposed exchange offer. In accordance 
with Rule 135 under the Securities Act of 1933, the letter contained only       
limited information regarding the exchange offer. Contemporaneously with the    
receipt of the letter from us, the Trustee received a unitholder proposal from  
Mr. Haskin. After reviewing the unitholder proposal, the Trustee determined that
it would call a special meeting of unitholders to consider and vote on the      
proposed amendments to the Trust Agreement set forth in the unitholder proposal.
The Trust filed preliminary proxy materials and revised preliminary proxy       
materials with the SEC and received comments from the staff of the SEC on the   
preliminary proxy materials, revised preliminary proxy materials and on the     
Trust's Form 10-K for the year ended December 31, 2000.                         

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  In light of the time required for the SEC staff's review process and the
Trust's preparation of responses to comments from the staff, the Trustee        
concluded that the timetable contemplated by the original letter from us and the
original unitholder proposal was unrealistic. The Trustee offered us the        
opportunity to make additional revised submissions. The Trustee received a      
revised letter from us dated July 3, 2001, which provided that we would effect  
an exchange offer as soon as practicable to acquire the units of the Trust in   
exchange for our common stock and warrants if we purchased the working interest 
from IMC Global and the royalty from the Trust. The full text of our revised    
letter is as follows:                                                           

July 3, 2001                                                                    

The Chase Manhattan Bank, Trustee                                               
Freeport-McMoRan Oil and Gas Royalty Trust                                      
700 Lavaca                                                                      
Austin, Texas 78702                                                             

Attn: Michael Ulrich                                                            

Re: Exchange Offer                                                    

Ladies and Gentlemen:                                                           

Pursuant to a letter of intent, Texas Standard Oil Company, a Texas   
corporation (the "TXS"), or its designee, proposes to purchase from IMC Global, 
Inc ("IMC") certain working interests in oil and gas properties (the "Working   
Interests"). The letter of intent states that, as consideration for the purchase
of the Working Interests, the purchaser will pay to IMC less than $5 million in 
cash, payable at the closing of the purchase (the "Closing"). The Working       
Interests consist of all oil and gas properties burdened by the overriding      
Royalty interest (the "Royalty") owned by Freeport-McMoRan Oil and Gas Royalty  
Trust (the "Trust"). TXS desires to acquire both the Working Interests and the  
Royalty.                                                                        

 If TXS purchases both the Working Interests and the Royalty, as soon as
practicable following the Closing, TXS proposes to effect an exchange offer (the
"Exchange Offer") pursuant to which it will acquire Units of Beneficial Interest
in the Trust (the "Units") in exchange for shares of its common stock, par value
$0.01 per share ("TXS Common Stock"), and warrants to purchase Company Common   
Stock (the "Warrants"). The Exchange Offer is more fully described below.       

TXS understands that a holder of Units has submitted to the Trustee a 
proposal (the "Shareholder Proposal") to be voted on at a Special Meeting of    
Unitholders. If the Shareholder Proposal is approved by the requisite vote of   
Unitholders, the Trustee will be instructed (a) to sell the Royalty to TXS for  
$1,000 on the same day that TXS purchases the Working Interests from IMC, and   
(b) to delay any liquidating distribution of Trust assets until completion of   
the Exchange Offer or December 31, 2001, whichever first occurs.                

This letter constitutes TXS's commitment to Unitholders that, if the  
Shareholder Proposal is approved at the Special Meeting by the requisite vote of
Unitholders, TXS will use its commercially reasonable efforts (a) to acquire the
Working Interests from IMC on or before August 31, 2001, (b) to acquire the     
Royalty for $1,000 in cash on the same day, (c) to file with the Securities     
Exchange Commission (the "SEC"), as soon as practicable following such Closing, 
a registration statement under the Securities Act of 1933 relating the Exchange 
Offer, (d) to cause such registration statement to become effective as soon as  
practicable thereafter, (e) upon effectiveness of the registration statement, to
make the Exchange Offer on substantially the terms described in this letter and 
(f) to complete the Exchange offer as soon as practicable but in any event prior
to December 31, 2001.                                                           

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The Exchange Offer                                                              

    The following is a brief summary of the basic terms of the Exchange Offer:

       1.  Prospectus.  The Exchange offer will be made only by means of a
prospectus.                                                           

        2.  Record Holders of At Least 2,000 Units.  All Unitholders holding
    of record at least 2,000 Units will be offered the opportunity to exchange
   their Units for securities of TXS as follows: for every 20 Units tendered
for exchange, TXS will issue one share of Common Stock. Without       
consideration of the effects of any exercise of the Warrants, if all  
   eligible Unitholders exchange their units for shares of TXS Common Stock,
the Unitholders as a group will own not less than 36% of the total    
outstanding shares of TXS.                                            

         3.  Record Holders of Fewer than 2,000 Units.  Unitholders holding of
    record fewer than 2,000 Units will not be entitled to exchange their units
    for Common Stock, but upon consummation of the Exchange offer such holders
   will be issued warrants entitling the holder to purchase shares of Common
   Stock on terms and for the consideration per share to be set forth in the
prospectus.                                                           

         4.  Minimum Condition.  TXS's obligation to exchange shares of Common
  Stock and to issue Warrants in the Exchange Offer will be subject to the
condition that Unitholders holding at least 50% of the total Units    
outstanding tender their Units for exchange.                          

       5.  Timing of the Exchange Offer.  TXS will not effect the Exchange
   Offer unless the Shareholder Proposal is approved at the Special Meeting.
    As soon as practicable following such approval and the acquisition of both
    the Royalty and the Working Interests, it will use commercially reasonable
efforts to file with the SEC a registration statement relating to the 
Exchange Offer. The Exchange Offer will be made promptly following    
effectiveness of the registration statement. TXS will not commence the
  Exchange Offer unless the registration statement becomes effective on or
prior to November 30, 2001.                                           

     6.  Purposes of the Exchange Offer.  The purposes of the Exchange
Offer are (a) to give Unitholders an incentive to vote in favor of the
  Shareholder Proposal at the Special Meeting, (b) to give Unitholders the
  opportunity to continue to participate as owners of interests in the oil
  and gas properties that the Royalty now burdens and (c) to provide funds
     for TXS's use (consisting of liquidating distributions on Units acquired in
 the Exchange Offer and any proceeds from the exercise of Warrants). Any
such funds will be used for general corporate purposes and to repay   
indebtedness.                                                         

 TXS is a newly organized entity with no substantial assets, but TXS has
obtained commitments that it believes will be sufficient to provide resources   
necessary to permit it to acquire the Working Interests from IMC and to effect  
the Exchange Offer. To TXS's knowledge, there is no fact or circumstance        
relating to TXS, its directors, officers or controlling persons that would      
prevent TXS's registration statement relating to the Exchange Offer from being  
declared effective by the SEC.                                                  

                     Very truly yours,

                              TEXAS STANDARD OIL COMPANY

                                By: /s/  TIMOTHY M. ROBERSON
                                            ------------------------------------
                                           Timothy M. Roberson
                                           President

   The exchange offer described in this document is being made in accordance
with our letter dated July 3, 2001. However, in order to comply with Exchange   
Act Rule 14d-10, we have elected to offer to exchange shares of our common stock
for units tendered by any unitholder, regardless of the number of units held of 
record by such tendering holder. We have not decreased the percentage of shares 
to be issued to unitholders of record of 2,000 or more units. As a result, if   
all unitholders participate in the exchange offer, we will issue approximately  
37% of our outstanding common stock to unitholders of the Trust.                

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    The Trustee also received a revised unitholder proposal on the date of our
revised letter. The revised unitholder proposal was approved at a special       
meeting of unitholders on October 5, 2001. The unitholder proposal provided that
the Trust Agreement be amended to instruct the Trustee to sell the royalty to us
for $1,000 and to delay any liquidating distribution of Trust assets until the  
earlier of completion of any exchange offer by us and December 31, 2001. We     
purchased the working interests from IMC Global on October 12, 2001 and the     
royalty from the Trust on October 11, 2001. On December 26, 2001, the Trustee   
issued a press release stating that it will not terminate the Trust until the   
earlier of the completion of our exchange offer or the depletion of the Trust's 
expense reserve.                                                                

   In the proxy statement filed by the Trust on August 30, 2001, the Trustee
estimated that the liquidating distribution to unitholders would be between two 
and two and one-half cents per unit. This estimated liquidating distribution    
represented the amounts previously set aside to cover the Trustee's expenses    
that the Trustee believed would not be needed for its anticipated expenses. On  
September 24, 2001, the Trustee filed an amendment to its proxy statement that  
revised the anticipated liquidating distribution to one-half of one cent per    
unit. The Trustee stated that the reduced amount available for the liquidating  
distribution was due to delays and higher than anticipated costs incurred in    
responding to SEC comments on the proxy statement. In the Trustee's press       
release on December 26, 2001, the Trustee stated that the entire amount of the  
Trust's remaining assets will be needed to pay the costs to wind up the affairs 
of the Trust. As a result, the Trustee stated that it did not expect to make a  
liquidating distribution.                                                       

As of December 31, 2000, $588,000 was remaining in the Trust's expense
reserve. For the nine month period ended September 30, 2001, the Trust incurred 
the following expenses:                                                         

                                                                [Download Table]

                                                              ESTIMATED
                                                               AMOUNT  
                                                              ---------
                                                                       
Legal Fees..................................................  $116,000 
Accounting Fees.............................................   105,000 
Trustee Fees................................................    58,000 
Solicitation Fees...........................................    32,000 
Mailing Costs...............................................    21,000 
Printing Costs..............................................    49,000 
Miscellaneous Other Fees....................................    31,000 
                                                              -------- 
          Total.............................................   412,000 
                                                              ======== 

For the year ended December 31, 2001, the Trust incurred total        
administrative expenses of $581,000 and earned $16,000 in interest. The         
additional $169,000 of administrative expenses incurred for the three month     
period ended December 31, 2001 consisted primarily of legal, accounting and     
trustee fees.                                                                   

REASONS FOR THE EXCHANGE OFFER                                                  

    We are making the exchange offer to comply with the representations in our
letter to the Trustee dated July 3, 2001. We agreed to make the exchange offer  
upon the purchase of the working interests and the royalty, which occurred in   
October 2001.                                                                   

OTHER TRANSACTIONS AND RELATIONSHIPS                                            

Prior to our proposal to purchase the working interest burdened by the
royalty from IMC Global and the royalty from the Trust, we did not have any     
relationship with the Trust. Other than with respect to the transaction         
discussed above, we have never had any material contacts or negotiations with   
the Trust regarding a merger, tender offer, purchase of assets or other similar 
transaction. We do not, to our knowledge the Trustee does not, and none of our  
officers, directors or affiliates, or any associate or majority owned subsidiary
of any of the foregoing do not, beneficially own any units of the Trust. Other  
than with respect to our exchange offer, to our knowledge, none of the persons  
or entities described in the preceding sentence has entered into a transaction  
regarding the Trust's securities during the past 60 days.                       

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ALTERNATIVES TO THE EXCHANGE OFFER                                              

  We are not aware of any alternative to the exchange offer, other than to
continue to own units of the Trust. The Trust Agreement requires the Trustee to 
liquidate the Trust. Based on publicly available information, we do not expect  
the Trust to make any liquidating or other distributions of cash to the         
unitholders.                                                                    

THE EXCHANGE OFFER

TERMS OF THE EXCHANGE OFFER                                                     

    Upon the terms and subject to the conditions stated in this prospectus and
in the letter of transmittal, we will accept all units properly tendered and not
withdrawn prior to 5:00 p.m. New York City time, on the expiration date. We are 
offering to exchange one share of our common stock for every 20 units of the    
Trust tendered by record holders of units of the Trust. As of the date of this  
prospectus, 14,975,390 units were issued and outstanding. This prospectus,      
together with the accompanying letter of transmittal, is initially being sent to
all registered holders of the units as of the close of business on April 1,     
2002.                                                                           

  We intend to conduct the exchange offer as required by the Exchange Act,
and the rules and regulations of the SEC under the Exchange Act, including      
Regulation 14D and Rule 14e-1, to the extent applicable. Rule 14e-1 describes   
unlawful tender practices under the Exchange Act. This section requires us,     
among other things:                                                             

- to hold our exchange offer open for twenty business days;           

  - to keep the exchange offer open for at least 10 business days after we
change the percentage of units sought or the consideration we are 
offering;                                                         

  - to promptly pay the consideration offered or return the units tendered
after the termination of our exchange offer; and                  

 - to issue a press release in the event of an extension of the exchange
offer.                                                            

   If any tendered units are not accepted for exchange because of an invalid
tender or the occurrence of other events described in this prospectus,          
certificates for these unaccepted units will be returned, at our cost, to the   
tendering holder of the units or, in the case of existing notes tendered by     
book-entry transfer, into the holder's account at the Depository Trust Company  
(DTC), according to the procedures described below, as promptly as practicable  
after the expiration date.                                                      

    Holders who tender units in the exchange offer will not be required to pay
brokerage commissions or fees or, subject to the instructions in the letter of  
transmittal, transfer taxes related to the exchange of units in the exchange    
offer. We will pay all charges and expenses, other than applicable taxes, in    
connection with the exchange offer.                                             

    NEITHER WE, OUR BOARD OF DIRECTORS OR THE TRUSTEE MAKES ANY RECOMMENDATION
TO HOLDERS OF UNITS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY
PORTION OF THEIR UNITS TO THE EXCHANGE OFFER. MOREOVER, NO ONE HAS BEEN         
AUTHORIZED TO MAKE ANY RECOMMENDATION. HOLDERS OF UNITS MUST MAKE THEIR OWN     
DECISION WHETHER TO TENDER IN THE EXCHANGE OFFER AND, IF SO, THE AMOUNT OF UNITS
TO TENDER AFTER READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND       
CONSULTING WITH THEIR ADVISORS, IF ANY, BASED ON THEIR OWN FINANCIAL POSITION   
AND REQUIREMENTS.                                                               

ISSUANCE OF SHARES; FRACTIONAL SHARES                                           

 We shall be considered to have accepted units tendered according to the
procedures in this prospectus when, as and if we have given oral or written     
notice of acceptance to the exchange agent. The exchange agent will act as agent
for the tendering holders for the purpose of receiving shares of common stock   
from us and delivering certificates representing shares of our common stock to  
those holders. Assuming the conditions to the exchange offer are met and the    
exchange offer is consummated, we will issue shares of                          
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common stock to unitholders that have properly tendered and not withdrawn their 
units as soon as practicable following the expiration date.                     

We will not issue any fractional shares in the exchange offer. We will
determine the number of shares of common stock to be issued to each tendering   
unitholder by dividing the number of units tendered by 20 and rounding up to the
nearest whole number.                                                           

EXPIRATION DATE; EXTENSIONS; AMENDMENTS                                         

The expiration date for the exchange offer is 5:00 p.m., New York City
time, on May 6, 2002, unless extended. We, in our sole discretion, reserve the  
right to extend the exchange offer. We can extend the exchange offer by giving  
oral or written notice to the exchange agent. During any extension, all units   
previously tendered and not withdrawn will remain subject to our offer. We      
currently do not intend to extend the exchange offer unless an extension is     
required to comply with any applicable legal requirements.                      

   Subject to the SEC's rules and regulations, we also expressly reserve the
right, in our sole discretion:                                                  

- to delay acceptance for exchange or exchange of any units, or to    
  terminate the exchange offer and to refuse to accept for exchange or
     exchange any units not previously accepted, if any of the conditions to
the exchange offer are not satisfied on the expiration date; or   

     - to waive any condition or otherwise amend the terms of the exchange offer
in any manner.                                                    

Any delay in acceptance, termination, extension, or amendment will be 
followed as promptly as practicable by oral or written notice to the exchange   
agent and by making a public announcement. If the exchange offer is amended in a
manner determined by us to constitute a material change, we will promptly       
disclose the amendment in a manner reasonably calculated to inform unitholders  
of the amendment. Without limiting the manner in which we may choose to make    
public announcements of any delay in acceptance, termination, extension, or     
amendment of the exchange offer, we shall have no obligation to publish, advise,
or otherwise communicate any public announcement, other than by making a timely 
release to Business Wire.                                                       

If we make a material change in the terms of our exchange offer or the
information concerning our offer, or if we waive a material condition of our    
offer, we will extend our offer to the extent required under the Exchange Act.  
If we make a change in the percentage of units sought or the consideration we   
are offering and our offer is scheduled to expire at any time earlier than the  
tenth business day from and including the date that notice of such change is    
first so published, sent or given, we will extend our exchange offer until the  
expiration of that ten business day period.                                     

PROCEDURES FOR TENDERING                                                        

  Only a registered holder may tender its units in the exchange offer. Any
beneficial owner whose units are registered in the name of his broker, dealer,  
commercial bank, trust company or other nominee and who wishes to tender should 
contact the registered holder promptly and instruct the registered holder to    
tender on his behalf and comply with the instructions in this prospectus and the
letter of transmittal. If the beneficial owner wishes to tender on his own      
behalf, the beneficial owner must, prior to completing and executing the letter 
of transmittal and delivering his units, either make appropriate arrangements to
register ownership of the units in the owner's name or obtain a properly        
completed bond power from the registered holder. The transfer of record         
ownership may take considerable time.                                           

    The tender by a holder will constitute an agreement between the holder, us
and the exchange agent according to the terms and subject to the conditions     
described in this prospectus and in the letter of transmittal.                  

  THE METHOD OF DELIVERY OF UNITS, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE     
UNITHOLDERS. DELIVERY OF SUCH DOCUMENTS WILL BE DEEMED MADE ONLY WHEN ACTUALLY  
RECEIVED BY THE EXCHANGE AGENT. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED 
TO ASSURE DELIVERY TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE. NO       
LETTERS OF TRANSMITTAL OR UNITS                                                 
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SHOULD BE SENT TO US. A UNITHOLDER MAY ALSO REQUEST THAT ITS RESPECTIVE BROKERS,
DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES EFFECT THE TENDER FOR    
SUCH UNITHOLDER IN EACH CASE AS DESCRIBED IN THIS PROSPECTUS AND IN THE LETTER  
OF TRANSMITTAL.                                                                 

UNITS HELD IN CERTIFICATED FORM                                             

    For a unitholder to validly tender units, the exchange agent must receive,
prior to 5:00 p.m. New York City time on the expiration date, at its address set
forth in this prospectus:                                                       

 - a properly completed and validly executed letter of transmittal, or a
       manually signed facsimile thereof, together with any signature guarantees
   and any other documents required by the instructions to the letter of
transmittal, and                                                  

- certificates for tendered units.                                    

UNITS HELD IN BOOK-ENTRY FORM                                               

  We understand that the exchange agent will make a request promptly after
the date of the prospectus to establish accounts for the units at DTC for the   
purpose of facilitating the exchange offer, and subject to their establishment, 
any financial institution that is a participant in DTC may make book-entry      
delivery of units by causing DTC to transfer the units into the exchange agent's
account for the units using DTC's procedures for transfer.                      

If you desire to transfer units held in book-entry form with DTC, the 
exchange agent must receive, prior to 5:00 p.m. New York City time on the       
expiration date, at its address set forth in this prospectus, a confirmation of 
book-entry transfer of the existing notes into the exchange agent's account at  
DTC, which is referred to in this prospectus as a "book-entry confirmation,"    
and:                                                                            

 - a properly completed and validly executed letter of transmittal, or a
       manually signed facsimile thereof, together with any signature guarantees
and other documents required by the instructions in the letter of 
transmittal; or                                                   

   - an agent's message transmitted pursuant to DTC's Automated Tender Offer
Program.                                                          

TENDER OF EXISTING NOTES USING DTC'S AUTOMATED TENDER OFFER PROGRAM (ATOP)  

The exchange agent and DTC have confirmed that the exchange offer is  
eligible for DTC's Automated Tender Offer Program. Accordingly, DTC participants
may electronically transmit their acceptance of the exchange offer by causing   
DTC to transfer units held in book-entry form to the exchange agent in          
accordance with DTC's ATOP procedures for transfer. DTC will then send a book-  
entry confirmation, including an agent's message to the exchange agent.         

    The term "agent's message" means a message transmitted by DTC, received by
the exchange agent and forming part of the book-entry confirmation, which states
that DTC has received an express acknowledgment from the participant in DTC     
tendering units that are the subject of that book-entry confirmation that the   
participant has received and agrees to be bound by the terms of the letter of   
transmittal, and that we may enforce such agreement against such participant. If
you use ATOP procedures to tender units you will not be required to deliver a   
letter of transmittal to the exchange agent, but you will be bound by its terms 
just as if you had signed it.                                                   

SIGNATURES                                                                  

 Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by a member firm of a registered national       
securities exchange or of the National Association of Securities Dealers, Inc.  
or a commercial bank or Trust company having an office or correspondent in the  

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United States or an "eligible guarantor institution" within the meaning of Rule 
17Ad-15 under the Exchange Act, unless the units tendered with the letter of    
transmittal are tendered:                                                       

  - by a registered holder who has not completed the box entitled "Special
  Registration Instructions" or "Special Delivery Instructions" in the
letter of transmittal; or                                         

- for the account of an institution eligible to guarantee signatures. 

If the letter of transmittal is signed by a person other than the     
registered holder who is listed as the owner, the units must be endorsed or     
accompanied by appropriate bond powers which authorize the person to tender the 
units on behalf of the registered holder who is listed as the owner, signed as  
the name of the registered holder(s) who appears on the units. If the letter of 
transmittal or any units or bond powers are signed or endorsed by trustees,     
executors, administrators, guardians, attorneys-in-fact, officers of            
corporations or others acting in a fiduciary or representative capacity, those  
persons should so indicate when signing, and unless waived by us, evidence      
satisfactory to us of their authority to so act must be submitted with the      
letter of transmittal.                                                          

DETERMINATIONS OF VALIDITY                                                  

All questions as to the validity, form, eligibility, including time of
receipt, acceptance and withdrawal of the tendered units will be determined by  
us in our sole discretion. This determination will be final and binding. We     
reserve the absolute right to reject any and all units not properly tendered or 
any units our acceptance of which would, in the opinion of our counsel, be      
unlawful. We also reserve the absolute right to waive any irregularities or     
conditions of tender as to particular units. Our interpretation of the terms and
conditions of the exchange offer, including the instructions in the letter of   
transmittal, will be final and binding on all parties. Unless waived, any       
defects or irregularities in connection with tenders of units must be cured     
within the time we shall determine. Although we intend to notify unitholders of 
defects or irregularities related to tenders of units, neither we, the exchange 
agent nor any other person shall be under any duty to give notification of      
defects or irregularities related to tenders of units nor shall any of them     
incur liability for failure to give notification. Tenders of units will not be  
considered to have been made until the irregularities have been cured or waived.
Any units received by the exchange agent that we determine are not properly     
tendered or the tender of which is otherwise rejected by us and as to which the 
defects or irregularities have not been cured or waived by us will be returned  
by the exchange agent to the tendering unitholder or, in the case of units      
tendered by book-entry transfer into the holder's account at DTC, unless        
otherwise provided in the letter of transmittal, as soon as practicable         
following the expiration date.                                                  

WITHDRAWAL OF TENDERS                                                           

  Except as otherwise provided in this prospectus, tenders of units may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the expiration 
date. In addition, you may withdraw any units that we have not previously       
accepted for exchange and exchanged for our common stock after June 6, 2002. To 
withdraw a tender of units in the exchange offer, a written or facsimile        
transmission of a notice of withdrawal must be received by the exchange agent at
its address listed below or you must comply with the procedures for DTC's       
Automated Tender Offer Program. A notice of withdrawal that is being sent prior 
to the expiration of the exchange offer must be received by the exchange agent  
prior to 5:00 p.m., New York City time, on the expiration date. Any notice of   
withdrawal must:                                                                

- specify the name of the person having deposited the units to be     
withdrawn;                                                        

   - identify the units to be withdrawn, including the certificate number or
       numbers and number of units or, in the case of existing notes transferred
by book-entry transfer, the name and number of the account at the 
depositary to be credited;                                        

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- be signed by the same person and in the same manner as the original 
      signature on the letter of transmittal by which the units were tendered,
including any required signature guarantee, or be accompanied by  
   documents of transfer sufficient to permit the transfer agent for the
     units to register the transfer of the units into the name of the person
withdrawing the tender; and                                       

     - specify the name in which any of these units are to be registered and the
      address to which units should be returned, if different from that of the
person who deposited the units to be withdrawn.                   

   All questions as to the validity, form and eligibility, including time of
receipt, of withdrawal notices will be determined by us. Our determination will 
be final and binding on all parties. Any units so withdrawn will be judged not  
to have been tendered according to the procedures in this prospectus for        
purposes of the exchange offer, and no shares of common stock will be issued in 
exchange for those units unless the units so withdrawn are validly re-tendered. 
Any units that have been properly withdrawn and are not accepted for exchange   
will be returned to the holder of the units or, in the case of units tendered by
book-entry transfer into the holder's account at DTC, without cost to the       
holder. This return or crediting will take place as soon as practicable after   
withdrawal. Properly withdrawn units may be re-tendered by following one of the 
procedures described above under "Procedures for Tendering" at any time prior to
the expiration date.                                                            

CONDITIONS                                                                      

    Consummation of the exchange offer is subject to the following conditions:

     - Holders of units representing at least 50% of the total outstanding units
      must validly tender and not withdraw their units prior to the expiration
date.                                                             

     - The Trustee must not have completed the liquidation of the Trust prior to
the expiration date.                                              

     - The exchange offer must comply with the securities laws or any applicable
       interpretation of the staff of the Securities and Exchange Commission and
       the securities law of states where unitholders are citizens and which are
applicable to us as a result of this exchange offer.              

   - The registration statement of which this prospectus is a part must have
       become effective and the SEC must not have issued a stop order suspending
the effectiveness of the registration statement or initiated or   
       threatened proceedings for the purpose of issuing a stop order suspending
the effectiveness of the registration statement.                  

  - We must have received all necessary state securities law or "blue sky"
authorizations.                                                   

    - There must not be in effect any temporary restraining order, preliminary
     or permanent injunction or other order or decree issued by any court or
      agency of competent jurisdiction or other legal restraint or prohibition
preventing the completion of the exchange offer.                  

     - There must not have been enacted, entered, promulgated or enforced by any
court, administrative agency or commission, or other governmental 
 authority or instrumentality, any statute, rule, regulation, order,
 injunction or decree that prohibits, restricts or makes illegal the
completion of our exchange offer.                                 

     - There must not be pending or threatened any suit, action or proceeding by
any governmental entity challenging our exchange offer, seeking to
     restrain or prohibit the completion of our exchange offer or seeking to
      obtain from us any damages that are material to us or which is otherwise
reasonably likely to have a material adverse effect on us.        

  The conditions listed above are solely for our benefit and we may assert
them regardless of the circumstances giving rise to any of the conditions,      
including any action or inaction by us. We may waive any of these conditions in 
whole or in part. The determination as to whether any condition has been        
satisfied shall be in our reasonable judgment and will be final and binding. We 
will determine whether or not all of the conditions have been met, and whether  
or not to waive any conditions on the expiration date. We, in our sole          
discretion, will not be required to accept for exchange or exchange any units   
and may                                                                         
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terminate the exchange offer if any of the conditions described above are not   
met. In the event that any of these conditions are not met and the exchange     
offer is not consummated, we will return all certificates representing units    
that have been tendered to us as soon as possible following the expiration date.

EXCHANGE AGENT                                                                  

  Securities Transfer Corporation has been appointed as exchange agent for
the exchange offer. In this capacity, the exchange agent has no fiduciary duties
and will be acting solely on the basis of our directions. Requests for          
assistance and requests for additional copies of this prospectus or of the      
letter of transmittal should be directed to the exchange agent. You should send 
certificates for units, letters of transmittal and any other required documents 
to the exchange agent addressed as follows:                                     

By Mail:                                                                        

Securities Transfer Corporation                                       
P.O. Box 701629                                                       
Dallas, TX 75370-1629                                                 

By Hand Delivery or Overnight Courier:                                          

Securities Transfer Corporation                                       
2591 Dallas Parkway, Suite 102                                        
Frisco, TX 75034                                                      
Facsimile Transmission: (469) 633-0088                                
Confirm by Telephone: (469) 633-0069                                  

  DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS LISTED
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS DESCRIBED     
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF THE LETTER OF TRANSMITTAL.        

SOLICITATION OF TENDERS; FEES AND EXPENSES                                      

     We will bear the expenses of requesting that unitholders tender their units
for common stock. The principal solicitation under the exchange offer is being  
made by mail. Additional solicitations may be made by our officers and regular  
employees and our affiliates in person, by telegraph, telephone or telecopier.  

    We have retained Morgan Spaulding, Inc. to act as a broker-dealer in those
states where state securities laws require offers to be made by a broker-dealer 
registered in such state. If you are a resident of the state of Texas, you may  
contact Morgan Spaulding at (972) 889-8001. Other than our retention of a       
broker-dealer for the purpose of complying with state "blue sky" laws, we have  
not retained any dealer-manager in connection with the exchange offer and will  
not make any payments to brokers, dealers or other persons soliciting           
acceptances of the exchange offer. We, however, will pay the exchange agent     
reasonable and customary fees for its services and will reimburse the exchange  
agent for its reasonable out-of-pocket costs and expenses in connection with the
exchange offer and will indemnify the exchange agent for all losses and claims  
incurred by it as a result of the exchange offer. We may also pay brokerage     
houses and other custodians, nominees and fiduciaries the reasonable            
out-of-pocket expenses incurred by them in forwarding copies of this prospectus,
letters of transmittal and related documents to the beneficial owners of the    
units and in handling or forwarding tenders for exchange.                       

 We will pay the expenses to be incurred in connection with the exchange
offer, including fees and expenses of the exchange agent, accounting and legal  
fees, and printing costs. The Trust will not pay any portion of the fees and    
expenses of the exchange offer. We will use our cash flows from operations to   
cover                                                                           

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the expenses of the exchange offer. We estimate that the costs and expenses     
incurred in connection with the exchange offer will be approximately $625,233,  
as summarized below:                                                            

                                                                [Download Table]

                                                               ESTIMATED
                                                                AMOUNT  
                                                               ---------
                                                                        
SEC Registration Fee........................................   $    233 
State "Blue Sky" Registrations Fees.........................     20,000 
Broker-Dealer Fees..........................................     40,000 
Legal Fees..................................................    350,000 
Accounting Fees.............................................     30,000 
Reserve Report Preparation Fees.............................     25,000 
Printing Costs..............................................     40,000 
Mailing Costs...............................................     40,000 
Exchange Agent Fees.........................................     50,000 
Transfer Agent Fees.........................................     15,000 
Information Agent fees......................................      5,000 
Miscellaneous Other Fees....................................     10,000 
                                                               -------- 
          Total.............................................   $625,233 
                                                               ======== 

  You will not be obligated to pay any transfer tax in connection with the
exchange, except if you instruct us to register common stock in the name of, or 
request that units not tendered or not accepted in the exchange offer be        
returned to, a person other than you, you will be responsible for the payment of
any applicable transfer tax.                                                    

ACCOUNTING TREATMENT                                                            

   The exchange offer will be accounted for as an acquisition of oil and gas
interests in exchange for an issuance of equity, using the purchase method of   
accounting.                                                                     

NO CONSENTS OR AUTHORIZATIONS                                                   

Under the Texas Trust Code, no vote of the unitholders of the Trust is
required in connection with this exchange offer. No vote of our shareholders is 
required under the Texas Business Corporation Act in connection with the        
exchange offer. No additional consents or authorizations from either party are  
necessary for the consummation of this exchange offer.                          

REGULATORY REQUIREMENTS                                                         

   This registration statement on Form S-4 must become effective and we must
comply with state securities laws in the states where unitholders are citizens. 
No other state or federal regulatory requirements have to be complied with or   
approval obtained in connection with the exchange offer.                        

NO INDEPENDENT REPRESENTATIVE OR FAIRNESS OPINION                               

   No independent representative of the unitholders was engaged for purposes
of negotiating the terms of the exchange offer, nor was a fairness opinion,     
appraisal or other report related to the exchange offer obtained from an        
unaffiliated third party. The absence of these protections was considered, but  
was not judged to be significant by us, in determining the fairness of the      
proposed exchange offer to the unitholders. We determined that the likelihood   
that such an unaffiliated representative of the unitholders or a fairness       
opinion would add value to the process of structuring the combination           
transactions was minimal and outweighed the costs of retaining such a           
representative or fairness opinion. As a result, the exchange rate and other    
terms of the exchange offer may not be as favorable as the terms that might have
been obtained had an independent representative been retained or a fairness     
opinion requested.                                                              

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MATERIAL FEDERAL INCOME TAX CONSEQUENCES

GENERAL                                                                         

   The following description of the material federal income tax consequences
of the exchange offer that generally should apply to unitholders who are U.S.   
persons and who hold their units as capital assets within the meaning of Section
1221 of the Internal Revenues Code is the opinion of Haynes and Boone, LLP, our 
counsel. This summary is based on certain assumptions, representations and      
reasoning, which are described below. The federal income tax consequences of the
exchange offer could differ substantially from those described herein if such   
assumptions and representations are not true, accurate and complete in all      
respects or if the Internal Revenue Service rejects the reasoning below. In     
addition, many aspects of federal income taxation that may be relevant to a     
particular unitholder, or to types of unitholders who are subject to specific   
tax treatment, including non-U.S. persons, financial institutions, tax-exempt   
organizations, insurance companies, broker-dealers and possibly other types of  
taxpayers, are not addressed. Finally, this summary is based on current         
provisions of the Internal Revenue Code, existing and proposed regulations under
the Internal Revenue Code, and current administrative rulings and court         
decisions, all of which may be changed retroactively or prospectively.          

ASSUMPTIONS AND REPRESENTATIONS                                                 

 This summary is based on the following assumptions and representations:

   - On October 5, 2001, we became obligated to acquire the royalty interest
and make the exchange offer.                                      

    - On October 5, 2001, the approximate fair market value of the outstanding
       Trust units was $1,048,277 based on the closing sales price of $0.07 then
reported for such units.                                          

   - On October 5, 2001, the approximate amount of the Trust's cash reserves
was $217,000.                                                     

 - On October 5, 2001, the only assets of the Trust were the partnership
interest and cash reserves.                                       

 - On October 5, 2001, the only asset of the partnership was the royalty
interest.                                                         

- On October 5, 2001, starting with the $1,048,277 market value of the
    outstanding Trust units and subtracting the cash reserves of $217,000,
there is a difference of $831,277.                                

- On October 5, 2001, the estimated liquidating distribution from the 
      Trust, expected to occur on December 31, 2001, was approximately $75,000
  to $150,000, or approximately $0.005 to $.01 per unit (including the
    Trust's share of the proceeds from the sale of the royalty interest to
us).                                                              

 - The $831,277 difference between market value of the outstanding Trust
      units and the cash reserves logically reflects value attributable to the
    Trust's partnership interest. The partnership held a single asset, the
royalty interest.                                                 

- The value of the royalty interest on October 5, 2001 substantially  
exceeded $1,000.                                                  

NO TAX RULINGS                                                                  

    No rulings have been requested from the Internal Revenue Service regarding
the federal income tax consequences of the exchange offer or related            
transactions. No assurances can be given that the Internal Revenue Service or   
the courts will agree with this summary.                                        

  YOU SHOULD CONSULT YOUR OWN TAX ADVISOR REGARDING THE FEDERAL INCOME TAX
CONSEQUENCES OF THE EXCHANGE OFFER APPLICABLE TO YOU, AND CONCERNING ANY SPECIAL
TAX CONSIDERATIONS THAT MAY APPLY TO YOU, INCLUDING ALTERNATIVE MINIMUM,        
FOREIGN, STATE AND LOCAL TAXES.                                                 

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SUBSTANCE OVER FORM PRINCIPLES                                                  

The unitholders hold the right to exchange Trust units for our shares.
However, the partnership, not the unitholders, transferred value (the royalty   
interest) to us for the right to exchange Trust units for our shares. We would  
not have agreed to exchange our shares to the unitholders for Trust units unless
the partnership first transferred the royalty interest to us. The imputed value 
of the royalty interest (Trust market value less cash reserves) was far greater 
than the $1,000 of cash that we paid to the partnership. The value that we      
received for our agreement to exchange our shares for units of the Trust was the
transfer of ownership of the royalty interest, a partnership asset. For federal 
income tax purposes, there is substantial authority for treating the            
unitholders' right to exchange Trust units for our shares pursuant to the       
exchange offer as part of the consideration we paid for the royalty, under      
assignment of income and substance-over-form principles, because:               

- The unitholders were the ultimate beneficial owners of 99.9% of the 
partnership and its assets.                                       

  - The imputed value of the royalty interest on October 5, 2001, when the
  unitholders approved the amendment to require the Trustee to sell or
cause the sale of the royalty interest to us for $1,000, was      
substantially greater than $1,000.                                

  - The unitholders received exchange rights worth substantially more than
      the estimated liquidating distribution from the Trust following the sale
of the royalty interest to us.                                    

- The partnership could not avoid a taxable event by assigning to the 
 unitholders the right to receive proceeds from partnership property
    because prevention of the assignment of income is a basic principle of
the federal income tax system.                                    

  - The exchange rights are options to acquire our shares. In general, for
       federal income tax purposes, the recipient of an option to acquire shares
    that is reasonably certain to be exercised is treated as receiving the
      underlying shares. Unitholders who do not exchange their Trust units for
      our shares are not expected to receive any consideration for their units
      when the Trust liquidates. Unitholders who do exchange their Trust units
       for our shares will own those shares. This economic difference in outcome
       indicates that the exchange rights are options to acquire shares that are
     reasonably certain to be exercised. As a result, the shares are treated
  as following the same ownership path, through the partnership to the
unitholders, as the exchange rights.                              

 Based on these general principles, for federal income tax purposes, the
right to acquire our shares pursuant to the exchange offer should be            
characterized, to reflect economic substance and not just form, as paid to the  
partnership. The exchange offer should be characterized as most of the          
consideration that we paid for the royalty interest that we purchased from the  
partnership on October 5, 2001. As a consequence, share received upon exercise  
of the exchange rights should be treated for federal income tax purposes as if  
they were granted to the partnership, distributed to the Trust upon liquidation 
of the partnership and then distributed by the Trust to the unitholders.        

ROYALTY PARTNERSHIP                                                             

The partnership should recognize gain or loss equal to the difference 
between (1) the consideration we paid to the partnership for the royalty (i.e., 
the sum of $1,000 plus the fair market value of the shares received upon        
exercise of the exchange rights, which the partnership should be treated as     
having received), less (2) the partnership's adjusted tax basis in the royalty  
interest.                                                                       

   The partnership is not subject to federal income taxes at the partnership
level. Instead, each partner includes its distributive share of the             
partnership's income, gains, losses, deductions and credits when computing its  
taxable income. The Trust's distributive share from the partnership is equal to 
its percentage interest in the partnership, or 99.9%.                           

     The partnership should not recognize any gain or loss upon distributing the
proceeds from the royalty transfer to the Trust and the Managing General Partner
in liquidation of the partnership.                                              

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   The partnership's holding period with respect to the shares received upon
exercise of the exchange rights it is treated as having received should begin on
October 12, 2001, the day after the closing of the sale of the royalty interest 
to us.                                                                          

ROYALTY TRUST                                                                   

    The Trust is a grantor trust for federal income tax purposes, meaning that
for such purposes the Trust is disregarded and the unitholders are treated as if
they directly own undivided interests in the Trust's income and principal. As a 
result, the Trust is not subject to federal income taxes at the Trust level.    
Instead, each unitholder includes the income, gains, losses, deductions and     
credits attributable to such unitholder's share of the Trust's assets, including
the Trust's interest in the partnership, when computing its taxable income.     

UNITHOLDERS                                                                     

A unitholder should include in income its distributive share of the   
partnership's gain or loss upon the sale of the royalty to us. Except to the    
extent of the depletion recapture amount described below, any such gain or loss 
should be a long-term capital gain or loss. If the unitholder is an individual, 
a long-term capital gain should be taxable at a maximum rate of 20%. The        
unitholder's ability to use long-term capital losses is subject to substantial  
restrictions.                                                                   

The unitholder must treat as ordinary income its depletion recapture  
amount, which is the amount equal to the lesser of such gain or the sum of the  
unitholder's prior depletion deductions with respect to the royalty, but not in 
excess of the unitholder's initial tax basis in the unitholder's units. If the  
unitholder is an individual, the depletion recapture amount should be taxable at
a maximum rate of 39.6%.                                                        

A unitholder should recognize gain upon the partnership's liquidating 
distribution to the Trust of the proceeds from the royalty transfer only to the 
extent that the unitholder's share of the amount of any money distributed, or   
deemed distributed, exceeds the unitholder's tax basis in the unitholder's units
immediately before the distribution, but after adjustment to reflect the        
unitholder's distributive share of the partnership's gain or loss upon the sale 
of the royalty to us. If the unitholder is an individual and has held his units 
for at least 12 months, such gain should be a long-term capital gain taxable at 
a maximum rate of 20%. No unitholder may recognize any loss upon the            
partnership's liquidating distribution to the Trust of the proceeds from the    
royalty transfer because such proceeds should be treated as including property  
(i.e., the shares received upon exercise of the exchange rights) in addition to 
money.                                                                          

Based upon treating the shares received upon exercise of the exchange 
rights as consideration paid to the partnership for the royalty interest, for   
the reasons given above, and except as described above, a unitholder should not 
recognize any gain or loss upon the exchange of such unitholder's units for     
shares of our common stock because the unitholder should be treated for federal 
income tax purposes as if the unitholder received those shares in a liquidating 
distribution from the partnership. The unitholder's tax basis in such shares    
should equal the unitholder's tax basis in the unitholder's units, after        
adjustment to reflect the unitholder's distributive share of the partnership's  
gain or loss upon the sale of the royalty to us, and after subtracting the      
amount of any money distributed, or deemed distributed, to the unitholder in    
liquidation of the partnership. The unitholder's holding period for such shares 
should include the partnership's holding period for such shares, which began on 
October 12, 2001 as described above.                                            

RIGHTS OF DISSENTING SHAREHOLDERS 

     There are no appraisal or dissenters' rights that arise as a result of this
exchange offer. Your choice as a unitholder of the Trust is to either           
participate in the exchange offer and tender all or some of your units for our  
common stock, or not participate in this exchange offer and retain your units.  

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ACCESS TO INVESTOR LIST                                                         

     Under the Trust Agreement, a unitholder may inspect the list of unitholders
in the Trust during reasonable business hours at the offices of the Trustee     
located at 700 Lavaca, 5th Floor, Austin, Texas 77002. Unitholders also have the
right under the Trust Agreement to inspect the books and records of the Trustee 
at reasonable times.                                                            

METHOD OF DETERMINING EXCHANGE VALUES 

The terms of the royalty held by the Trust required the owner of the  
working interests to have an investment grade bond rating. Since we do not have 
such a rating, this provision of the royalty prevented us from acquiring the    
working interests. Therefore, it was necessary for us to acquire the royalty in 
order to waive this prohibition. In addition, acquiring the royalty allows us to
save the administrative, reporting and computational burdens associated with the
royalty. To induce unitholders to approve the sale of the royalty to us, we     
offered to exchange our common stock for units of the Trust. We did not use any 
valuation formula to determine the number of shares of common stock to be       
offered to unitholders. The exchange ratio of one share of common stock for     
every 20 units tendered was selected primarily because it would result in the   
issuance of approximately one-third of the shares of our common stock to        
unitholders, if all unitholders accepted the offer. We believed that this was a 
sufficient interest in the company to induce unitholders to approve the sale of 
the royalty to us. Our decision was not based on an analysis of the relative    
value of our stock and the Trust units or of the value of our units and the     
Trust's assets. Therefore, the exchange ratio of one share of our common stock  
for 20 Trust units could be deemed arbitrary.                                   

We did not employ a more objective valuation criteria to determine the
exchange ratio for the following reasons:                                       

- The working interest owner was not expected to make any additional  
     payments with respect to the royalty, and the Trust was not expected to
       make any material distributions to unitholders. This made it difficult to
evaluate the value of the royalty and the Trust units.            

     - We are a newly formed private company, with no history of operations, and
 very little likelihood of liquidity in our common stock. We did not
      believe it was practical to place a meaningful value on our common stock
for purposes of establishing an exchange ratio for Trust units.   

    The Trust's sole remaining asset consists of cash that will be used to pay
the Trustee's fees and expenses. To our knowledge, the Trustee does not hold any
units and therefore, will not be participating in the exchange offer.           

RECOMMENDATION OF THE TRUSTEE 

  The Trust is a passive entity and does not engage in an active business.
The Trust Agreement does not require the Trustee to accept or reject the        
exchange offer or take any actions with respect to the offer. The Trustee,      
therefore, has not expressed an opinion regarding the exchange offer or made a  
recommendation regarding the acceptance of the offer.                           

SELECTED FINANCIAL DATA OF THE TRUST

   The following table shows selected financial data regarding the Trust for
the five years ended December 31, 2001. The financial data for each of the two  
years in the period ended December 31, 2001 has been derived from the audited   
statements of assets, liabilities and trust equity, and the related statements  
of net loss and distributable income, and changes in trust equity that were     
prepared in accordance with generally accepted accounting principles and are    
included in this prospectus. The financial data for the three years ended       
December 31, 1999 has been derived from the Trust's audited financial statements
that were prepared on a cash basis and is not necessarily comparable to the     
financial data for                                                              

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the two years ended December 31, 2001. You should read this data in conjunction 
with "Texas Standard's Discussion and Analysis of Financial Condition and       
Results of Operation of the Freeport-McMoRan Oil and Gas Royalty Trust" and the 
Trust's financial statements and notes thereto included in this prospectus.     

                                                        [Enlarge/Download Table]

                                              YEARS ENDED DECEMBER 31,                
                              --------------------------------------------------------
                                2001       2000       1999        1998         1997   
                              --------   --------   --------   ----------   ----------
                                                                                      
Royalty Proceeds............. $     --   $     --   $     --   $       --   $       --
Distributable Cash...........       --         --         --           --           --
Distributable Cash Per                                                                
  Unit.......................       --         --         --           --           --
Cash......................... $ 22,691   $615,459   $896,620   $1,406,603   $1,705,582
Total Assets.................   22,691    615,459    896,620    1,406,603    1,705,582
Trust Corpus.................   22,691    615,459         --           --           --
Interest Income.............. $ 15,936   $ 41,414   $ 50,013   $   72,154   $   78,890
Trust Administrative                                                                  
  Expenses...................  581,243    339,992    559,995      371,133      356,880
Reserve for Future Trust                                                              
  Expenses...................   22,691    587,998    896,620    1,406,603    1,705,582

TEXAS STANDARD'S DISCUSSION AND ANALYSIS OF 

FINANCIAL CONDITION AND RESULTS OF OPERATION OF THE 

FREEPORT-MCMORAN OIL AND GAS ROYALTY TRUST

The following discussion of the financial condition and results of    
operation of the Trust for the year ended December 31, 2001 was prepared by     
Texas Standard. The Trust sold its sole asset, other than a cash expense reserve
retained from previous distributions to the Trust, to Texas Standard on October 
11, 2001. For a description of the royalty interest that was sold to Texas      
Standard, see "Background and Reasons for the Exchange Offer."                  

COMPARISON OF RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2001 AND   
2000                                                                            

    Royalty Proceeds.  There have not been any distributions to the Trust with
respect to the royalty since 1995. Based on the reserve report for the working  
interests and other data available to the Trustee, the Trustee did not believe  
that any further distributions would be made with respect to the royalty prior  
to the liquidation of the Trust required by the terms of the Trust Agreement.   
While gross proceeds attributable to the sale of oil and gas by the working     
interests burdened by the royalty exceeded total costs by approximately $6.1    
million during the nine month period ended September 30, 2001, the cost carry-  
forward attributable to the royalty prevented any distributions to the Trust.   
The cost carry-forward decreased from $19.8 million on December 31, 2000 to     
$13.7 million on September 30, 2001. Because the royalty was sold to Texas      
Standard on October 11, 2001, there was no cost carry-forward on December 31,   
2001.                                                                           

During 2000, gross proceeds exceeded total costs by approximately $2.9
million. The increased amounts of net proceeds attributable to the royalty      
during the nine-months ended September 30, 2001 is due to increased prices      
received for gas production and reduced lease operating costs, partially offset 
by decreased production and prices received for oil production.                 

Trust Administrative Expenses.  Since 1995, the Trust's administrative
expenses have been paid from the expense reserve. During 2001, the Trust's      
expense reserve decreased from $588,000 on December 31, 2000 to $23,000 on      
December 31, 2001. The Trust incurred total administrative expenses of $581,000 
during 2001. These costs were partially offset by $16,000 of interest earned on 
cash retained in the reserve. For a detailed breakdown of the costs incurred by 
the Trust during 2001, see "Background and Reasons for the Exchange             
Offer -- Background of the Exchange Offer."                                     

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     During 2000, the Trust incurred administrative expenses of $322,575, offset
by interest on cash retained in the reserve of $41,414. The $258,425 increase in
the Trust's administrative expenses during 2001 when compared to 2000 is        
primarily attributable to increased administrative, legal and accounting costs  
incurred during 2001. These costs were related to the preparation of the proxy  
statement for the unitholder's meeting to approve the sale of the royalty to    
Texas Standard, responding to SEC comments received in connection with the proxy
statement, the sale of the royalty to Texas Standard and the winding-up and     
liquidation of the Trust.                                                       

COMPARISON OF RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2000 AND   
1999                                                                            

   Royalty Proceeds.  Gross proceeds attributable to the sale of oil and gas
by the working interests burdened by the royalty exceeded total costs by        
approximately $2.6 million for the year ended December 31, 2000. However, the   
cost carry-forward attributable to the royalty prevented any distributions to   
the Trust. The cost carry-forward decreased from $22.4 million on December 31,  
1999 to $19.8 million on December 31, 2000. During 1999, gross proceeds exceeded
total costs by approximately $3.2 million.                                      

   Lease operating expenses, exploration and development costs, interest and
accrued abandonment costs are deducted from gross proceeds to determine the     
amount of net proceeds to be applied to the reduction of the cost carry-forward.
Revenues from the sale of gas decreased from $3.7 million during 1999 to $2.5   
million during 2000 primarily as a result of the assignment by the owner of the 
working interests burdened by the royalty of three properties to the operator   
during 1999. This assignment contributed to the reduction of lease operating    
expenses from $3.3 million in 1999 to $1.6 million in 2000. Revenues from the   
sale of oil increased significantly from $2.3 million in 1999 to $8.6 million in
2000 was a result of workovers performed during 2000 and an increase in oil     
prices in 2000. These workovers resulted in exploration and development costs   
increasing from $1.4 million in 1999 to $4.2 million in 2000. Interest expense  
decreased from $2.3 million in 1999 to $2.1 million in 2000. Abandonment costs  
of $2 million were accrued in 2000. For the year ended December 31, 1999 there  
was a credit of $4.6 million to abandonment costs as a result of reversing      
previously accrued abandonment costs associated with the assigned properties.   

    Trust Administrative Expenses.  Trust administrative expenses decreased by
approximately $200,000 during 2000 when compared to 1999. The increased costs in
1999 compared to 2000 are primarily related to administrative, legal and        
accounting costs incurred during 1999 related to the preparation of proxy       
statement. The Trust Agreement required the Trustee to terminate the Trust at   
the end of 1998. The proxy statement was prepared in order to solicit the       
consent of unitholders to a unitholder proposal to extend the life of the Trust.

LIQUIDITY AND CAPITAL RESOURCES                                                 

    Other than interest on cash retained to pay Trust administrative expenses,
the royalty was the Trust's sole source of income. As a result of the failure to
receive any distributions with respect to the royalty since 1995, the Trust is  
required to be liquidated and has avoided liquidation at this point only so that
the unitholders might have the opportunity to participate in this exchange      
offer. As discussed under "Background and Reasons for the Exchange              
Offer -- Background of the Exchange Offer," the Trust will be liquidated upon   
the earlier to occur of the consummation of Texas Standard's exchange offer or  
the depletion of the Trust's expense reserve.                                   

LEGAL PROCEEDINGS                                                               

     The Trust is not currently party to any pending material legal proceedings.

ACCOUNTANTS                                                                     

    During the Trust's two most recent fiscal years, the Trust has not changed
its independent accountants.                                                    

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PLAN OF OPERATION 

  We were incorporated on March 27, 2001. On October 12, 2001, we acquired
working interests ranging from 23% to 35% in three properties in the Gulf of    
Mexico located in federal waters offshore Louisiana. As of September 30, 2001,  
there were eight productive oil wells and five productive gas wells on two of   
these properties. On October 11, 2001, we acquired the royalty interest that    
burdens the working interests from the Trust. In addition to these acquisitions,
we acquired a 21% working interest in a gas well onshore Texas in October, 2001,
which is currently not producing and is scheduled to be plugged and abandoned.  
Prior to acquiring the working interests and the royalty, we had less than      
$150,000 in assets. We had a net loss of $381,086 for our fiscal year ended     
September 30, 2001. Prior to October 2001, we did not have any revenues. Our net
loss is attributable to general and administrative expenses, consisting         
primarily of $300,000 in bonuses paid to executive officers in 2001. For the    
year ended September 30, 2001, we did not have any revenues from operations. We 
had net operating income from operations of $312,017 for the period ended       
December 31, 2001.                                                              

We intend to participate in any exploration conducted on and in the   
development of the properties that we acquired. However, we have a limited      
amount of funds with which to participate in the development of these           
properties. As of February 22, 2002, we had approximately $4.9 million of cash  
and other liquid investments. We intend to reserve approximately 40% of this    
amount and 40% of future net revenues to pay future plugging and abandonment    
liabilities associated with the acquired working interests. We believe that     
anticipated cash flows from operations will be sufficient to fund the           
exploration and development of our recently acquired properties. We currently   
anticipate development expenses of $2 million and plugging and abandonment      
expenses of $1.2 million for fiscal 2002. We do not currently plan to drill any 
wells in 2002. To the extent that these cash flows are insufficient to fund     
exploration and development expenses, we may choose, or be required, to elect   
not to participate in the drilling of wells proposed by the operators of these  
properties. If this occurs, our working interests could be reduced or forfeited 
if we choose not to participate in an exploratory well or other operation and   
our right to receive production may be forfeited or suspended until the other   
working interest owners recover a specified multiple of their costs if we choose
not to participate in the drilling of, or other operation on, a well.           

 In addition to exploring and developing our existing properties, we may
review potential property acquisitions. At this time, we have not reviewed any  
available properties, other than those properties that we have already acquired,
that we intend to acquire. Currently, we intend to limit any additional         
acquisitions to properties that can be acquired using funds from current        
operations. However, we may choose to seek other financing alternatives, such as
obtaining a credit agreement or a private debt or equity offering. We have not  
budgeted any amounts for property acquisitions during 2002. We plan to          
continually review acquisition opportunities in light of existing and           
anticipated oil and gas prices, economic conditions, prevailing costs, available
financing and other matters. We are not currently engaged in material           
negotiations to purchase oil and gas properties.                                

RESULTS OF OPERATIONS                                                           

     Our results of operations are primarily influenced by the prices we receive
for oil and gas production and the costs we incur to produce oil and gas. The   
following table shows information about our prices and costs as well as         
production volumes. We did not have any significant assets until October 11,    
2001. All of                                                                    

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the information provided below is on a pro forma basis assuming we had acquired 
the working interests and royalty as of the indicated date. Prices shown below  
include the effects of our hedging activities.                                  

                                                        [Enlarge/Download Table]

                                                         PRO FORMA         PRO FORMA     
                                                         YEAR ENDED       NINE MONTHS    
                                                        DECEMBER 31,  ENDED SEPTEMBER 30,
                                                            2000             2001        
                                                        ------------  -------------------
                                                                                         
PRODUCTION:                                                                              
  Oil (Bbls)...........................................     292,345          198,068     
  Gas (Mcf)............................................     926,945          699,978     
  Total production (Mcfe)..............................   2,681,015        1,888,386     
AVERAGE SALES PRICE:                                                                     
  Oil (per Bbl)........................................  $    30.69       $    27.79     
  Gas (per Mcf)........................................        4.02             5.07     
  Total production (per Mcfe)..........................        4.76             4.80     
AVERAGE COSTS (PER MCFE):                                                                
  Lease operating expenses (excluding severance                                          
     taxes)............................................  $     1.05       $      .94     

LIQUIDITY AND CAPITAL RESOURCES                                                 

CAPITAL SOURCES AND EXPENDITURES                                            

   We agreed to acquire the working interests from IMC for $1.1 million. Our
agreement to acquire the working interests from IMC provided that we would be   
entitled to the net proceeds of production from January 1, 2001 to the closing  
date, as a purchase price adjustment. We received a $1.5 million purchase price 
adjustment in connection with the purchase of our three properties on October   
12, 2001. We received $3.8 million of additional amounts representing purchase  
price adjustments on January 11, 2002. We believe that our cash flows from      
operations and cash on hand will be sufficient to fund our current operations   
for the next 12 months. Projected cash flows from operations and cash on hand   
should be sufficient to fund our anticipated drilling and property acquisition  
programs for the next 12 months. However, we may obtain a credit facility or    
utilize conventional debt and equity offerings to finance our capital           
expenditure program. In addition, other financing options may be considered for 
future property acquisitions.                                                   

FINANCIAL INSTRUMENTS                                                       

   Our revenues are derived from the sale of oil and natural gas. The prices
of oil and natural gas are extremely volatile and experience large fluctuations 
as a result of relatively small changes in supplies. We may periodically use    
derivative financial instruments to hedge oil and gas price risks. Mr. Roberson 
and Mr. Langston oversee our hedging program. Mr. Roberson and Mr. Langston     
periodically consult oil and gas analyst, traders and marketers and review daily
and weekly market reports and updates on both oil and gas futures and physical  
markets activities. Our policy is to mitigate downward price risk by execution  
of relatively small hedge volumes when we deem market conditions to be          
favorable. We do not anticipate hedging any further 2002 production at this     
time. However, we may elect to increase or decrease our currently hedged        
positions if market conditions or production volumes change. In a typical hedge 
transaction, we have the right to receive from the counterparties to the hedge  
the excess of the fixed price specified in the hedge over a floating price based
on a market index, multiplied by the quantity hedged. If the floating price     
exceeds the fixed price, we must pay the counterparties the difference          
multiplied by the quantity hedged. We must pay the difference between the       
floating price and the fixed price when the floating price exceeds the fixed    
price regardless of whether we have sufficient production to cover the          
quantities specified in the hedge. If there are significant reductions in our   
production at times when the floating price exceeds the fixed price, we could be
required to make payments under the hedge agreements even though these payments 
are not offset by sales of production. Hedging will also prevent us from        
receiving the full advantage of increases in oil or gas prices above the amount 
specified in the hedge. We                                                      

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may also enter into price "collars" to reduce the risk of changes in oil and gas
prices. Under a collar, no payments are due by either party so long as the      
market price is above a floor set in the collar and below a ceiling. If the     
price falls below the floor, the counterparty to the collar pays the difference 
to us and if the price is above the ceiling, we pay the counterparty the        
difference.                                                                     

   As of February 15, 2002, we have hedged approximately 150 Bbls of oil per
day at a price of $20.28 for the twelve month period beginning January 1, 2002  
and 200 Bbls per day at a price of $21.01 for the six month period beginning    
March 1, 2002. In addition we purchased options to sell 2,000 Mcfe of gas per   
day at a price of $2.00 per Mcfe for the six month period beginning February 1, 
2002. For the month of February we have hedged approximately 16% of our         
estimated oil production and 76% of our estimated gas production, based on      
February nominations. Based on our March nomination, for 2002 we have hedged    
approximately 60% of our estimated oil production and 47% of our estimated gas  
production. None of our hedging contracts are with Enron related entities.      

BUSINESS AND PROPERTIES 

     Texas Standard Oil Company was incorporated in Texas in March 2001. We were
formed to acquire and consolidate the working interests and net overriding      
royalty interest on three properties located in federal waters, offshore        
Louisiana and offshore Texas. We acquired the royalty on October 11, 2001 and   
the working interests on October 12, 2001. Prior to October 11, 2001, we had    
less than $150,000 in assets. All of the information provided below is on a pro 
forma basis assuming we had acquired the working interests and royalty as of the
indicated date.                                                                 

     As of September 30, 2001, on a pro forma basis, there were eight gross (1.8
net) productive oil wells and five gross (1.4 net) productive gas wells on two  
properties. We intend to develop these properties and pursue further            
acquisitions of oil and gas properties. As of September 30, 2001, on a pro forma
basis, our estimated net proved reserves were 938,134 BOE, all of which were    
proved developed.                                                               

 The following table provides information about our estimated net proved
reserves and production, on a pro forma basis, as of September 30, 2001.        

                                                        [Enlarge/Download Table]

                                                            PRODUCTION                                 
                                                           FOR THE NINE                                
                                                              MONTHS                                   
                                                               ENDED      ESTIMATED NET PROVED RESERVES
                                                           SEPTEMBER 30,  -----------------------------
AREA NAME                               PRIMARY OPERATOR       2001         OIL        GAS      TOTAL  
---------                              ------------------  -------------  --------   -------   --------
                                                               (BOE)       (BBLS)    (MMCF)     (BOE)  
                                                                                                       
GULF OF MEXICO OFFSHORE:                                                                               
  West Cameron Area Block 498......... El Paso Production     295,100     342,730     2,904    826,730 
                                       Company                                                         
  West Delta Area Block 34............ Forest Oil              19,374       1,738       658    111,405 
                                       Corporation                                                     

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

(1) Represents the present value of future net cash flows, discounted at 10%,   
attributable to estimated proved reserves, on a pro forma basis, as of  
    September 30, 2001, as set forth in our independent reserve reports prepared
by Ryder Scott Company, L.P., Independent Petroleum Engineers.          

PROPERTIES                                                                      

As of December 31, 2001, we owned 7,500 gross (1,587 net) acres in two
federal block located offshore Louisiana and 100 gross (21 net) acres onshore   
Texas. As of September 30, 2001, on a pro forma basis, we had an average working
interest of 24.7% in thirteen producing wells. As of February 15, 2001, we did  
not have any wells in the process of being drilled.                             

  West Cameron Area Block 498.  West Cameron Block 498 is located offshore
Louisiana in federal waters. We own a 23.1% working interest and a 19.2% net    
revenue interest in ten producing wells. This                                   

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property consists of 5,000 gross (962 net) acres. This property has two existing
platforms; however, all of the wells on one platform are currently shut-in and  
there is no production. The second platform consists of ten actively producing  
wells with 14 completions. Net average daily production for these ten wells     
during the nine month period ended September 30, 2001 was 1,085 BOE per day. All
oil production from this platform is subject to a purchase agreement with a     
pipeline company. We are required to pay a transportation fee to the pipeline   
company that is based on the average daily volume of oil produced. If oil       
production from this area does not meet specified minimum average daily volumes 
that vary over the term of the agreement, we are required to pay the pipeline   
company a deficiency payment. During 2001, the minimum average daily volume was 
5,167 Bbls per day. The estimated average daily production from this property   
was 3,400 gross (653 net) Bbls per day for our fiscal year ended September 30,  
2001. During 2000, IMC Global, the prior owner of our working interest, paid the
pipeline company a deficiency payment of approximately $500,000. We currently   
anticipate a deficiency penalty of approximately $281,592, or $.35 per net Bbl  
produced in 2001, being assessed for 2001. This property has never met the      
minimum volume requirements in the purchase agreement. We anticipate that       
penalties will continue to be assessed in future years. El Paso Production      
Company operates this block.                                                    

 West Delta Area Block 34.  West Delta Area Block 34 is located offshore
Louisiana in federal waters. We own a 30.0% working interest and a 25.0% net    
revenue interest in three producing wells. This property consists of 2,500 gross
(625 net) acres. The net average daily production for the three actively        
producing wells located on this property during the nine month period ended     
September 30, 2001 was 71 BOE per day. Forest Oil Corporation operates this     
block.                                                                          

High Island Area Block A552.  High Island Area Block A552 is located  
offshore Texas in federal waters. We own a 35% working interest and a 29.2% net 
revenue interest in this property. This property is currently producing         
immaterial quantities of oil and does not have any proved reserves attributed to
it. The platform on this property is currently being used to process third-party
liquids which are being produced from a nearby property. While this processing  
income serves to offset a portion of the operating costs of this platform, the  
overall costs of operating the platform still exceed such processing income. The
estimated plugging and abandonment costs of this property are $1.3 million.     
While the operator has control of the timing of when this property will be      
plugged and abandoned, we have budgeted for the plugging and abandonment of this
property in 2002.                                                               

Coles #1.  In October, 2001, we acquired a 21% working interest in an 
exploratory gas well located in Goliad County, Texas. This well was completed in
November 2001 and produced limited quantities of gas until it was shut-in on    
January 7, 2001 in preparation for re-completion. As of February 15, 2002, this 
well is scheduled to be plugged and abandoned. We do not anticipate incurring   
any additional costs in connection with the plugging and abandonment of this    
well. We acquired our working interest from Roberson Oil Company and an         
unrelated third party for $55,000. The purchase price included the prepayment of
estimated dry hole costs. Our share of the completion costs, which are estimated
at $34,000, has also been prepaid. Roberson Oil Company, which is wholly-owned  
by Timothy Roberson, our CEO, has a 16% carried working interest in this well.  
Roberson Oil Company is the operator of this well. As of December 31, 2001,     
there were no proved reserves attributable to this well.                        

OIL AND GAS RESERVES                                                            

  Our only assets are the three properties we acquired in October 2001 and
the gas well we acquired in October 2001. The following table sets forth        
information about our pro forma estimated net proved                            

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reserves as of the dates set forth below. Ryder Scott Company, L.P., our        
independent petroleum engineers, prepared these estimates.                      

                                                        [Enlarge/Download Table]

                                                         DECEMBER 31,    SEPTEMBER 30,
                                                       ----------------  -------------
                                                        1999     2000        2001     
                                                       ------   -------  -------------
                                                                                      
Proved developed:                                                                     
     Oil (MBbls)......................................    518       452        344    
     Gas (MMcf).......................................  3,053     3,501      3,562    
          Total (BOE) (000s)..........................  1,027     1,036        938    
Proved undeveloped:                                                                   
     Oil (MBbls)......................................     --        --         --    
     Gas (MMcf).......................................     --        --         --    
Total proved:                                                                         
     Oil (MBbls)......................................    518       452        344    
     Gas (MMcf).......................................  3,053     3,501      3,562    
          Total (BOE) (000s)..........................  1,027     1,036        938    
Estimated future net cash flows before income taxes... $6,561   $16,436     $3,491    
Standardized measure of discounted future net cash                                    
  flows (000s)........................................  3,790    10,143      2,786    

Our independent reserve engineers prepared the estimates of the proved
reserves and the future net cash flows, and the present value and standardized  
measure thereof, attributable to these proved reserves. There are numerous      
uncertainties inherent in estimating quantities of proved reserves, including   
many factors beyond our control or the control of the reserve engineers. Reserve
engineering is a subjective process of estimating underground accumulations of  
oil and gas that cannot be measured in an exact manner, and the accuracy of any 
reserve or cash flow estimate is a function of the quality of available data and
of engineering and geological interpretation and judgment. Estimates by         
different engineers often vary, sometimes significantly. In addition, physical  
factors, including the results of drilling, testing and production subsequent to
the date of an estimate, as well as economic factors, such as an increase or    
decrease in product prices that renders production of such reserves more or less
economic, may justify revision of such estimates. Accordingly, reserve estimates
are different from the quantities of oil and gas that are ultimately recovered. 

    We have not filed any reports with other federal agencies which contain an
estimate of total proved net oil and gas reserves.                              

PRODUCTIVE WELLS                                                                

     On a pro forma basis, we did not drill any development or exploratory wells
during the years ended December 31, 2000 and 1999 and the nine months ended     
September 30, 2001.                                                             

   On a pro forma basis, we owned working interests in eight gross (1.8 net)
producing oil and five gross (1.4 net) producing gas wells as of September 30,  
2001. A well is categorized as an oil well or a natural gas well based upon the 
ratio of oil to gas reserves on a Mcfe basis. However, some of our wells produce
both oil and gas. At September 30, 2001, we did not have any wells in the       
process of being drilled. One of our wells has two oil completions and one well 
has one oil and one gas completion. A well with at least one oil completion is  
classified as an oil well.                                                      

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LEASEHOLD ACREAGE                                                               

  The following table show our approximate developed and undeveloped gross
and net leasehold acreage as of September 30, 2001, on a pro forma basis.       

                                                                [Download Table]

                                                            DEVELOPED    UNDEVELOPED
                                                          -------------  -----------
LOCATION                                                  GROSS    NET   GROSS   NET
--------                                                  -----   -----  -----   ---
                                                                                    
FEDERAL WATERS:                                                                     
     Texas............................................... 5,760   1,680     0      0
     Louisiana........................................... 7,500   1,587     0      0

MAJOR CUSTOMERS                                                                 

  Our production is sold on month-to-month contracts at prevailing prices.
The following table identifies, on a pro forma basis, customers to whom we sold 
a significant percentage of our total oil and gas production during each of the 
following periods:                                                              

                                                        [Enlarge/Download Table]

                                                        YEAR ENDED                     
                                                       DECEMBER 31,                    
                                                       ------------  NINE MONTHS ENDED 
                                                       1999    2000  SEPTEMBER 30, 2001
                                                       ----    ----  ------------------
                                                                                       
EOTT Energy Operating L.P.............................  --      67%          47%       
Plains Marketing, L.P.................................  46%      6%          --        
Coast Energy, Inc. ...................................  54%     26%          46%       
Pro Gas Inc. .........................................  --      --            7%       

 Because alternative purchasers of oil and gas are readily available, we
believe that the loss of any of these purchasers would not result in a material 
adverse effect on our ability to market future oil and gas production. Enron    
Corp. controls EOTT in its capacity as EOTT's general partner. However, EOTT has
not filed for bankruptcy protection and continues to fully perform its contracts
with us.                                                                        

 We do not have any contracts to sell or hedge our production with Enron
Corp. or its subsidiaries. However, Progas, Inc. a purchaser of our gas produced
from West Cameron Area Block 498 failed to pay us in full for our November 2001 
gas sales because Progas had been selling such gas to an Enron subsidiary and   
did not receive payment for November 2001 sales. The purchaser owed us $183,202 
as of February 15, 2002. We are in negotiations with this purchaser regarding   
their payment of the amount due by June 2002 in four monthly installments.      

TITLE TO PROPERTIES                                                             

We have performed title checks of our oil and gas properties that we  
believe are in accordance with industry standards. These reviews included       
searching the Minerals Management Service files for the lease assignments to    
Freeport-McMoRan, Inc. and any subsequent assignments, examining the merger     
documents between Freeport-McMoRan, Inc. and IMC Global, examining the history  
of payments for production, reviewing operating agreements and other contracts  
affecting production and transportation of oil and gas, and obtaining a special 
warranty of title from IMC Global. We believe that we own our oil and gas       
properties in accordance with standards generally accepted in the oil and gas   
industry, subject to such exceptions which, in our opinion, are not so material 
as to detract substantially from the use or value of such properties. To the    
extent that such burdens and obligations affect our rights to production        
revenues, they have been taken into account in calculating our net revenue      
interests and in estimating the quantity and value of our reserves. We believe  
that the burdens and obligations affecting our properties are typical in the    
industry for properties of the kind owned by us.                                

COMPETITION                                                                     

We operate in the highly competitive areas of oil and gas exploration,
development and production. We compete for the purchase of leases in the Gulf of
Mexico from the U.S. government and from other                                  

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oil and gas companies, and from private mineral owners and other oil and gas    
companies onshore. These leases include exploration prospects as well as        
properties with proved reserves. Factors that affect our ability to compete in  
the marketplace include:                                                        

- our access to the capital necessary to drill wells and acquire      
properties;                                                       

     - technology and our ability to acquire and analyze seismic, geological and
other information relating to a property;                         

- our ability to retain the personnel necessary to properly evaluate  
seismic and other information relating to a property;             

- the location of, and our ability to access, platforms, pipelines and
    other facilities used to produce and transport oil and gas production;

- the standards we establish for the minimum projected return on an   
investment of our capital; and                                    

- the availability of alternate fuel sources.                         

Our competitors include major integrated oil companies, substantial   
independent energy companies, affiliates of major interstate and intrastate     
pipelines and national and local gas gatherers, many of which possess greater   
financial, technological and other resources than we do.                        

MARKETS                                                                         

Our ability to market oil and gas from our wells depends upon numerous
factors beyond our control, including:                                          

- the extent of domestic production and imports of oil and gas;       

- the proximity of gas production to gas pipelines;                   

- the availability of capacity in such pipelines;                     

- the demand for oil and gas by utilities and other end users;        

- the availability of alternative fuel sources;                       

- the effects of inclement weather; and                               

- state and federal regulation of oil and gas production and federal  
regulation of gas sold or transported in interstate commerce.     

The exact effects of these factors cannot be accurately predicted. No assurance 
can be given that we will be able to market all of the oil and gas produced by  
us or that favorable prices can be obtained for the oil and gas we produce.     

    In view of the many uncertainties affecting the supply and demand for oil,
gas and refined petroleum products, we are unable to predict future oil and gas 
prices and demand or the overall effect such prices and demand will have on us. 
We do not believe that the loss of any of our oil purchasers would have a       
material adverse effect on our operations. Additionally, since substantially all
of our gas sales are on the spot market, the loss of one or more gas purchasers 
should not materially and adversely affect our financial condition.             

CORPORATE OFFICES                                                               

Our headquarters are located in Houston, Texas, in approximately 1,000
square feet of leased space. Replacement of our leased offices would not result 
in material expenditures by us as alternative locations to our leased space are 
anticipated to be readily available.                                            

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EMPLOYEES                                                                       

     We had five full-time and no part-time employees as of December 31, 2001. A
union does not represent any of our employees. We believe that our relations    
with our employees are good.                                                    

LEGAL PROCEEDINGS                                                               

  From time to time, we may be involved in legal proceedings that arise in
the ordinary course of business. As of the date of this prospectus, we are not a
party to any pending legal proceedings that we believe could reasonably be      
expected to have a material effect on our financial position or results of      
operations.                                                                     

ENVIRONMENTAL REGULATIONS                                                       

   General.  Our activities are subject to federal, state and local laws and
regulations governing environmental quality and pollution control. Although no  
assurances can be made, we believe that, absent the occurrence of an            
extraordinary event, compliance with existing federal, state and local laws,    
rules and regulations regulating the release of materials in the environment or 
otherwise relating to the protection of the environment will not have a material
effect upon our capital expenditures, earnings or competitive position with     
respect to our existing assets and operations. We cannot predict what effect    
additional regulation or legislation, enforcement policies thereunder, and      
claims for damages to property, employees, other persons and the environment    
resulting from our operations could have on our activities.                     

Our activities with respect to natural gas facilities are subject to  
stringent environmental regulation by state and federal authorities, including  
the United States Environmental Protection Agency. Such regulation can increase 
the cost of planning, designing, installing and operating such facilities. In   
most instances, the regulatory requirements relate to water and air pollution   
control measures. Although we believe that compliance with environmental        
regulations will not have a material adverse effect on us, risks of substantial 
costs and liabilities are inherent in oil and gas production operations, and    
there can be no assurance that significant costs and liabilities will not be    
incurred. Moreover, it is possible that other developments, such as stricter    
environmental laws and regulations, and claims for damages to property or       
persons resulting from oil and gas production, would result in us incurring     
substantial costs and liabilities.                                              

   Solid and Hazardous Waste.  We own or lease numerous properties that have
been used for the production of oil and gas for many years. Although we have    
utilized operating and disposal practices standard in the industry at the time, 
hydrocarbons or other solid wastes may have been disposed or released on or     
under these properties. In addition, many of these properties have been operated
by third parties. We had no control over such entities' treatment of            
hydrocarbons or other solid wastes and the manner in which such substances may  
have been disposed or released. State and federal laws applicable to oil and gas
wastes and properties have gradually become stricter over time. Under these new 
laws, we could be required to remove or remediate previously disposed wastes,   
including wastes disposed or released by prior owners or operators, or property 
contamination, or to perform remedial plugging operations to prevent future     
contamination.                                                                  

 We generate wastes, including hazardous wastes, that are subject to the
Federal Resource Conservation and Recovery Act and comparable state statutes.   
The Environmental Protection Agency has limited the disposal options for certain
hazardous wastes and is considering adoption of stricter disposal standards for 
nonhazardous wastes. Furthermore, it is possible that certain wastes currently  
exempt from treatment as "hazardous wastes" generated by our oil and gas        
operations may in the future be designated as "hazardous wastes" under the      
Federal Resource Conservation and Recovery Act or other applicable statutes and,
therefore, may be subject to more rigorous and costly disposal requirements.    

Superfund.  The Comprehensive Environmental Response, Compensation and
Liability Act, also known as the "Superfund" law, imposes liability, without    
regard to fault or the legality of the original conduct, on certain classes of  
persons with respect to the release of a "hazardous substance" into the         
environment. These persons include the owner and operator of a site and persons 
that disposed or arranged                                                       

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for the disposal of the hazardous substances found at a site. Superfund also    
authorizes the Environmental Protection Agency and, in some cases, third parties
to take actions in response to threats to the public health or the environment  
and to seek to recover from the responsible classes of persons the costs of such
action. Neither we nor our predecessors has been designated as a potentially    
responsible party by the Environmental Protection Agency under Superfund with   
respect to any of our leases.                                                   

Oil Pollution Act.  The Oil Pollution Act of 1990 and regulations     
thereunder impose a variety of regulations on "responsible parties" related to  
the prevention of oil spills and liability for damages resulting from such      
spills in United States waters. A "responsible party" includes the owner or     
operator of a facility or vessel, or the lessee or permittee of the area in     
which an offshore facility is located. The Oil Pollution Act assigns liability  
to each responsible party for oil removal costs and a variety of public and     
private damages. While liability limits apply in some circumstances, a party    
cannot take advantage of liability limits if the spill was caused by gross      
negligence or willful misconduct or resulted from violation of a federal safety,
construction or operating regulation. If the party fails to report a spill or to
cooperate fully in the cleanup, liability limits likewise do not apply. Few     
defenses exist to the liability imposed by the Oil Pollution Act.               

  The Oil Pollution Act also imposes ongoing requirements on a responsible
party, including proof of financial responsibility to cover at least some costs 
in a potential spill. Amendments to the Oil Pollution Act that were enacted in  
1996 require owners and operators of offshore facilities that have a worst case 
oil spill potential of more than 1,000 barrels to demonstrate financial         
responsibility in amounts ranging from $10 million in specified state waters and
$35 million in federal Outer Continental Shelf waters up to $150 million, based 
upon worst case oil-spill discharge volume calculations. We believe that we     
currently have established adequate proof of financial responsibility for our   
offshore facilities.                                                            

     Air Emissions.  Our operations are subject to state and federal regulations
for the control of emissions from sources of air pollution. Administrative      
enforcement actions for failure to comply strictly with air regulations or      
permits are generally resolved by payment of monetary fines and correction of   
any identified deficiencies. Alternatively, regulatory agencies could require us
to forego construction or operation of certain air emission sources. We believe 
that in such case we would have enough permitted or permittable capacity to     
continue our operations without a material adverse effect on any particular     
producing field.                                                                

OSHA.  We are subject to the requirements of the Federal Occupational 
Safety and Health Act and comparable state statutes. The Federal Occupational   
Safety and Health Act hazard communication standard, the Environmental          
Protection Agency community right-to-know regulations under Title III of the    
Federal Superfund Amendment and Reauthorization Act and similar state statutes  
require us to organize and/or disclose information about hazardous materials    
used or produced in our operations. This information must be provided to        
employees, state and local governmental authorities and local citizens.         

Water.  The Federal Water Pollution Contract Act, or Clean Water Act, 
imposes restrictions and strict controls regarding the discharge of produced    
waters and other oil and gas wastes into navigable waters. Such discharges are  
typically authorized by National Pollutant Discharge Elimination System permits.
The Federal Water Pollution Control Act provides for civil, criminal and        
administrative penalties for any unauthorized discharges and along with the Oil 
Pollution Act of 1990, imposes substantial potential liability for the costs of 
removal, remediation and damages. State laws for the control of water pollution 
also provide varying civil, criminal and administrative penalties and           
liabilities in the case of a discharge of petroleum, its derivatives or         
hazardous substances into state waters. In addition, the Coastal Zone Management
Act authorizes state implementation and development of programs of management   
measures for non-point source pollution to restore and protect coastal waters.  
The federal National Pollutant Discharge Elimination System permits applicable  
to our properties prohibit the discharge of produced water, and other substances
generated by the oil and gas industry, from wells located in the coastal waters 
of Louisiana.                                                                   

Protected Species.  The Endangered Species Act seeks to ensure that   
activities do no jeopardize endangered or threatened animal, fish and plant     
species, nor destroy or modify the critical habitat of such                     
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species. Under the Endangered Species Act, exploration and production           
operations, as well as actions by federal agencies, may not significantly impair
or jeopardize the species or its habitat. The Endangered Species Act provides   
for criminal penalties for willful violations of the Endangered Species Act.    
Other statutes which provide protection to animal and plant species and which   
may apply to our operations include, but are not necessarily limited to, the    
Marine Mammal Protection Act, the Marine Protection, Research and Sanctuaries   
Act, the Fish and Wildlife Coordination Act, the fishery Conservation and       
Management Act, the Migratory Bird Treaty Act and the National Historic         
Preservation Act.                                                               

     Wetlands.  Pursuant to the Federal Water Pollution Contract Act, The United
States Corps of Engineers, with oversight by the EPA, administers a complex     
program that regulates activities in wetland areas. Some of our operations are  
in areas that have been designated as wetlands and, as such, are subject to     
permitting requirements. Failure to properly obtain a permit or violation of    
permit terms could result in the issuance of compliance orders, restorative     
injunctions and a host of civil, criminal and administrative penalties. We      
believe that we are currently in substantial compliance with these permitting   
requirements.                                                                   

    Wildlife Refuges/Bird Sanctuaries.  Portions of our properties are located
in or adjacent to federal and state wildlife refuges and bird sanctuaries. Our  
operations in such area must comply with regulations governing air and water    
discharge which are more stringent than in our other areas of operations. We    
have not been, and do not anticipate that we will be, materially affected by any
such requirements.                                                              

     Abandonment Costs.  We are typically responsible for payment of abandonment
costs on the oil and gas properties we own. As of December 31, 2001, total      
future abandonment costs on our oil and gas properties estimated to be incurred 
were approximately $4.2 million. Estimates of abandonment costs and their timing
may change due to many factors including actual production results, inflation   
rates and changes in environmental laws and regulations.                        

  We believe that we are in substantial compliance with current applicable
environmental laws and regulations and that continued compliance with existing  
requirements would not have a material adverse impact on us.                    

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MANAGEMENT

OFFICERS AND DIRECTORS                                                          

Our executive officers and directors are as follows:                  

                                                        [Enlarge/Download Table]

                                 POSITION                               DIRECTORS TERMS
NAME                        AGE   SINCE             POSITION              EXPIRES IN   
----                        ---  --------  ---------------------------  ---------------
                                                                                       
Timothy M. Roberson........ 44     2001    Chief Executive Officer,          2002      
                                           President and Chairman of                   
                                           the Board of Directors                      
Joseph F. Langston, Jr. ... 49     2001    Chief Financial Officer and       2002      
                                           Director                                    
Charles A. Sharman......... 47     2001    General Counsel, Vice             2002      
                                           President of Land and Legal                 
                                           and Director                                

The following is a brief description of the background and principal  
occupation of each director and executive officer.                              

    Timothy M. Roberson is our Chief Executive Officer, President and Chairman
of our Board of Directors. Mr. Roberson formed Texas Standard in March 2001. Mr.
Roberson currently devotes approximately 75% of his time exclusively to the     
management of the affairs of Texas Standard and 25% of his time to the          
management of Roberson Oil Company. He anticipates that he will be devoting 90% 
of his time exclusively to Texas Standard by the end of the year. Mr. Roberson  
is sole owner and president of Roberson Oil Company, an independent exploration 
and production company which he formed in 1998. Roberson Oil Company is the     
successor operator to Pecos Petroleum Company, an independent exploration and   
production company. Mr. Roberson co-founded Pecos Petroleum Company in October  
1987 and has served as President of the company since its inception. Mr.        
Roberson is the sole owner of Pecos which is currently in the process of being  
liquidated. Prior to forming Pecos, Mr. Roberson had managed an exploration team
of several geologists and consultants for Edge Petroleum Corporation, an        
independent exploration and production company, from 1984 to 1987. Mr. Roberson 
gained major oil company experience as a staff landman with Gulf Oil Company    
from 1982 to 1983 and as a contract landman for ARCO during 1981. Mr. Roberson  
received a B.B.A. from the University of Texas at Austin in 1980 and conducted  
post-graduate work at the University of Texas in Petroleum Land Management and  
Geology. Mr. Roberson is a member of the American Association of Professional   
Landmen, the Houston Geological Society, the Houston Producers' Forum and the   
Houston Petroleum Club.                                                         

Joseph F. "Chip" Langston, Jr. is our Chief Financial Officer and a   
Director. Mr. Langston assisted with the negotiation of the acquisition of the  
working interests and the royalty prior to, and after, the formation of Texas   
Standard. Mr. Langston was appointed to his current positions in October 2001.  
Mr. Langston currently devotes approximately 60% of his time exclusively to the 
management of the affairs of Texas Standard and 40% of his time to the          
management of Langston Investments. He anticipates that he will be devoting 90% 
of his time exclusively to Texas Standard by the end of the year. Mr. Langston  
has served as President of Langston Investments, Inc., which provides corporate 
financial advisory services primarily to small exploration and development      
companies, since he formed Langston Investments in 1984. Mr. Langston served as 
Vice-President of Corporate Finance and Director of Photonics Corporation, an   
operator of an internet site for commercial real estate professionals, from     
November 2000 to June 2001. From July 2001 to October 2001, Mr. Langston served 
as Vice-President of Corporate Finance and Director of International Cavitation 
Technologies, Inc., an oilfield services company. In 1989, Mr. Langston formed  
Search Exploration Inc., an independent exploration and production company, by  
consolidating 33 limited partnerships. Mr. Langston served as the President and 
Chairman of the Board of Search until it was merged with Harken Energy          
Corporation in May 1995. Prior to forming Search, Mr. Langston had served as    
Vice President of Corporate Finance and a Director of Trans-Western Exploration 
Inc., an independent exploration and production company, from 1977 until        

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1983. Mr. Langston received a B.B.A. in Accounting/Finance from the University  
of Texas at Arlington in 1974. Mr. Langston is a Certified Public Accountant.   

     Charles A. Sharman is our Vice President of Land and Legal, General Counsel
and a Director. Mr. Sharman has been engaged in the private practice of law     
since August 1999. Mr. Sharman co-founded Allied Natural Gas Corporation in     
February 1996 to acquire offshore oil and gas properties for redevelopment. Mr. 
Sharman served as President of Allied until the company ceased doing business in
July 1999. Allied filed for bankruptcy in April 1999. Mr. Sharman filed a       
personal bankruptcy petition in September 1999. Prior to forming Allied, Mr.    
Sharman had been engaged in the private practice of law specializing in oil and 
gas and energy transactions and financing since 1982. Mr. Sharman served as an  
Assistant Attorney General of Texas from 1979 until he entered private practice 
in 1981. Mr. Sharman received a B.A., cum laude, from Vanderbilt University in  
1975, and a J.D. from the University of Texas School of Law in 1978. He is a    
member of the State Bar of Texas, the United States District Court for the      
Southern District of Texas and the United States Court of Appeals for the Fifth 
Circuit.                                                                        

All of our officers and directors are United States citizens.         

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE                                                      

The following table sets forth information with respect to our Chief  
Executive Officer and four most highly compensated executive officers whose     
salary and bonus exceeded $100,000 for our year ended September 30, 2001.       

                                                        [Enlarge/Download Table]

                                               ANNUAL COMPENSATION                     
                                         --------------------------------              
                                                             OTHER ANNUAL   ALL OTHER  
NAME AND POSITION                  YEAR  SALARY    BONUS     COMPENSATION  COMPENSATION
-----------------                  ----  ------   --------   ------------  ------------
                                                                                       
Timothy M. Roberson............... 2001    $0     $150,000        $0            $0     
  Chief Executive Officer,                                                             
  President and Chairman of                                                            
  the Board                                                                            
Joseph F. Langston, Jr. .......... 2001     0      150,000         0             0     
  Chief Financial Officer                                                              
  and Director                                                                         

EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL          
ARRANGEMENTS                                                                    

  We do not currently have employment agreements with any of our executive
officers.                                                                       

STOCK-BASED PLANS                                                               

 On January 4, 2002 our board of directors and shareholders approved our
2002 Equity Incentive Plan. Pursuant to this plan, 300,000 shares of common     
stock were reserved for issuance upon the exercise of options or grants of      
restricted stock. The plan is administered by our board of directors. As of     
January 7, 2002, no awards had been made pursuant to the plan. We do not intend 
to issue to officers, directors, employees, 5% shareholders, or affiliates      
non-qualified options with an exercise price of less than 85% of the fair market
value of our common stock on the date of grant of such options. We will not     
issue options to purchase more than 12% of our outstanding common stock prior to
the consummation of the exchange offer.                                         

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OPTION/SAR GRANTS IN LAST FISCAL YEAR                                           

     We did not grant any options to purchase our common stock during our fiscal
year ended September 30, 2001 to our Chief Executive Officer or any other       
executive officer listed in the summary compensation table above.               

AGGREGATE OPTION/SAR EXERCISE IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR
VALUES                                                                          

As of September 30, 2001, we did not have any outstanding options to  
purchase our common stock. No options to purchase our common stock were         
exercised by our Chief Executive Officer or any other executive officer listed  
in the summary compensation table above during our fiscal year ended September  
30, 2001.                                                                       

LONG TERM INCENTIVE PLAN AWARDS                                                 

 Other than our 2002 Equity Incentive Plan, we do not have any long-term
incentive plans for our employees.                                              

BENEFICIAL OWNERSHIP OF OUR COMMON STOCK

  The following table shows the ownership of our common stock, and the pro
forma ownership of our common stock immediately after completion of the exchange
offer assuming that all eligible unitholders tender their units, by:            

- our chief executive officer and other officers named in the Summary 
Compensation Table above;                                         

- all of our directors;                                               

- all of our executive officers and directors as a group; and         

- anyone who is known by us to beneficially own 5% or more of our     
outstanding common stock.                                         

     Based on SEC rules, shares of common stock which an individual or group has
the right to acquire within 60 days pursuant to the exercise of options or      
warrants are deemed to be outstanding for the purpose of computing the          
percentage ownership of such individual or group. These shares are not deemed to
be outstanding for the purpose of computing the percentage ownership of any     
other person shown on this table.                                               

  Unless otherwise indicated, each person named in the following table has
the sole power to vote and dispose of the shares listed next to their name. The 
address of each of our executive officers and directors is 6371 Richmond Avenue,
Suite 100, Houston, Texas 77057, unless otherwise indicated. Information in the 
tables and accompanying text has been provided to us by our directors, executive
officers and 5% shareholders. The information provided below is based on        
information available to us as of February 15, 2002.                            

                                                        [Enlarge/Download Table]

                                                                    PRO FORMA ESTIMATED  
                                             CURRENT BENEFICIAL          BENEFICIAL      
                                           ----------------------  ----------------------
                                                 OWNERSHIP               OWNERSHIP       
                                           ----------------------  ----------------------
NAME AND ADDRESS                           NUMBER OF   PERCENTAGE  NUMBER OF   PERCENTAGE
OF BENEFICIAL OWNERS                        SHARES      OF TOTAL    SHARES      OF TOTAL 
--------------------                       ---------   ----------  ---------   ----------
                                                                                         
Timothy M. Roberson.......................   747,600      59.5%      747,600      37.3%  
Joseph F. Langston, Jr. ..................   508,871      40.5%      508,871      25.4%  
Charles A. Sharman........................         0        --             0        --   
All Directors and Executive Officers as a                                                
  Group (two persons)..................... 1,256,471       100%    1,256,471      62.7%  

     Timothy M. Roberson.  The shares beneficially owned by Mr. Roberson include
747,600 shares held by Roberson LP-1. Mr. Roberson holds a 96% limited partner  
interest in Roberson LP-1. Roberson GP,                                         

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Inc. is wholly-owned by Mr. Roberson and owns a 1% general partner interest in  
Roberson LP-1. The Roberson Children's Trust, the beneficiaries of which are Mr.
Roberson's three children, owns a 3% limited partner interest in Roberson LP.   

Joseph F. Langston, Jr.  The shares beneficially owned by Mr. Langston
include 508,871 shares held by the Langston Family Limited Partnership. Mr.     
Langston is the sole managing partner of the Langston Family Limited            
Partnership.                                                                    

CERTAIN TRANSACTIONS

  Our prior transactions with affiliates were not approved by independent,
non-management, directors. At this time, our board of directors does not have,  
and we do not anticipate appointing, any independent directors. All future      
transactions with persons and entities affiliated with us will be on terms that 
are no less favorable than those that could be obtained by unaffiliated third   
parties. For a period of two years after the consummation of the exchange offer,
we will not enter into any transactions with affiliated persons unless such     
transactions are approved by at least two independent, disinterested directors. 
We do not intend to make loans to officers, directors, or other controlling     
persons.                                                                        

WORKING CAPITAL LOANS                                                           

     On July 13, 2001 we executed a $115,000 promissory note payable to Roberson
Oil Company. This loan bore interest at 7% and was repaid in October 2001.      
Roberson Oil Company is wholly owned by Timothy M. Roberson, our Chief Executive
Officer and President. Roberson Oil Company provided us with these funds in     
order for us to pay a $110,000 deposit to IMC Global in connection with the     
acquisition of the working interests from IMC Global. We repaid the loan when we
received funds as a result of the purchase price adjustment paid to us upon the 
closing of our acquisition of the working interests.                            

SERVICES AGREEMENTS AND PURCHASE OF ASSETS                                      

     We have entered into an agreement with Roberson Oil Company whereby we will
provide accounting and administrative services to Roberson Oil Company for a fee
of $3,000 per month. The services we are providing consist of accounting, legal 
and administrative services. In addition, on November 27, 2001, we purchased    
furniture, computers, other office equipment and supplies from Roberson Oil     
Company for $20,000.                                                            

GOLIAD COUNTY WELL                                                              

  In October 2001, we purchased a 16.8% working interest in an exploratory
gas well located in Goliad County, Texas from Roberson Oil Company for $44,000. 
We later purchased an additional 4.2% working interest in this well from Sook   
Chung, an unrelated third party for $11,000. The purchase price of $55,000      
included the prepayment of estimated dry hole costs. This prospect was assembled
and promoted by Roberson Oil Company. Roberson Oil Company received a 16%       
working interest that did not require Roberson Oil Company to carry any of the  
costs of the well associated with the wells drilling and evaluation. We acquired
our working interest from Roberson Oil Company under the same basic terms and   
conditions as other participants in the project. This well is currently         
scheduled to be plugged and abandoned. We do not anticipate incurring any       
additional costs in connection with the plugging and abandonment of this well.  

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COMPARISON OF SECURITY HOLDER RIGHTS AND
CERTAIN CHANGES IN THE RIGHTS OF UNITHOLDERS

    We are incorporated under the laws of the State of Texas, and the Trust is
subject to the laws of the state of Texas. The Trust's unitholders who tender   
their units in the exchange offer, whose rights are currently governed by Texas 
law and the Trust Agreement, will, upon consummation of the exchange offer,     
become shareholders whose rights will be governed by Texas law and our articles 
of incorporation and bylaws. The following is a summary of the material rights  
of our shareholders as compared with the rights of the Trust unitholders.       

                                                        [Enlarge/Download Table]

                                  THE COMPANY                         THE TRUST             
                                  -----------                         ---------             
                                                                                            
BOARD OF DIRECTORS/    Under Texas law, the powers of a   The trustee is authorized to take 
TRUSTEE                corporation are exercised by or    any action that, in its judgment, 
                       under the authority of the board   is necessary or advisable to best 
                       of directors. Texas law permits    achieve the purposes of the Trust,
                       any Texas corporation to classify  so long as such modifications or  
                       its board of directors into as     settlements do not alter the      
                       many as three classes with         nature of the royalty interest or 
                       staggered terms of office. Our     alter the partnership agreement in
                       articles do not provide for a      a way that changes the purposes or
                       staggered board.                   scope of activities of the        
                                                          partnership.                      

PURPOSE                The purpose of the corporation is  The purposes of the Trust are: to 
                       to transact any or all lawful      protect and conserve, for the     
                       business for which a corporation   benefit of the unitholders, the   
                       may be organized by the Texas      Trust estate; to receive the      
                       Business Corporation Act.          Trust's share of any distributions
                                                          from the partnership; and to pay, 
                                                          or provide for the payment of, any
                                                          liabilities incurred in carrying  
                                                          out the purposes of the Trust, and
                                                          thereafter to distribute the      
                                                          remaining amounts of cash received
                                                          by the Trust pro rata to the      
                                                          unitholders.                      

OWNERSHIP INTEREST OF  Under Texas law, a common share-   The unitholders own, pro rata, the
SHAREHOLDERS AND       holder owns legal and beneficial   beneficial interest in the Trust  
UNITHOLDERS            title to an ownership interest in  described in the Trust Agreement  
                       the corporation. The rights        and are entitled to participate   
                       appurtenant to that interest are   pro rata in the rights and        
                       determined by the Texas Business   benefits of the unitholders under 
                       Corporation Act and the articles   the Trust Agreement. No unitholder
                       and bylaws of the corporation,     has any title in any real property
                       which rights, in our case, are     interest that may be considered a 
                       described more fully in this       part of the Trust estate,         
                       section.                           including the royalty interest or 
                                                          any part of the royalty interest, 
                                                          or in any asset of the Trust      
                                                          estate to the extent that an      
                                                          interest in such asset would cause
                                                          the interest of a unitholder to be
                                                          treated as other than an          
                                                          intangible personal property      
                                                          interest. The sole interest of    
                                                          each unitholder is this benefi-   
                                                          cial interest and the obligation  
                                                          of the trustee to hold, manage and
                                                          dispose of the Trust estate and to
                                                          account for the Trust estate as   
                                                          the Trust Agreement provides. No  
                                                          unitholder has the right to call  
                                                          for or demand or secure any parti-

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                               THE COMPANY                          THE TRUST             
                               -----------                          ---------             
                                                                                          
                                                        tion during the continuance of the
                                                        Trust or during the period of     
                                                        liquidation and winding up.       

CHARTER AMENDMENTS  Articles:  Under Texas law, unless  No amendment may be made to any   
                    a different amount, not less than   provision of the Trust Agreement  
                    a majority, is specified in the     that would increase the power of  
                    articles of incorporation, an       the trustee to engage in business 
                    amendment to the articles of        or investment activities or alter 
                    incorporation requires the          the rights of the unitholders. All
                    approval of the holders of at       other amendments to the provisions
                    least two-thirds of the             of the Trust Agreement may be made
                    outstanding shares of the           only by a vote of the unitholders 
                    corporation. Texas does not         present or represented by proxy at
                    require shareholder approval for    a meeting, provided that no       
                    the board of directors of a         amendment shall be effective      
                    corporation to fix the voting       without the express written       
                    powers, designation, preferences,   approval of the trustee.          
                    limitations, restrictions and                                         
                    rights of a class of stock                                            
                    provided that the corporation's                                       
                    charter documents grant such power                                    
                    to its board of directors. Our                                        
                    articles grant such authority with                                    
                    respect to the issuance of                                            
                    preferred stock. The holders of                                       
                    the outstanding shares of a                                           
                    particular class are entitled to                                      
                    vote as a class on a proposed                                         
                    amendment if the amendment would                                      
                    alter or change the power,                                            
                    preferences or special rights of                                      
                    one or more series of any class so                                    
                    to affect them adversely. Our                                         
                    articles may only be amended by a                                     
                    two-thirds vote.                                                      

                    Bylaws:  Texas law provides that                                      
                    the board of directors has the                                        
                    power to adopt, amend or repeal                                       
                    the bylaws, unless this power is                                      
                    reserved exclusively to the                                           
                    shareholders in the articles of                                       
                    incorporation. Our bylaws may be                                      
                    amended by our board of directors.                                    

MERGERS AND OTHER   Under Texas law, shareholders have  Not applicable to the Trust.      
CORPORATE           the right to vote on all mergers                                      
REORGANIZATIONS     to which the corporation is a                                         
                    party, except for certain                                             
                    parent-subsidiary mergers in which                                    
                    the parent owns at least 90% of                                       
                    the subsidiary and certain mergers                                    
                    in which the corporation is the                                       
                    surviving entity and the                                              
                    shareholders voting power is not                                      
                    diluted by more than 20%. In                                          
                    certain circumstances, different                                      
                    classes of securities may be                                          
                    entitled to vote separately as                                        
                    classes with respect to such                                          
                    transactions. Unless the articles                                     
                    of incorporation provide                                              
                    otherwise, approval of the holders                                    
                    of at least two-thirds of all out-                                    

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                                     THE COMPANY                          THE TRUST             
                                     -----------                          ---------             
                                                                                                
                          standing shares entitled to vote                                      
                          is required by Texas law to                                           
                          approve a merger. Our articles                                        
                          provide that a merger requires the                                    
                          approval of two-thirds of our                                         
                          outstanding shares.                                                   

BUSINESS COMBINATIONS     We will continue to be subject to   There is no comparable provision  
                          the provisions of Part Thirteen of  under the Texas Trust Code.       
                          the Texas Business Corporation Act                                    
                          until June 2003. That section                                         
                          prohibits business combinations                                       
                          with a person that has acquired                                       
                          beneficial ownership of 20 per-                                       
                          cent or more of our outstanding                                       
                          voting stock during the past three                                    
                          years unless the transaction is                                       
                          approved by the board of directors                                    
                          or shareholders. For a more                                           
                          detailed description of Part                                          
                          Thirteen of the Texas Business                                        
                          Corporation Act, see "Description                                     
                          of Capital Stock -- Texas                                             
                          Anti-Takeover Law and Article of                                      
                          Incorporation and Bylaw                                               
                          Provisions".                                                          

SALES, LEASES, EXCHANGES  Unless otherwise provided in a      If approved by the unitholders    
OR OTHER DISPOSITIONS     corporation's articles of           present or represented at a       
                          incorporation, the sale, lease,     meeting, the trustee shall sell   
                          exchange or other disposition of    that portion of the Trust estate  
                          all, or substantially all, of the   as directed by the unitholders at 
                          property and assets of a Texas      such meeting. The trustee is also 
                          corporation not made in the         authorized to cause the           
                          regular course of business          partnership to sell the part-     
                          requires the approval of the        nership's interest in an oil and  
                          holders of at least two-thirds of   gas lease or a portion of such    
                          the outstanding shares of the       interest, if, absent such sale,   
                          corporation. Approval by            the partnership's interest in the 
                          two-thirds of our shares is         lease would, in the opinion of the
                          required.                           managing general partner of the   
                                                              partnership, be lost through      
                                                              abandonment.                      

VOTING RIGHTS             Under Texas law, unless otherwise   The presence in person or by proxy
                          provided in the articles of         of unitholders holding a majority 
                          incorporation, with respect to any  of the units outstanding as of the
                          meeting of shareholders, a quorum   record date for determining the   
                          is deemed to be present for any     right to receive notice of a      
                          matter to be presented at that      meeting constitutes a quorum, and 
                          meeting if the holders of a         any matter is deemed to have been 
                          majority of the shares entitled to  approved by the unitholders if it 
                          vote at the meeting are             is approved by the vote of        
                          represented at the meeting in       unitholders holding a majority of 
                          person or by proxy.                 the units represented at a        
                                                              meeting. Each unitholder is       
                          With respect to any matter, other   entitled to one vote for each unit
                          than the election of directors or   owned by him, and any unitholder  
                          a matter for which the affirmative  may vote in person or by duly     
                          vote of the holders of a specified  executed written proxy. No        
                          portion of the shares entitled to   provision is made in the Trust    
                          vote is required by the Texas       Agreement for action by written   
                          Business Corporation Act, the       consent of the unitholders.       
                          affirmative vote of the holders of                                    
                          a majority of the shares entitled                                     
                          to vote on, and that                                                  

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                              THE COMPANY                          THE TRUST
                              -----------                          ---------
                                                                            
                   voted or abstained with respect to                       
                   that matter at a meeting of                              
                   shareholders at which a quorum is                        
                   present, shall be the act of the                         
                   shareholders, unless otherwise                           
                   provided in the articles of                              
                   incorporation or the bylaws of the                       
                   corporation. Our bylaws provide                          
                   that if a quorum is present at any                       
                   meeting, the vote of the holders                         
                   of a majority of the shares enti-                        
                   tled to vote, present in person or                       
                   represented by proxy, shall decide                       
                   any question brought before such                         
                   meeting, unless the question is                          
                   one upon which a different vote is                       
                   required by law.                                         

                   Any action required by the Texas                         
                   Business Corporation Act to be                           
                   taken at any annual or special                           
                   meeting of shareholders, or any                          
                   action which may be taken at any                         
                   annual or special meeting of                             
                   shareholders, may be taken without                       
                   a meeting, without prior notice,                         
                   and without a vote, if a consent                         
                   or consents in writing, setting                          
                   forth the action so taken, shall                         
                   have been signed by the holder or                        
                   holders of all the shares entitled                       
                   to vote with respect to the action                       
                   that is the subject of the                               
                   consent. The articles of                                 
                   incorporation may provide that any                       
                   action required by the Texas                             
                   Business Corporation Act to be                           
                   taken at any annual or special                           
                   meeting of shareholders, or any                          
                   action which may be taken at any                         
                   annual or special meeting of                             
                   shareholders, may be taken without                       
                   a meeting, without prior notice,                         
                   and without a vote, if a consent                         
                   or consents in writing, setting                          
                   forth the action so taken, shall                         
                   be signed by the holder or holders                       
                   or shares having not less than the                       
                   minimum number of votes that would                       
                   be necessary to take such action                         
                   at a meeting at which the holders                        
                   of all shares entitled to vote on                        
                   the action were present and voted.                       
                   Our articles of incorporation                            
                   provide that such written consent                        
                   must be signed by a majority of                          
                   the shareholders entitled to vote                        
                   on the matter.                                           

CUMULATIVE VOTING  Cumulative voting for directors     Not applicable.      
                   entitles each shareholder to cast                        
                   a number of votes that is equal to                       
                   the number of voting shares held                         
                   by such shareholder                                      

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                                    THE COMPANY                           THE TRUST             
                                    -----------                           ---------             
                                                                                                
                         multiplied by the number of                                            
                         directors to be elected and to                                         
                         cast all such votes for one                                            
                         nominee or distribute such votes                                       
                         among up to as many candidates as                                      
                         there are positions to be filled.                                      
                         Cumulative voting may enable a                                         
                         minority shareholder or group of                                       
                         shareholders to elect at least one                                     
                         representative to the Board of                                         
                         Directors where such shareholders                                      
                         would not be able to elect any                                         
                         directors without cumulative                                           
                         voting. Texas law grants                                               
                         cumulative voting unless the cor-                                      
                         poration expressly denies the                                          
                         right to vote cumulatively in the                                      
                         corporation's articles of                                              
                         incorporation. Our articles                                            
                         expressly deny cumulative voting.                                      

PREEMPTIVE RIGHTS        Under Texas law, except to the       No additional units may be created
                         extent limited or denied by          under the documents creating the  
                         statute or by the articles of        Trust; therefore, preemptive      
                         incorporation, shareholders have a   rights are not applicable to the  
                         preemptive right to acquire addi-    Trust.                            
                         tional, unissued, or treasury                                          
                         shares of the corporation, or                                          
                         securities of the corporation                                          
                         convertible into or carrying a                                         
                         right to subscribe to or acquire                                       
                         shares, whenever the corporation                                       
                         issues such shares in sufficient                                       
                         numbers so that the shareholder                                        
                         may maintain its ownership                                             
                         percentage in the corporation. Our                                     
                         articles expressly deny preemptive                                     
                         rights.                                                                

CLASS VOTING             Under Texas law, class voting is     Not applicable to the Trust.      
                         required in connection with                                            
                         - certain amendments of a                                              
                           corporation's articles of                                            
                           incorporation;                                                       
                         - a merger or consolidation                                            
                           requiring shareholder approval if                                    
                           the plan of merger or                                                
                           consolidation contains any                                           
                           provision which, if contained in                                     
                           a proposed amendment to a                                            
                           corporation's articles of                                            
                           incorporation, would require                                         
                           class voting; or                                                     
                         - certain sales of all or                                              
                           substantially all of the assets of                                   
                           a corporation.                                                       

BOARD/TRUSTEE VACANCIES  Under Texas law, vacancies on the    In the event of a vacancy in the  
                         Board of Directors during the year   position of the trustee or if a   
                         may be filled by the affirmative     trustee has given notice of its   
                         vote of a majority of the            intention to resign, the          
                         remaining directors then in          unitholders present or represented
                         office, even if less than a          at a meeting may appoint a        
                         quorum, or by election at an         successor trustee meeting the     
                         annual or special meet-              requirements set forth in         

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                                  THE COMPANY                           THE TRUST             
                                  -----------                           ---------             
                                                                                              
                       ing of the shareholders called for   the indenture. In the event that a
                       that purpose. The Board of           vacancy in the position of trustee
                       Directors is limited to filling no   continues for 60 days, a successor
                       more than two vacancies per year.    trustee may be appointed by any   
                       Any director appointed holds         State or Federal District Court   
                       office for the unexpired term of     holding terms in Houston, Harris  
                       his predecessor in office.           County, Texas, upon the           
                                                            application of any unitholder,    
                                                            and, in the event any such        
                                                            application is filed, such court  
                                                            may appoint a temporary trustee at
                                                            any time after such application is
                                                            filed with it which shall, pending
                                                            the final appointment of a        
                                                            trustee, have such powers and     
                                                            duties as the court appointing    
                                                            such temporary trustee shall      
                                                            provide in its order of           
                                                            appointment, consistent with the  
                                                            provisions of the Trust Agreement.

REMOVAL OF             Under Texas law, the articles of     The trustee may be removed by the 
DIRECTORS/TRUSTEE      incorporation or bylaws may          affirmative vote of a majority of 
                       provide that holders of a number,    the unitholders present or        
                       but not less than a majority, of     represented at a properly called  
                       voting shares of each class          meeting.                          
                       entitled to vote at an election of                                     
                       directors may vote to remove any                                       
                       director or the entire board with                                      
                       or without cause, unless:                                              
                       - the board is a classified board,                                     
                         in which case, unless the articles                                   
                         of incorporation provide                                             
                         otherwise, directors may be                                          
                         removed only for cause;                                              
                       - the corporation has cumulative                                       
                         voting in which case, if less than                                   
                         the entire board is to be                                            
                         removed, no director may be                                          
                         removed if the vote cast against                                     
                         his removal would be enough to                                       
                         elect him; or                                                        
                       - a class or series of shares is                                       
                         entitled by the articles of                                          
                         incorporation to elect one or                                        
                         more directors, in which case                                        
                         only the holders of that class                                       
                         or series shall be entitled to                                       
                         vote on removal of any director                                      
                         elected by such holders.                                             
                       Our bylaws allow for the removal                                       
                       of directors by majority vote with                                     
                       or without cause.                                                      

RIGHT TO CALL SPECIAL  Under Texas law, a special           A meeting of the unitholders may  
MEETINGS OF            shareholders' meeting may be         be called by the trustee or by    
SHAREHOLDERS/          called by:                           unitholders owning not less than  
UNITHOLDERS                                                 10% of the then outstanding units.
                       - the president, the board of                                          
                         directors, or any other person or                                    
                         persons as may be authorized in                                      
                         the articles of incorpo-                                             

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                               THE COMPANY                          THE TRUST             
                               -----------                          ---------             
                                                                                          
                      ration; or                                                          
                    - the holders of at least 10% of                                      
                      all of the shares entitled to                                       
                      vote, unless the articles of                                        
                      incorporation provide for a                                         
                      number of shares greater than or                                    
                      less than 10%, in which event,                                      
                      special meetings of the                                             
                      shareholders may be called by                                       
                      the holders of at least the                                         
                      percentage of shares so                                             
                      specified in the articles of                                        
                      incorporation, but in no event                                      
                      may the articles of                                                 
                      incorporation provide for a                                         
                      number of shares greater than                                       
                      50% that would be required to                                       
                      call a special meeting.                                             
                    Our articles and bylaws provide                                       
                    that a special meeting may be                                         
                    called by our president, a                                            
                    majority of our board of directors                                    
                    or holders of 50% of our out-                                         
                    standing shares.                                                      

DISSENTERS' RIGHTS  Under Texas law, dissenting         No corresponding right.           
                    shareholders of a corporation                                         
                    engaged in certain major corporate                                    
                    transactions are entitled to                                          
                    appraisal rights. Appraisal rights                                    
                    permit a shareholder to receive                                       
                    cash equal to the fair market                                         
                    value of the shareholder's shares,                                    
                    in lieu of the consideration such                                     
                    shareholder would otherwise                                           
                    receive in any such transaction.                                      

DERIVATIVE SUITS    Under Texas law, a shareholder may  No corresponding provision.       
                    bring a derivative action on                                          
                    behalf of the corporation if the                                      
                    shareholder was a shareholder of                                      
                    the corporation at the time of the                                    
                    transaction in question or became                                     
                    a shareholder by operation of law                                     
                    from a person that was a share-                                       
                    holder at that time.                                                  

DIVIDENDS AND       Texas law prohibits distributions   There is no comparable limitation 
DISTRIBUTIONS       to shareholders if:                 on distributions under the Texas  
                                                        Trust Code. The trustee determines
                    - after giving effect to the        the monthly distribution amount   
                      distribution, the corporation     based on the excess of proceeds   
                      would be insolvent; or            from distributions by the         
                                                        partnership over the Trust's      
                    - the distribution exceeds the      liabilities for each month. The   
                      surplus of the corporation.       trustee distributes the monthly   
                      Surplus is defined under Texas    distribution amount, if any,      
                      law as the excess of total        quarterly.                        
                      assets over total debts and                                         
                      stated capital, as such stated                                      
                      capital may be adjusted by the                                      
                      corporation's board of                                              
                      directors.                                                          

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                                     THE COMPANY                          THE TRUST             
                                     -----------                          ---------             
                                                                                                
                          We do not anticipate paying                                           
                          dividends in the foreseeable                                          
                          future.                                                               

INVESTMENT POLICIES       Our Articles of Incorporation       The trustee is prohibited by the  
                          permit us to engage in any lawful   Trust Agreement from acquiring any
                          business activity. We intend to     assets other than the Trust's     
                          invest in oil and gas properties    interest in the partnership or    
                          and related assets. We have not     engaging in any business or       
                          identified any assets for purchase  investment activity.              
                          or sale at this time. However, we                                     
                          may sell assets in the future. In                                     
                          addition, we may borrow funds or                                      
                          seek other forms of financing to                                      
                          acquire assets or fund operations.                                    

SCOPE OF INDEMNIFICATION  Under Texas law, a corporation is   The trustee is indemnified by, and
OF DIRECTORS AND          permitted to provide                receives reimbursement from, the  
OFFICERS                  indemnification or advancement of   Trust estate against any and all  
                          expenses, through a bylaw           liabilities, expenses, claims,    
                          provision, agreement, security      damages or losses incurred by it  
                          arrangement or otherwise, against   individually or as trustee in the 
                          judgments, penalties, fines,        administration of the Trust and   
                          settlements and reasonable          the Trust estate, or in the       
                          expenses actually incurred by the   performance or omission of any act
                          person in connection with a         occurring on account of its being 
                          proceeding. However, if the person  trustee. The trustee is personally
                          is found liable to the              liable only for fraud or acts or  
                          corporation, or if the person is    omissions in bad faith or which   
                          found liable on the basis that he   constitute gross negligence.      
                          received an improper personal       Neither the trustee nor any agent 
                          benefit, indemnification under      or employee of the trustee is     
                          Texas law is limited to the         entitled to any reimbursement or  
                          reimbursement of reasonable         indemnification from any          
                          expenses. No indemnification is     unitholder for any liability,     
                          available if the person is found    expense, claims, damages or loss  
                          liable for willful or in-           incurred by the trustee or any    
                          tentional misconduct. Our           such agent or employee. The right 
                          directors and officers are          of reimbursement and              
                          indemnified to the fullest extent   indemnification, if any, of the   
                          permitted by law.                   trustee and its agents and        
                                                              employees is limited solely to the
                                                              Trust estate, whether or not the  
                                                              Trust estate is exhausted without 
                                                              full reimbursement or             
                                                              indemnification of the trustee or 
                                                              any such agent or employee.       

REIMBURSEMENT AND         Under Texas law, reasonable court   If any claim is made against the  
ADVANCEMENT OF EXPENSES   costs and attorneys' fees incurred  trustee for which it may be       
                          by a director who was, is, or is    entitled to reimbursement from or 
                          threatened to be made, a named      indemnification by the Trust      
                          defendant or respondent in a        estate, it may cause its ex-      
                          proceeding because the person is    penses incurred in defense of such
                          or was a director of such           claim to be paid out of the Trust 
                          corporation may be paid or          estate; provided that if it is    
                          reimbursed by the corporation in    later determined not to be        
                          advance of the final disposition    entitled to reimbursement or      
                          of the proceeding after the         indemnification hereunder it shall
                          corporation receives a written      reimburse the Trust estate for all
                          affirmation by the director of his  of its expenses so paid, together 
                          good faith belief that he has met   with interest thereon at the prime
                          the standard of conduct necessary   rate. The trustee shall have a    
                          for indemnification under Texas     lien upon the Trust estate to     
                          law and                             secure it for                     

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                            THE COMPANY                          THE TRUST             
                            -----------                          ---------             
                                                                                       
                 a written undertaking by or on      such indemnification and          
                 behalf of the director to repay     reimbursement and for compensation
                 the amount paid or reimbursed if    to be paid to the trustee.        
                 it is ultimately determined that                                      
                 he has not met those requirements                                     
                 or indemnification for such                                           
                 expenses is precluded under Texas                                     
                 law.                                                                  

PROCEDURE FOR    Texas law provides that a           The Trust Agreement requires the  
INDEMNIFICATION  determination that indemnification  indemnification of the trustee    
                 is appropriate under Texas law      from the Trust estate, which is   
                 shall be made:                      managed and administered by the   
                                                     trustee.                          
                 - by a majority vote of a quorum                                      
                   consisting of directors who are                                     
                   not party to the proceeding;                                        
                 - if such a quorum cannot be                                          
                   obtained, by a special committee                                    
                   of the board of directors                                           
                   consisting of at least two di-                                      
                   rectors not party to the                                            
                   proceeding;                                                         
                 - by special legal counsel; or                                        
                 - by shareholder vote.                                                
                 Our officers and directors are                                        
                 automatically indemnified under                                       
                 our bylaws. We may indemnify                                          
                 others upon a resolution by a                                         
                 majority of the board of                                              
                 directors.                                                            

MANDATORY        Under Texas law, indemnification    The Trust Agreement requires the  
INDEMNIFICATION  by the corporation is mandatory     indemnification of the trustee as 
                 for a director only if the          discussed above.                  
                 director is wholly successful on                                      
                 the merits or otherwise, in the                                       
                 defense of the proceeding.                                            
                 However, our bylaws provide for                                       
                 our officers and directors to be                                      
                 indemnified in every case unless                                      
                 the Texas Business Corporation Act                                    
                 prohibits indemnification.                                            

INSURANCE        Texas law allows a corporation to   No corresponding provision.       
                 purchase and maintain insurance on                                    
                 behalf of any person who is or was                                    
                 a director, officer, employee or                                      
                 agent of the corporation against                                      
                 any liability asserted against                                        
                 such person and incurred by such                                      
                 person in such a capacity or                                          
                 arising out of his status as such                                     
                 a person whether or not the                                           
                 corporation would have the power                                      
                 to indemnify him against that                                         
                 liability. In addition, a cor-                                        
                 poration may also establish and                                       
                 maintain arrangements, other than                                     
                 insurance, to protect these                                           
                 individuals, including a trust                                        
                 fund or surety arrangement.                                           

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                                    THE COMPANY                           THE TRUST             
                                    -----------                           ---------             
                                                                                                
STANDARD OF CARE         In general, directors are charged    The trustee may act in its        
                         with the duty in their               discretion and shall be personally
                         decision-making process and          or individually liable only for   
                         oversight responsibilities to act    fraud or acts or omissions in bad 
                         as would a reasonably prudent        faith or which constitute gross   
                         person in the conduct of such        negligence.                       
                         person's own affairs. However, we                                      
                         limit our directors' liability in                                      
                         our bylaws. See "Limited Liability                                     
                         of Directors/Trustee."                                                 

SHAREHOLDER/ UNITHOLDER  Texas law requires a report to the   No corresponding provision.       
REPORTS                  shareholders upon indemnification                                      
                         or advancement of expenses.                                            

LIMITED LIABILITY OF     Texas law permits a corporation to   No corresponding provision.       
DIRECTORS/TRUSTEE        eliminate in its charter all                                           
                         monetary liability of a director                                       
                         to the corporation or its                                              
                         shareholders for conduct in the                                        
                         performance of such director's                                         
                         duties. However, Texas law does                                        
                         not permit any limitation of the                                       
                         liability of a director for:                                           
                         - breaching the duty of loyalty to                                     
                           the corporation or its                                               
                           shareholders;                                                        
                         - failing to act in good faith;                                        
                         - engaging in intentional                                              
                           misconduct or a known violation of                                   
                           law;                                                                 
                         - engaging in a transaction from                                       
                           which the director obtains an                                        
                           improper benefit; or                                                 
                         - violating applicable statutes                                        
                           which expressly provide for the                                      
                           liability of a director.                                             
                         Our articles contain such a                                            
                         limitation on director liability.                                      

COMPENSATION PAYABLE TO  By resolution of the board of        The trustee receives an annual fee
THE BOARD/TRUSTEE        directors, our directors may be      based on distributions from the   
                         paid their expenses for attending    partnership to the trustee and the
                         a meeting of the board and a fixed   number of unitholders of record.  
                         sum for attendance at each meeting   The Trustee received $58,225 in   
                         or a fixed salary.                   fees from the Trust during the    
                                                              period ended September 30, 2001.  
                                                              For the years ended December 31,  
                                                              2000 and 1999, the Trustee        
                                                              received $69,540 and $77,564 in   
                                                              fees.                             

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DESCRIPTION OF CAPITAL STOCK

    As of April 2, 2002, our authorized capital stock consisted of 100,000,000
shares of common stock, par value $0.01 per share, and 10,000,000 shares of     
preferred stock, par value $.001 per share. As of that date, we had 1,256,471   
shares of common stock outstanding and no shares of preferred stock outstanding.
As of April 2, 2002, we had two shareholders of record of our common stock. We  
summarize below the key terms and provisions of our capital stock. We encourage 
you to read the actual provisions of our articles of incorporation, as amended, 
and our bylaws, as amended, that relate to your individual investment strategy. 
We are filing our articles of incorporation and bylaws with the SEC with this   
registration statement.                                                         

PREFERRED STOCK                                                                 

   Issuance.  Our Articles authorize us to issue up to ten million shares of
preferred stock. Currently, we do not have any issued or outstanding shares of  
preferred stock. Our board of directors can, without approval of shareholders,  
issue a series of preferred stock. The board of directors can also determine the
number of shares of each series and the rights, preferences and limitations of  
each series including the dividend rights, voting rights, conversion rights,    
redemption rights and any liquidation preferences of any wholly unissued series 
of preferred stock, the number of shares constituting each series and the terms 
and conditions of issue. In some cases, the issuance of preferred stock could   
delay a change in our control and make it harder to remove present management.  
In addition, the voting and conversion rights of a series of preferred stock    
issued by our board of directors could adversely affect the voting power of our 
common shareholders. Unless the issuance of a series of preferred stock is      
approved by the majority of our disinterested directors, we will only issue     
preferred stock to promoters on the same terms as such series of preferred stock
is offered to other offerees of preferred stock. Under certain circumstances,   
preferred stock could also restrict dividend payments to holders of our common  
stock.                                                                          

Fully Paid.  The preferred stock will, when issued, be fully paid and 
non-assessable.                                                                 

COMMON STOCK                                                                    

   Voting Rights.  Each share of our common stock is entitled to one vote in
the election of directors and other matters. A majority of the issued and       
outstanding common stock constitutes a quorum at any meeting of shareholders.   
The vote by the holders of two-thirds of the outstanding shares is required to  
effect certain fundamental corporate changes such as liquidation, merger or     
amendment of our articles of incorporation. Common shareholders are not entitled
to cumulative voting rights.                                                    

Dividends.  Common shareholders may receive dividends if the board of 
directors declares them out of legally available funds. We may pay dividends in 
cash, stock or another form.                                                    

 Liquidation.  If we liquidate, dissolve or wind-up our business, either
voluntarily or not, common shareholders will share equally in the assets        
remaining after we pay our creditors and any preferred shareholders.            

Fully Paid.  All outstanding shares of common stock are fully paid and
non-assessable. Any additional common stock we issue will also be fully paid and
non-assessable.                                                                 

   Preemption Rights.  The holders of common stock have no preemptive rights
to purchase shares of stock.                                                    

Other Rights.  We will notify common shareholders of any shareholders'
meetings according to applicable law.                                           

    Listing.  There is not an active trading market for our common stock. Upon
completion of the exchange offer, we anticipate that our common stock will be   
traded on the OTC Bulletin Board.                                               

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TEXAS ANTI-TAKEOVER LAW AND ARTICLES OF INCORPORATION AND BYLAW PROVISIONS      

We are a Texas corporation. The Texas Business Corporation Act and our
articles of incorporation and bylaws contains certain provisions that could     
discourage potential takeover attempts and make it more difficult for our       
shareholders to change management or receive a premium for their shares.        

TEXAS LAW                                                                   

   Although we have amended our articles of incorporation to elect not to be
subject to the provisions of Part Thirteen of the Texas Business Corporation    
Act, we will remain subject to such provisions until June 2003. That section    
provides that we may not, directly or indirectly, enter into or engage in a     
merger, sale of assets, issuance of shares or similar transaction with a person 
that has beneficially owned during the past three years, 20 percent or more of  
our outstanding voting shares, or any affiliate or associate of such affiliated 
shareholder, during the three-year period immediately following the date such   
affiliated shareholder first acquired 20 percent or more of our shares unless:  

  - the business combination or the purchase or acquisition of shares that
    resulted in the affiliated shareholder acquiring 20 percent or more of
       our shares is approved by our board of directors before such acquisition;
or                                                                

- the business combination is approved, by the affirmative vote of the
 holders of at least two-thirds of our outstanding voting shares not
 beneficially owned by the affiliated shareholder or an affiliate or
       associate of the affiliated shareholder, at a meeting of shareholders and
      not by written consent, duly called for that purpose at least six months
      after the date that the affiliated shareholder first acquired 20 percent
or more of our shares.                                            

CHARTER AND BYLAW PROVISIONS                                                

   Our articles of incorporation and bylaws provide that any action required
or permitted to be taken by our shareholders may be effected either at a duly   
called annual or special meeting of the shareholders or by a written consent of 
the shareholders executed by the number of shareholders required to approve the 
action assuming all shareholders entitled to vote on the matter were present and
voted at a duly called meeting of shareholders. Special meetings of shareholders
may be called by our president, our board of directors or by 50% of our         
shareholders.                                                                   

    Our articles of incorporation do not provide for the division of our board
of directors into classes. Each year at the annual meeting of shareholders, all 
directors are elected to hold office until the next succeeding annual meeting of
shareholders. The number of directors is fixed by resolution of our board, but  
is required under the bylaws to be at least one. The size of the board is       
currently fixed at three members.                                               

    Directors may be removed with the approval of the holders of a majority of
the shares entitled to vote at a meeting of shareholders. Directors may be      
removed by shareholders with or without cause. Vacancies and newly-created      
directorships resulting from any increase in the number of directors may be     
filled by a majority of the directors then in office, a sole remaining director,
or the holders of a majority of the shares entitled to vote at a meeting of     
shareholders.                                                                   

LIMITATION OF LIABILITY; INDEMNIFICATION                                        

    Our articles of incorporation contain provisions permitted under the Texas
Business Corporation Act relating to the liability of directors. These          
provisions eliminate a director's personal liability for monetary damages       
resulting from a breach of fiduciary duty. A director will continue to be       
personally liable for:                                                          

 - breaching the duty of loyalty to the corporation or its shareholders;

- failing to act in good faith;                                       

- engaging in intentional misconduct or a known violation of law;     

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 - engaging in a transaction from which the director obtains an improper
benefit; or                                                       

   - violating applicable statutes which expressly provide for the liability
of a director.                                                    

These provisions do not limit or eliminate our rights or those of any 
shareholder to seek non-monetary relief, such as an injunction or rescission, in
the event of a breach of a director's fiduciary duty. These provisions will not 
alter a director's liability under federal securities laws.                     

    Our bylaws also contain provisions indemnifying our directors and officers
to the fullest extent permitted by the Texas Business Corporation Act. The      
indemnification provisions may require us, among other things, to indemnify the 
officers and directors against certain liabilities, other than liabilities      
arising from willful misconduct, that may arise by reason of their status or    
service as directors or officers. These provisions also may require us to       
advance the expenses incurred by the officers and directors as a result of any  
proceeding against them as to which they could be indemnified. We believe that  
these indemnification arrangements are necessary to attract and retain qualified
individuals to serve as directors and officers.                                 

TRANSFER AGENT AND REGISTRAR                                                    

The transfer agent and registrar for our common stock is Securities   
Transfer Corporation.                                                           

MARKET FOR THE TRUST'S UNITS

The Trust's units are traded on the over-the-counter market under the 
symbol "FMOLS." As of April 1, 2002, 14,975,390 units were outstanding and held 
of record by, 7,958 unitholders. The high and low sales prices of the units as  
reported on the OTC Bulletin Board for each quarterly period of 2001 and 2000   
were:                                                                           

                                                                [Download Table]

                                                               UNITS OF  
                                                              BENEFICIAL 
                                                               INTEREST  
                                                              -----------
QUARTER ENDED                                                 HIGH   LOW 
-------------                                                 ----   ----
                                                                         
December 31, 2001...........................................  $.10   $.05
September 30, 2001..........................................   .10    .05
June 30, 2001...............................................   .11    .05
March 31, 2001..............................................   .13    .06
December 31, 2000...........................................   .07    .03
September 30, 2000..........................................   .13    .05
June 30, 2000...............................................   .25    .11
March 31, 2000..............................................    .5    .07

MARKET FOR OUR COMMON STOCK 
AND SHARES ELIGIBLE FOR FUTURE SALE 

Our common stock is not currently listed on any national securities   
exchange or the NASDAQ National Market and there is not an established trading  
market for our common stock. As of February 15, 2002, we had two shareholders of
record. If all unitholders participate in the exchange offer, we will have a    
total of 2,005,241 shares of common stock outstanding following the exchange    
offer. The shares issued in exchange for units of the Trust will be freely      
tradable unless they are issued to our "affiliates," as defined in Rule 144     
under the Securities Act. In January 2003, 647,600 shares of common stock held  
by Timothy M. Roberson and 440,804 shares held by Joseph F. Langston, Jr. will  
be eligible for resale pursuant to Rule 144 under the Securities Act. Currently,
100,000 of the shares held by Mr. Roberson are eligible for resale pursuant to  
Rule 144. In October 2002, 68,067 of the shares held by Mr. Langston will be    
eligible for resale pursuant to Rule 144. Rule 144 will limit the amount of     
stock that Mr. Roberson and Mr. Langston may sell and the manner in which they  
may sell their stock while they are our affiliates.                             

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     As of April 2, 2002, we did not have any outstanding options or warrants to
purchase, or securities convertible into, our common stock.                     

     We have not paid dividends since our incorporation in March 2001 and do not
anticipate paying cash dividends in the foreseeable future. Any future payment  
of cash dividends will depend upon our results of operations, financial         
condition, cash requirements and other factors deemed relevant by our board of  
directors.                                                                      

LEGAL MATTERS 

The validity of our common stock offered hereby will be passed upon by
Haynes and Boone, LLP.                                                          

INDEPENDENT AUDITORS

     The audited financial statements of Texas Standard as of September 30, 2001
and for the year then ended, the historical summaries of revenues and direct    
operating expenses of the working interests purchased by Texas Standard from IMC
Global, Inc. for the nine months ended September 30, 2001 and the year ended    
December 31, 2000, and the financial statements of the Freeport-McMoRan Oil and 
Gas royalty Trust are included in this prospectus in reliance upon the report of
Hein + Associates LLP, independent public accountants, included herein, and upon
the authority of said firm as experts in accounting and auditing.               

RESERVE ENGINEERS 

     Information about our estimated net proved reserves and the future net cash
flows attributable to these reserves was prepared by Ryder Scott Company, L.P., 
Independent Petroleum Engineers, and are included in this prospectus in reliance
upon their authority as experts in reserves and present values.                 

WHERE YOU CAN FIND MORE INFORMATION ABOUT TEXAS STANDARD

  We have filed a registration on Form S-4 with the SEC in connection with
this exchange offer. In addition, on December 10, 2001, we also filed with the  
SEC a statement on Schedule TO pursuant to Rule 14d-3 under the Exchange Act to 
furnish information about our offer. Upon consummation of the exchange offer, we
will be required to file annual, quarterly and current reports, proxy statements
and other information with the SEC. You may read and copy the registration      
statement, the Schedule TO and any other documents we have filed at the SEC's   
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please 
call the SEC at 1-800-SEC-0330 for further information on the Public Reference  
Room. Our SEC filings are also available to the public at the SEC's Internet    
site at "http://www.sec.gov."                                                   

    This prospectus is part of the registration statement and does not contain
all of the information included in the registration statement. Whenever a       
reference is made in this prospectus to any of our contracts or other documents,
the reference may not be complete and, for a copy of the contract or document,  
you should refer to the exhibits that are a part of the registration statement. 

Upon consummation of the exchange offer, we expect to provide annual  
reports to our stockholders that include financial information examined and     
reported on by our independent public accountants.                              

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GLOSSARY OF OIL AND GAS TERMS 

TERMS USED TO DESCRIBE QUANTITIES OF OIL AND NATURAL GAS                        

  - Bbl -- One stock tank barrel, or 42 US gallons liquid volume, of crude
oil or other liquid hydrocarbons.                                 

- Bcf -- One billion cubic feet of natural gas.                       

   - BOE -- One barrel of oil equivalent, converting gas to oil at the ratio
of 6 Mcf of gas to 1 Bbl of oil.                                  

- MBbl -- One thousand Bbl.                                           

- Mcf -- One thousand cubic feet of natural gas.                      

     - Mcfe -- One thousand cubic feet of natural gas equivalent, converting oil
to gas at the ratio of 1 Bbl of oil to 6 Mcf of gas.              

- MMcf -- One million cubic feet of natural gas.                      

TERMS USED TO DESCRIBE OUR INTERESTS IN WELLS AND ACREAGE                       

- Gross oil and gas wells or acres  -- Our gross wells or gross acres 
     represents the total number of wells or acres in which we own a working
interest.                                                         

    - Net oil and gas wells or acres  -- Determined by multiplying "gross" oil
   and natural gas wells or acres by the working interest that we own in
such wells or acres represented by the underlying properties.     

TERMS USED TO ASSIGN A PRESENT VALUE TO OUR RESERVES                            

    - Standardized measure of proved reserves -- The present value, discounted
    at 10%, of the pre-tax future net cash flows attributable to estimated
    net proved reserves. We calculate this amount by assuming that we will
 sell the oil and gas production attributable to the proved reserves
      estimated in our independent engineer's reserve report for the prices we
    received for the production on the date of the report, unless we had a
   contract to sell the production for a different price. We also assume
     that the cost to produce the reserves will remain constant at the costs
    prevailing on the date of the report. The assumed costs are subtracted
       from the assumed revenues resulting in a stream of future net cash flows.
    Estimated future income taxes using rates in effect on the date of the
   report are deducted from the net cash flow stream. The after-tax cash
      flows are discounted at 10% to result in the standardized measure of our
 proved reserves. The standardized measure of our proved reserves is
disclosed in our financial statements as supplemental data.       

TERMS USED TO CLASSIFY OUR RESERVE QUANTITIES                                   

     - Proved reserves -- The estimated quantities of crude oil, natural gas and
    natural gas liquids which, upon analysis of geological and engineering
    data, appear with reasonable certainty to be recoverable in the future
   from known oil and natural gas reservoirs under existing economic and
      operating conditions. The SEC definition of proved oil and gas reserves,
per Article 4-10(a)(2) of Regulation S-X, is as follows:          

     Proved oil and gas reserves.  Proved oil and gas reserves are the estimated
quantities of crude oil, natural gas, and natural gas liquids which geological  
and engineering data demonstrate with reasonable certainty to be recoverable in 
future years from known reservoirs under existing economic and operating        
conditions, i.e., prices and costs as of the date the estimate is made. Prices  
include consideration of changes in existing prices provided only by contractual
arrangements, but not on escalations based upon future conditions.              

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     (a) Reservoirs are considered proved if economic producibility is
 supported by either actual production or conclusive formation test. The
    area of a reservoir considered proved includes (A) that portion delineated
   by drilling and defined by gas-oil and/or oil-water contacts, if any; and
  (B) the immediately adjoining portions not yet drilled, but which can be
reasonably judged as economically productive on the basis of available
 geological and engineering data. In the absence of information on fluid
   contacts, the lowest known structural occurrence of hydrocarbons controls
the lower proved limit of the reservoir.                              

          (b) Reserves which can be produced economically through application of
     improved recovery, techniques (such as fluid injection) are included in the
    "proved" classification when successful testing by a pilot project, or the
  operation of an installed program in the reservoir, provides support for
the engineering analysis on which the project or program was based.   

          (c) Estimates of proved reserves do not include the following: (1) oil
that may become available from known reservoirs but is classified     
    separately as "indicated additional reserves"; (2) crude oil, natural gas,
 and natural gas liquids, the recovery of which is subject to reasonable
   doubt because of uncertainty as to geology, reservoir characteristics, or
     economic factors; (3) crude oil, natural gas, and natural gas liquids, that
may occur in undrilled prospects; and (4) crude oil, natural gas, and 
     natural gas liquids, that may be recovered from oil shales, coal, gilsonite
and other such sources.                                               

   - Proved developed reserves -- Proved reserves that can be expected to be
    recovered through existing wells with existing equipment and operating
methods.                                                          

  - Proved undeveloped reserves -- Proved reserves that are expected to be
   recovered from new wells on undrilled acreage, or from existing wells
where a relatively major expenditure is required.                 

TERMS WHICH DESCRIBE THE COST TO ACQUIRE OUR RESERVES                           

- Finding costs -- Our finding costs compare the amount we spent to   
      acquire, explore and develop our oil and gas properties, explore for oil
and gas and to drill and complete wells during a period, with the 
   increases in reserves during the period. This amount is calculated by
      dividing the net change in our evaluated oil and property costs during a
   period by the change in proved reserves plus production over the same
period.                                                           

TERMS WHICH DESCRIBE THE PRODUCTIVE LIFE OF A PROPERTY OR GROUP OF PROPERTIES   

- Reserve life -- A measure of the productive life of an oil and gas  
property or a group of oil and gas properties, expressed in years.
     Reserve life equals the estimated net proved reserves attributable to a
     property or group of properties divided by production from the property
       or group of properties for the four fiscal quarters preceding the date as
of which the proved reserves were estimated.                      

TERMS USED TO DESCRIBE THE LEGAL OWNERSHIP OF OUR OIL AND GAS PROPERTIES        

- Royalty interest -- A real property interest entitling the owner to 
      receive a specified portion of the gross proceeds of the sale of oil and
natural gas production or, if the conveyance creating the interest
       provides, a specific portion of oil and natural gas produced, without any
    deduction for the costs to explore for, develop or produce the oil and
 natural gas. A royalty interest owner has no right to consent to or
     approve the operation and development of the property, while the owners
     of the working interest have the exclusive right to exploit the mineral
on the land.                                                      

- Working interest -- A real property interest entitling the owner to 
   receive a specified percentage of the proceeds of the sale of oil and
     natural gas production or a percentage of the production, but requiring
the owner of the working interest to bear the cost to explore for,
       develop and produce such oil and natural gas. Aworking interest owner who
       owns a portion of the working interest may participate either as operator
or by voting his percentage interest to approve or disapprove the 
   appointment of an operator and drilling and other major activities in
connection with the development and operation of a property.      
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TERMS USED TO DESCRIBE SEISMIC OPERATIONS                                       

     - Seismic data -- Oil and gas companies use seismic data as their principal
  source of information to locate oil and gas deposits, both to aid in
   exploration for new deposits and to manage or enhance production from
   known reservoirs. To gather seismic data, an energy source is used to
    send sound waves into the subsurface strata. These waves are reflected
       back to the surface by underground formations, where they are detected by
    geophones which digitize and record the reflected waves. Computers are
  then used to process the raw data to develop an image of underground
formations.                                                       

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TEXAS STANDARD OIL COMPANY

INDEX TO FINANCIAL STATEMENTS 

                                                                [Download Table]

                                                              PAGE 
                                                              -----
                                                                   
FINANCIAL STATEMENTS OF TEXAS STANDARD OIL COMPANY                 
  Independent Auditor's Report..............................    F-2
  Balance Sheets as of September 30, 2001 and December 31,         
     2001 (unaudited).......................................    F-3
  Statement of Operations for the Period from March 27, 2001       
     to September 30, 2001 and for the Three Months Ended          
     December 31, 2001 (unaudited)..........................    F-4
  Statement of Stockholders' Deficit for the Period from           
     March 27, 2001 to September 30, 2001 and for the Three        
     Months Ended December 31, 2001 (unaudited).............    F-5
  Statement of Cash Flows for the Period from March 27, 2001       
     to September 30, 2001 and for the Three Months Ended          
     December 31, 2001 (unaudited)..........................    F-6
  Notes to Financial Statements.............................    F-7
REVENUES AND DIRECT OPERATING EXPENSES OF PROPERTIES               
  ACQUIRED IN OCTOBER 2001                                         
  Independent Auditor's Report..............................   F-10
  Historical Summaries of Revenues and Direct Operating            
     Expenses of Properties Acquired in October 2001........   F-11
  Notes to Historical Summaries of Revenues and Direct             
     Operating Expenses of Properties Acquired in October          
     2001...................................................   F-12
UNAUDITED PRO FORMA FINANCIAL INFORMATION                          
  Unaudited Pro Forma Financial Information.................   F-14
  Unaudited Pro Forma Consolidated Balance Sheet as of             
     December 31, 2001......................................   F-15
  Unaudited Pro Forma Consolidated Statement of Income for         
     the Three Months Ended December 31, 2001...............   F-16
  Unaudited Pro Forma Consolidated Statement of Income for         
     the Nine Months Ended September 30, 2001...............   F-17
  Notes to Unaudited Pro Forma Financial Information........   F-18
FINANCIAL STATEMENTS OF THE FREEPORT-MCMORAN OIL AND GAS           
  ROYALTY TRUST                                                    
  Independent Auditor's Report..............................   F-19
  Statements of Assets, Liabilities and Trust Equity as of         
     December 31, 2001 and 2000.............................   F-20
  Statements of Net Loss and Distributable Income for the          
     Years Ended December 31, 2001 and 2000.................   F-21
  Statement of Changes in Trust Equity......................   F-22
  Statements of Cash Flows..................................   F-23
  Notes to Financial Statements.............................   F-24

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INDEPENDENT AUDITOR'S REPORT

Board of Directors and Stockholders                                             
Texas Standard Oil Company                                                      
Houston, Texas                                                                  

We have audited the accompanying balance sheet of Texas Standard Oil  
Company as of September 30, 2001, and the related statements of operations,     
changes in stockholders' deficit and cash flows for the period from inception   
(March 27, 2001) to September 30, 2001. These financial statements are the      
responsibility of the Company's management. Our responsibility is to express an 
opinion on these financial statements based on our audit.                       

We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan  
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a 
test basis, evidence supporting the amounts and disclosures in the financial    
statements. An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall     
financial statement presentation. We believe that our audit provides a          
reasonable basis for our opinion.                                               

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Texas Standard Oil Company  
as of September 30, 2001, and the results of its operations and its cash flows  
for the period then ended, in conformity with accounting principles generally   
accepted in the United States of America.                                       

                                         HEIN + ASSOCIATES LLP

Dallas, Texas                                                                   
November 30, 2001                                                               

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TEXAS STANDARD OIL COMPANY

BALANCE SHEETS

                                                        [Enlarge/Download Table]

                                                              DECEMBER 31,   SEPTEMBER 30,
                                                                  2001           2001     
                                                              ------------   -------------
                                                              (UNAUDITED)                 
                                                                                          
                                          ASSETS                                          

CURRENT ASSETS:                                                                           
  Cash......................................................  $    777,779     $   6,659  
  Restricted cash...........................................       160,000            --  
  Marketable securities, at fair market value...............       605,220            --  
  Oil and gas sales receivable..............................       422,599            --  
  Receivable from purchase and sale agreement...............     3,243,000            --  
  Note receivable...........................................       227,092            --  
                                                              ------------     ---------  
          TOTAL CURRENT ASSETS..............................     5,435,690         6,659  
PROPERTY AND EQUIPMENT:                                                                   
  Oil and gas properties (full cost method).................       111,966            --  
  Furniture and equipment...................................        20,000            --  
  Less accumulated depletion and depreciation...............       (12,320)           --  
                                                              ------------     ---------  
  Net property and equipment................................       119,646            --  
DEFERRED TAX ASSET..........................................       115,000            --  
DEPOSIT ON PURCHASE AND SALE AGREEMENT......................            --       110,000  
                                                              ------------     ---------  
          TOTAL ASSETS......................................  $  5,670,336     $ 116,659  
                                                              ============     =========  

                          LIABILITIES AND STOCKHOLDERS' DEFICIT                           
CURRENT LIABILITIES:                                                                      
  Accounts payable and accrued expenses.....................  $  1,577,143     $ 381,745  
  Note payable -- related party.............................            --       115,000  
  Income tax payable........................................       115,000            --  
  Deferred revenue..........................................        11,553            --  
                                                              ------------     ---------  
          TOTAL CURRENT LIABILITIES.........................     1,703,696       496,745  
PLUG AND ABANDONMENT LIABILITY..............................     4,200,000            --  
COMMITMENTS (Note 5)........................................            --            --  
STOCKHOLDERS' DEFICIT:                                                                    
  Preferred stock, 10,000,000 shares authorized, no shares                                
     issued.................................................            --            --  
  Common stock, $.01 par value; 100,000,000 shares                                        
     authorized; 168,067 and 100,000 shares issued and                                    
     outstanding, respectively..............................         1,681         1,000  
  Additional paid in capital................................       131,976            --  
  Accumulated deficit.......................................      (367,017)     (381,086) 
                                                              ------------     ---------  
          TOTAL STOCKHOLDERS' DEFICIT.......................      (233,360)     (380,086) 
                                                              ------------     ---------  
          TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT.......  $  5,670,336     $ 116,659  
                                                              ============     =========  

See accompanying notes to these financial statements. 
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TEXAS STANDARD OIL COMPANY

STATEMENTS OF OPERATIONS

                                                        [Enlarge/Download Table]

                                                               FOR THE       PERIOD FROM   
                                                             THREE MONTHS     INCEPTION    
                                                                ENDED      (MARCH 27, 2001)
                                                             DECEMBER 31,  TO SEPTEMBER 30,
                                                                 2001            2001      
                                                             ------------  ----------------
                                                             (UNAUDITED)                   
                                                                                           
OIL AND GAS REVENUE.........................................  $1,327,247      $      --    
COSTS AND EXPENSES:                                                                        
  Production expense........................................     584,451             --    
  Well insurance expense....................................     133,687             --    
  Depletion and depreciation................................      12,320                   
  General and administrative................................     284,772        380,171    
                                                              ----------      ---------    
          Total expenses....................................   1,015,230        380,171    
OPERATING INCOME (LOSS).....................................     312,017       (380,171)   
OTHER INCOME (EXPENSE):                                                                    
  Non-recurring offering costs..............................    (244,240)            --    
  Unrealized loss on marketable securities..................     (71,555)            --    
  Interest income...........................................      17,847            830    
  Interest expense..........................................          --         (1,745)   
                                                              ----------      ---------    
                                                                (297,948)          (915)   
                                                              ----------      ---------    
INCOME TAX PROVISION:                                                                      
  Current expense...........................................    (115,000)            --    
  Deferred benefit..........................................     115,000             --    
                                                              ----------      ---------    
NET INCOME (LOSS)...........................................  $   14,069      $(381,086)   
                                                              ==========      =========    

See accompanying notes to these financial statements. 
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TEXAS STANDARD OIL COMPANY

STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE PERIOD FROM INCEPTION (MARCH 27, 2001) TO DECEMBER 31, 2001 (UNAUDITED) 

                                                        [Enlarge/Download Table]

                                            COMMON STOCK    ADDITIONAL                          
                                          ----------------   PAID IN     ACCUMULATED            
                                          SHARES    AMOUNT   CAPITAL       DEFICIT      TOTAL   
                                          -------   ------  ----------   -----------  --------- 
                                                               (UNAUDITED)                      
                                                                                                
BALANCES:                                                                                       
  March 27, 2001.........................      --   $   --                $      --   $      -- 
  Issuance of common stock............... 100,000    1,000                       --       1,000 
     Net loss............................      --       --                 (381,086)   (381,086)
                                          -------   ------   --------     ---------   --------- 
BALANCES:                                                                                       
  September 30, 2001..................... 100,000    1,000                 (381,086)   (380,086)
  Issuance of common stock (unaudited)...  68,067      681    131,976            --     132,657 
  Net income (unaudited).................      --       --                   14,069      14,069 
                                          -------   ------   --------     ---------   --------- 
BALANCES:                                                                                       
  December 31, 2001 (unaudited).......... 168,067   $1,681   $131,976     $(367,017)  $(233,360)
                                          =======   ======   ========     =========   ========= 

See accompanying notes to these financial statements. 
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TEXAS STANDARD OIL COMPANY

STATEMENT OF CASH FLOWS 

                                                        [Enlarge/Download Table]

                                                               FOR THE       FOR THE PERIOD   
                                                             THREE MONTHS    FROM INCEPTION   
                                                                ENDED       (MARCH 27, 2001)  
                                                             DECEMBER 31,   TO SEPTEMBER 30,  
                                                                 2001             2001        
                                                             ------------  -------------------
                                                             (UNAUDITED)                      
                                                                                              
CASH FLOWS FROM OPERATING ACTIVITIES:                                                         
  Net income (loss).........................................  $   14,069        $(381,086)    
  Depletion, depreciation and amortization..................      12,320               --     
  Unrealized loss on marketable securities..................      71,555               --     
  Deferred tax benefit......................................    (115,000)              --     
  Purchase of trading securities............................    (676,775)              --     
  Stock compensation........................................     131,976               --     
  Changes in assets and liabilities:                                                          
     Accounts receivable and accrued income.................    (649,691)              --     
     Accounts payable and accrued expenses..................     735,789          381,745     
                                                              ----------        ---------     
          NET CASH PROVIDED BY (USED IN) OPERATING                                            
            ACTIVITIES......................................    (475,757)             659     
CASH FLOWS FROM INVESTING ACTIVITIES:                                                         
  Deposit on purchase and sale agreement....................          --         (110,000)    
  Restricted cash...........................................    (160,000)              --     
  Cash received in oil and gas property purchase............   1,500,000               --     
  Additions to property and equipment.......................      21,196               --     
                                                              ----------        ---------     
          NET CASH (PROVIDED BY) USED IN INVESTING                                            
            ACTIVITIES......................................   1,361,196         (110,000)    
CASH FLOWS FROM FINANCING ACTIVITIES:                                                         
  Proceeds from (repayments of) related party note..........    (115,000)         115,000     
  Proceeds from sale of common stock........................         681            1,000     
                                                              ----------        ---------     
          NET CASH PROVIDED (USED) BY FINANCING                                               
            ACTIVITIES......................................    (114,319)         116,000     
                                                              ----------        ---------     
NET CHANGE IN CASH..........................................     771,120            6,659     
CASH:                                                                                         
  Beginning of year.........................................       6,659               --     
                                                              ----------        ---------     
CASH:                                                                                         
  End of year...............................................  $  777,779        $   6,659     
                                                              ==========        =========     

See accompanying notes to these financial statements. 
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TEXAS STANDARD OIL COMPANY

NOTES TO FINANCIAL STATEMENTS 
(THE PERIOD SUBSEQUENT TO SEPTEMBER 30, 2001 IS UNAUDITED)

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                  

ORGANIZATION AND NATURE OF OPERATIONS                                       

 Texas Standard Oil Company (the "Company") was incorporated in Texas in
March 2001. The Company is engaged in the acquisition and development of oil and
gas properties in federal waters offshore Texas and Louisiana.                  

CASH AND CASH EQUIVALENTS                                                   

   The Company considers all highly liquid debt instruments purchased with a
remaining maturity of three months or less to be cash equivalents.              

OIL AND GAS PROPERTIES                                                      

 The Company uses the full cost method of accounting for its oil and gas
properties. The Company's properties are all located in the United States       
federal waters both onshore and offshore Texas and Louisiana, and therefore its 
costs are capitalized in one cost center. Under the full cost method, all costs 
related to the acquisition, exploration or development of oil and gas properties
are capitalized into the "full cost pool". Such costs include those related to  
lease acquisitions, drilling and equipping of productive and non-productive     
wells, delay rentals, geological and geophysical work and certain internal costs
directly associated with the acquisition, exploration or development of oil and 
gas properties. Upon the sale or disposition of oil and gas properties, no gain 
or loss is recognized, unless such adjustments of the full cost pool would      
significantly alter the relationship between capitalized costs and proved       
reserves.                                                                       

 Under the full cost method of accounting, a "full cost ceiling test" is
required wherein net capitalized costs of oil and gas properties cannot exceed  
the present value of estimated future net revenues from proved oil and gas      
reserves, discounted at 10%, less any related income tax effects.               

Amortization of oil and gas properties is computed using the          
unit-of-production method based on estimated proved oil and gas reserves.       
Amortizable costs include estimated future development costs of proved reserves 
and estimated dismantlement and abandonment costs, and exclude the costs of     
unevaluated oil and gas properties.                                             

INCOME TAXES                                                                

   Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due, if any, plus net   
deferred taxes related primarily to differences between the bases of assets and 
liabilities for financial and income tax reporting. Deferred tax assets and     
liabilities represent the future tax return consequences of those differences,  
which will either be taxable or deductible when the assets and liabilities are  
recovered or settled. Deferred tax assets include recognition of operating      
losses that are available to offset future taxable income and tax credits that  
are available to offset future income taxes. Valuation allowances are recognized
to limit recognition of deferred tax assets where appropriate. Such allowances  
may be reversed when circumstances provide evidence that the deferred tax assets
will more likely than not be realized. The Company had a deferred tax asset of  
approximately $130,000, which was fully reserved, and no material deferred tax  
liabilities, at September 30, 2001. At December 31, 2001, the Company had a net 
deferred tax asset of $700,000, of which $585,000 is reserved as it cannot be   
ascertained that it is more likely than not such asset will be realized.        

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TEXAS STANDARD OIL COMPANY

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

UNAUDITED INFORMATION                                                       

   The balance sheet as of December 31, 2001 and the statement of operations
for the three months ended December 31, 2001 were taken from the Company's books
and records without audit. However, in the opinion of management, such          
information includes all adjustments (consisting only of normal recurring       
accruals) which are necessary to properly reflect the financial position of the 
Company as of December 31, 2001 and the results of operations for the three     
months ended December 31, 2001.                                                 

USE OF ESTIMATES AND CERTAIN SIGNIFICANT ESTIMATES                          

  The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires the Company's management to   
make estimates and assumptions that affect the amounts reported in these        
financial statements and accompanying notes. Actual results could differ from   
those estimates. Significant assumptions are required in the valuation of proved
oil and gas reserves, which as described above may affect the amount at which   
oil and gas properties are recorded. It is at least reasonably possible those   
estimates could be revised in the near term and those revisions could be        
material.                                                                       

2.  ACQUISITION OF OIL AND GAS PROPERTIES                                       

In October 2001, the Company acquired interests in certain producing  
properties in federal waters offshore Texas and Louisiana for consideration of  
$1,101,000. The effective date of the transaction was January 1, 2001, and      
pre-closing net revenue from the properties after the effective date was about  
$6,000,000. Therefore, the Company had a receivable from the seller of          
approximately $4,900,000 (subject to final negotiated purchase price            
adjustments) upon closing. As of December 31, 2001, the Company had received    
payment for $1,500,000 of the receivable. As part of the Agreement, the Company 
assumes all future abandonment costs associated with the properties, which were 
estimated at closing to be approximately $4,200,000, and all contracts          
associated with the properties, including the transportation agreement discussed
at Note 5.                                                                      

3.  RELATED PARTY TRANSACTIONS                                                  

   In July 2001, the Company received proceeds of $115,000 in exchange for a
note payable from a stockholder. The note carries interest at 7% and was paid   
with accrued interest at final maturity November 1, 2001.                       

 In October 2001, the Company acquired a 21% interest in the Coles No. 1
prospect for approximately $89,000 which includes prepayment of its share of    
estimated drilling and completion costs. The Company is responsible for paying  
its share of additional drilling and completion costs, as billed by the         
operator, Roberson Oil Company, a company controlled by a Company stockholder.  

4.  STOCKHOLDERS' EQUITY                                                        

  In October 2001, the Company issued 68,067 shares of its $.001 par value
common stock with an estimated fair value of $132,657 for cash consideration of 
$681, increasing total outstanding shares to 168,067.                           

    Also subsequent to September 30, 2001, the Company amended its articles of
incorporation to authorize the issuance of up to 10,000,000 shares of preferred 
stock. Preferred shares may be issued in series and with rights and preferences 
as determined by the Company's board of directors.                              

In December 2001, the Company's board of directors adopted the Equity 
Incentive Plan (the "Plan"), under which 300,000 shares of stock were reserved  
for issuance upon the exercise of options or grant of restricted stock. No      
options had been granted under the Plan.                                        

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TEXAS STANDARD OIL COMPANY

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     The Company has proposed to offer shares of its common stock to unitholders
of the Freeport-McMoRan Oil & Gas Royalty Trust in exchange for the units in the
Trust. In connection with this proposed transaction, the Company executed a     
forward split of its common stock resulting in the issuance of an additional    
1,088,404 shares to its existing stockholders subsequent to December 31, 2001.  

5.  COMMITMENTS AND CONTINGENCIES                                               

As part of the property acquisition discussed at Note 2, the Company  
assumed an obligation under an agreement with an oil pipeline company to deliver
on a daily basis specified quantities of crude oil from West Cameron 498. Under 
the terms of the agreement, the Company is required to pay a transportation fee 
calculated at a sliding monthly rate based upon the total average daily volumes 
delivered from West Cameron 498 during the month. Should the annual minimum     
delivery volume not be met, a deficiency payment is assessed by the pipeline.   
During 2000, the Working Interest Owner did not deliver the minimum volume under
the agreement; therefore, in February 2001, the pipeline company billed the     
Working Interest Owner approximately $500,000 for the 2000 deficiency. Based on 
2001 projected production, the minimum delivery volumes will not be met in 2001.
However, should production exceed the 2001 minimum, the Company is entitled to  
receive transportation without cost up to the cumulative prior undelivered      
volumes.                                                                        

  In February 2002, suit was filed against the Company relating to certain
rights to proceeds from the acquisition of the working and royalty interests    
(Note 2). The suit was settled by the Company agreeing to pay the claimant a sum
of $250,000 which is reflected in accrued liabilities at December 31, 2001.     

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INDEPENDENT AUDITOR'S REPORT

Board of Directors                                                              
Texas Standard Oil Company                                                      
Houston, Texas                                                                  

     We have audited the accompanying historical summaries of revenue and direct
operating expenses of properties acquired in October 2001, for the nine months  
ended September 30, 2001 and the year ended December 31, 2000. The historical   
summaries are the responsibility of the Company's management. Our responsibility
is to express an opinion on the historical summaries based on our audit.        

We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform 
the audit to obtain reasonable assurance about whether the historical summaries 
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the historical summaries. An 
audit also includes assessing the accounting principles used and significant    
estimates made by management, as well as evaluating the overall historical      
summaries presentation. We believe that our audit provides a reasonable basis   
for our opinion.                                                                

The accompanying historical summaries were prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange         
Commission (for inclusion in the Form S-4 of Texas Standard Oil Company) as     
described in Note 1 and are not intended to be a complete presentation of the   
properties' revenues and expenses.                                              

    In our opinion, the historical summaries referred to above present fairly,
in all material respects, the revenue and direct operating expenses of the      
properties acquired in October 2001, in conformity with accounting principles   
generally accepted in the United States.                                        

                                         HEIN + ASSOCIATES LLP

November 20, 2001                                                               
Dallas, Texas                                                                   

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TEXAS STANDARD OIL COMPANY

HISTORICAL SUMMARIES OF REVENUES AND DIRECT OPERATING EXPENSES
OF PROPERTIES ACQUIRED IN OCTOBER 2001

                                                        [Enlarge/Download Table]

                                                           FOR THE YEAR ENDED  FOR THE NINE MONTHS
                                                              DECEMBER 31,     ENDED SEPTEMBER 30,
                                                                  2000                2001        
                                                           ------------------  -------------------
                                                                                                  
Oil and gas sales.........................................    $12,769,000          $9,056,000     
Direct operating expenses.................................      2,820,000           1,774,000     
                                                              -----------          ----------     
     Net revenue..........................................    $ 9,949,000          $7,282,000     
                                                              ===========          ==========     

See accompanying notes to historical summaries. 
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TEXAS STANDARD OIL COMPANY

NOTES TO HISTORICAL SUMMARIES OF REVENUES AND DIRECT
OPERATING EXPENSES OF PROPERTIES ACQUIRED IN OCTOBER 2001 

1.  BASIS OF PREPARATION                                                        

The accompanying historical summaries of revenues and direct operating
expenses relate to the operations of the oil and gas properties acquired by     
Texas Standard Oil Company (the "Company") in October 2001 from IMC Global, Inc.
The properties were acquired for approximately $1,100,000, before purchase      
adjustments.                                                                    

  Revenues are recorded when the Company's share of oil or natural gas and
related liquids are sold. Direct operating expenses are recorded when the       
related liability is incurred. Direct operating expenses include lease operating
expenses, transportation, ad valorem taxes and production taxes. Depreciation   
and amortization of oil and gas properties, general and administrative expenses 
and income taxes have been excluded from operating expenses in the accompanying 
historical summaries because the amounts would not be comparable to those       
resulting from proposed future operations.                                      

    The historical summaries presented herein were prepared for the purpose of
complying with the financial statement requirements of a business acquisition to
be filed on Form S-4 as promulgated by Regulation S-B Item 3-10 of the          
Securities Exchange Act of 1934.                                                

2.  SUPPLEMENTAL INFORMATION ON OIL AND GAS RESERVES (UNAUDITED)                

    Proved oil and gas reserves consist of those estimated quantities of crude
oil, natural gas, and natural gas liquids that geological and engineering data  
demonstrate with reasonable certainty to be recoverable in future years from    
known reservoirs under existing economic and operating conditions. Proved       
developed oil and gas reserves are reserves that can be expected to be recovered
through existing wells with existing equipment and operating methods.           

  The following estimates of proved reserves have been made by independent
engineers. The estimated net interest in proved reserves are based upon         
subjective engineering judgments and may be affected by the limitations inherent
in such estimation. The process of estimating reserves is subject to continual  
revision as additional information becomes available as a result of drilling,   
testing, reservoir studies and production history. There can be no assurance    
that such estimates will not be materially revised in subsequent periods.       

   The changes in proved reserves of the properties acquired in October 2001
for the year ended December 31, 2000 and the nine months ended September 30,    
2001 are summarized as follows:                                                 

                                                                [Download Table]

                                                                OIL     NATURAL GAS
                                                             ---------  -----------
                                                                         (THOUSAND 
                                                             (BARRELS)  CUBIC FEET)
                                                                                   
Reserves at January 1, 2000.................................  518,000    3,053,000 
Revisions and other.........................................  226,000    1,375,000 
Production.................................................. (292,000)    (927,000)
                                                             --------    --------- 
Reserves at December 31, 2000...............................  452,000    3,501,000 
Revisions and other.........................................   90,000      761,000 
Production.................................................. (198,000)    (700,000)
                                                             --------    --------- 
Reserves at September 30, 2001..............................  344,000    3,562,000 
                                                             ========    ========= 

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TEXAS STANDARD OIL COMPANY

NOTES TO HISTORICAL SUMMARIES OF REVENUES 
AND DIRECT OPERATING EXPENSES OF PROPERTIES 
ACQUIRED IN OCTOBER 2001 -- (CONTINUED) 

The standardized measure of discounted estimated future net cash flows
related to proved oil and gas reserves at December 31, 2000 and September 30,   
2001 is as follows:                                                             

                                                        [Enlarge/Download Table]

                                                              2000           2001     
                                                          ------------   ------------ 
                                                                                      
Future cash inflows...................................... $ 30,596,000   $ 15,849,000 
Future production and development costs..................  (14,160,000)   (12,358,000)
                                                          ------------   ------------ 
Future net cash flows, before income tax.................   16,436,000      3,491,000 
Future income taxes......................................   (5,588,000)    (1,187,000)
                                                          ------------   ------------ 
Future net cash flows....................................   10,848,000      2,304,000 
10% annual discount......................................     (705,000)       482,000 
                                                          ------------   ------------ 
Standardized measure of discounted future net cash                                    
  flows.................................................. $ 10,143,000   $  2,786,000 
                                                          ============   ============ 

 The primary changes in the standardized measure of discounted estimated
future net cash flows for the years ended December 31, 2000 and the nine months 
ended September 30, 2001, were as follows:                                      

                                                        [Enlarge/Download Table]

                                                              2000           2001     
                                                           -----------   ------------ 
                                                                                      
Beginning of period....................................... $ 3,970,000   $ 10,143,000 
Sales of oil and gas produced, net of production costs....  (9,949,000)    (7,282,000)
Effect of change in prices................................  11,266,000    (15,693,000)
Accretion of discount.....................................     397,000      1,014,000 
Net change in income taxes................................  (3,139,000)     5,320,000 
Revision of estimates and other...........................   7,598,000      9,284,000 
                                                           -----------   ------------ 
End of period............................................. $10,143,000   $  2,786,000 
                                                           ===========   ============ 

   Estimated future cash inflows are computed by applying year-end prices of
oil and gas to year-end quantities of proved reserves. Estimated future         
development and production costs are determined by estimating the expenditures  
to be incurred in developing and producing the proved oil and gas reserves at   
the end of the year, based on year-end costs and assuming continuation of       
existing economic conditions. Estimated future income tax expense is calculated 
by applying year-end statutory tax rates to estimated future pre-tax net cash   
flows related to proved oil and gas reserves, less the tax basis of the         
properties involved.                                                            

The assumptions used to compute the standardized measure are those    
prescribed by the Financial Accounting Standards Board and as such, do not      
necessarily reflect the Company's expectations of actual revenues to be derived 
from those reserves nor their present worth. The limitations inherent in the    
reserve quantity estimation process are equally applicable to the standardized  
measure computations since these estimates are the basis for the valuation      
process.                                                                        

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TEXAS STANDARD OIL COMPANY

UNAUDITED PRO FORMA FINANCIAL INFORMATION 

In October 2001, Texas Standard Oil Company (the "Company") acquired  
working and net overriding royalty interests in certain producing properties    
located in federal waters, offshore Louisiana and offshore Texas from IMG       
Global, Inc. and the Freeport-McMoRan Oil and Gas Royalty Trust (the "Trust")   
for consideration of $1,101,000. The Company has also proposed to offer shares  
of its common stock to the unitholders of the Trust in exchange for the units in
the Trust. The following unaudited pro forma financial statements have been     
prepared to demonstrate the effect on the Company's financial position and      
results of operations as if the exchange offer with the Trust unitholders was   
completed as of December 31, 2001 (with respect to the pro forma balance sheet) 
and at the beginning of the periods (with respect to the pro forma statements of
income). The acquisition of the property interests are included in the pro forma
statement of income for the nine months ended September 30, 2001 as if it had   
occurred at the beginning of the period. The pro forma financial statements     
should be read in conjunction with the historical summaries of revenues and     
direct operating expenses of the acquired properties and with the financial     
statements of the Company included herein. The financial statements of the Trust
have not been included in the pro forma financial statements because the net    
assets and operations included in those financial statements will not have an   
impact on the ongoing operations of the Company. The pro forma financial        
statements should not be construed as a reflection of the financial position or 
results of operations that actually would have occurred if the acquisition would
have occurred on the above dates.                                               

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TEXAS STANDARD OIL COMPANY

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2001 

                                                        [Enlarge/Download Table]

                                                                       EXCHANGE                  
                                                                       OFFER PRO                 
                                                           TEXAS         FORMA                   
                                                          STANDARD    ADJUSTMENTS     PRO FORMA  
                                                         ----------   -----------     ---------- 
                                                                                                 
                                             ASSETS                                              

CURRENT ASSETS:                                                                                  
  Cash.................................................  $  777,779   $       --      $  777,779 
  Restricted cash......................................     160,000           --         160,000 
  Marketable securities, at fair market value..........     605,220           --         605,220 
  Oil and gas sales receivable.........................     422,599           --         422,599 
  Receivable from purchase and sale agreement..........   3,243,000           --       3,243,000 
  Note receivable......................................     227,092           --         227,092 
                                                         ----------   ----------      ---------- 
          TOTAL CURRENT ASSETS.........................   5,435,690           --       5,435,690 
PROPERTY AND EQUIPMENT:                                                                          
  Oil and gas properties (full cost method)............     111,966    4,048,000(1)    4,159,966 
  Furniture and equipment..............................      20,000           --          20,000 
  Less accumulated depletion and depreciation..........     (12,320)          --         (12,320)
                                                         ----------   ----------      ---------- 
       Net property and equipment......................     119,646    4,048,000       4,167,646 
  Deferred tax asset...................................     115,000           --         115,000 
                                                         ----------   ----------      ---------- 
          TOTAL ASSETS.................................  $5,670,336   $4,048,000      $9,718,336 
                                                         ==========   ==========      ========== 

                             LIABILITIES AND STOCKHOLDERS' DEFICIT                               
CURRENT LIABILITIES:                                                                             
  Accounts payable and accrued expenses................  $1,577,143   $       --      $1,577,143 
  Income tax payable...................................     115,000           --         115,000 
  Deferred revenue.....................................      11,553      (11,553)(1)          -- 
                                                         ----------   ----------      ---------- 
          TOTAL CURRENT LIABILITIES....................   1,703,696      (11,553)      1,442,143 
PLUG AND ABANDONMENT LIABILITY.........................   4,200,000           --       4,200,000 
STOCKHOLDERS' EQUITY (DEFICIT):........................    (233,360)   4,059,553(1)    3,826,193 
                                                         ----------   ----------      ---------- 
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                             
            (DEFICIT)..................................  $5,670,336   $4,048,000      $9,718,336 
                                                         ==========   ==========      ========== 

See accompanying notes to pro forma financial statements. 
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TEXAS STANDARD OIL COMPANY

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED DECEMBER 31, 2001

                                                        [Enlarge/Download Table]

                                                          TEXAS       PRO FORMA                 
                                                         STANDARD    ADJUSTMENTS     PRO FORMA  
                                                        ----------   -----------     ---------- 
                                                                                                
REVENUE:                                                                                        
  Oil and gas sales.................................... $1,327,247   $       --      $1,327,247 
COSTS AND EXPENSES:                                                                             
  Production expense...................................    718,138           --         718,138 
  Depletion and depreciation...........................     12,320      563,000(2)      575,320 
  General and administrative...........................    284,772           --         284,772 
                                                        ----------   ----------      ---------- 
          Total costs and expenses.....................  1,015,230      563,000       1,578,230 
OPERATING INCOME (LOSS)................................    312,017     (563,000)       (250,983)
OTHER INCOME (EXPENSE).................................   (297,948)     244,240(4)      (53,708)
                                                        ----------   ----------      ---------- 
INCOME (LOSS) BEFORE INCOME TAXES......................     14,069     (318,760)       (304,691)
INCOME TAX PROVISION...................................         --           --              -- 
                                                        ----------   ----------      ---------- 
NET INCOME (LOSS)...................................... $   14,069   $ (318,760)     $ (304,691)
                                                        ==========   ==========      ========== 
BASIC EARNINGS PER SHARE............................... $      .09   $     (.17)(6)  $     (.15)
                                                        ==========   ==========      ========== 
DILUTED EARNINGS PER SHARE............................. $      .09   $     (.17)(6)  $     (.15)
                                                        ==========   ==========      ========== 
WEIGHTED AVERAGE SHARES BASIC..........................    165,042    1,840,199(6)    2,005,241 
                                                        ==========   ==========      ========== 
WEIGHTED AVERAGE SHARES DILUTED........................    165,042    1,840,199(6)    2,005,241 
                                                        ==========   ==========      ========== 

See accompanying notes to pro forma financial statements. 
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TEXAS STANDARD OIL COMPANY

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 2001

                                                        [Enlarge/Download Table]

                                                        (5)                                   
                                           TEXAS      ACQUIRED    PRO FORMA                   
                                         STANDARD    PROPERTIES  ADJUSTMENTS       PRO FORMA  
                                         ---------   ----------  -----------      ----------- 
                                                                                              
REVENUE:                                                                                      
  Oil and gas sales..................... $      --   $9,056,000  $        --      $ 9,056,000 
COSTS AND EXPENSES:                                                                           
  Production expense....................        --    1,774,000           --        1,774,000 
  Depletion and depreciation............        --           --      955,000(2)       955,000 
  General and administrative............   380,171           --      300,000(3)       680,171 
                                         ---------   ----------  -----------      ----------- 
          Total costs and expenses......   380,171    1,774,000    1,255,000        3,409,171 
OTHER INCOME (EXPENSE):                                                                       
  Interest income (expense), net........      (915)          --           --             (915)
  Miscellaneous.........................        --           --           --               -- 
                                         ---------   ----------  -----------      ----------- 
          Total other income                                                                  
            (expense)...................      (915)          --           --             (915)
                                         ---------   ----------  -----------      ----------- 
INCOME (LOSS) BEFORE INCOME TAXES.......  (381,086)   7,282,000   (1,255,000)       5,645,914 
INCOME TAX PROVISION....................                          (1,940,000)(4)   (1,940,000)
                                         ---------   ----------  -----------      ----------- 
NET INCOME (LOSS)....................... $(381,086)  $7,282,000  $(3,195,000)     $ 3,705,914 
                                         =========   ==========  ===========      =========== 
BASIC EARNINGS PER SHARE................ $   (3.81)              $      1.68(6)   $      1.84 
                                         =========               ===========      =========== 
DILUTED EARNINGS PER SHARE.............. $   (3.81)              $      1.68(6)   $      1.84 
                                         =========               ===========      =========== 
WEIGHTED AVERAGE SHARES BASIC...........   100,000                 1,905,241(6)     2,005,241 
                                         =========               ===========      =========== 
WEIGHTED AVERAGE SHARES DILUTED.........   100,000                 1,905,241(6)     2,005,241 
                                         =========               ===========      =========== 

See accompanying notes to pro forma financial statements. 
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TEXAS STANDARD OIL COMPANY

NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION

(1) Adjustment to reflect completion of the acquisition transaction in
exchange for the stock of Texas Standard, recorded at estimated fair market     
value of the interests acquired.                                                

    (2) Adjustment to reflect depletion as if the properties had been acquired
and exchange offer occurred at the beginning of the period.                     

    (3) Adjustment to reflect estimated general and administrative expenses as
if the properties had been acquired and exchange offer occurred at the beginning
of the period.                                                                  

(4) Adjustment to remove non-recurring costs related to this exchange 
transaction that are included in the Company's statement of operations.         

(5) Oil and gas sales and direct operating expenses of the acquired   
properties for the period.                                                      

     (6) Adjustment assumes exchange of all unitholders at a ratio of 1 share of
common stock for each 20 units (748,770 shares). The adjustment also includes   
the effect of the 68,067 shares issued by the Company in October 2001 and the   
issuance of 1,088,404 shares to existing shareholders on January 4, 2002. The   
adjustments are as if all the shares were issued at the beginning of the        
respective periods.                                                             

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INDEPENDENT AUDITOR'S REPORT

The Trustee and Unitholders                                                     
Freeport-McMoRan Oil & Gas Royalty Trust                                        

     We have audited the accompanying statement of assets, liabilities and trust
equity of Freeport-McMoRan Oil and Gas Royalty Trust as of December 31, 2001,   
and the related statements of net loss and distributable income, and changes in 
trust equity for each of the two years in the period ended December 31, 2001.   
These financial statements are the responsibility of the Trustee. Our           
responsibility is to express an opinion on these financial statements based on  
our audits.                                                                     

 We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan  
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a 
test basis, evidence supporting the amounts and disclosures in the financial    
statements. An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall     
financial statement presentation. We believe that our audits provide a          
reasonable basis for our opinion.                                               

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the assets, liabilities and trust equity of           
Freeport-McMoRan Oil and Gas Royalty Trust as of December 31, 2001, and the net 
loss and distributable income, and changes in trust equity for each of the two  
years in the period ended December 31, 2001, in conformity with accounting      
principles generally accepted in the United States of America.                  

As described in Note 1, the Trust has sold its interest in the royalty
during October 2001.                                                            

                                         HEIN + ASSOCIATES LLP

Dallas, Texas                                                                   
February 27, 2002                                                               

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FREEPORT-MCMORAN OIL AND GAS ROYALTY TRUST

STATEMENTS OF ASSETS, LIABILITIES AND TRUST EQUITY

                                                        [Enlarge/Download Table]

                                                             DECEMBER 31,  DECEMBER 31,  
                                                                 2001          2000      
                                                             ------------  ------------- 
                                                                                         
                                          ASSETS                                         

Cash and cash equivalents...................................   $22,691     $     615,459 
Net overriding royalty interest in oil and gas properties...        --       189,875,741 
Less accumulated amortization and impairment of net                                      
  overriding royalty interest...............................        --      (189,875,741)
                                                               -------     ------------- 
          Total assets......................................   $22,691     $     615,459 
                                                               =======     ============= 

                               LIABILITIES AND TRUST EQUITY                              
Accrued liabilities.........................................   $    --     $      27,461 
Trust Equity:                                                                            
Reserve for future Trust expenses...........................    22,691           587,998 
Trust corpus (14,975,390 Units of Beneficial Interest                                    
  authorized, issued and outstanding).......................        --                -- 
                                                               -------     ------------- 
                                                                22,691           587,998 
                                                               -------     ------------- 
          Total liabilities and trust equity................   $22,691     $     615,459 
                                                               =======     ============= 

The accompanying notes are an integral part of these financial statements.
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FREEPORT-MCMORAN OIL AND GAS ROYALTY TRUST

STATEMENTS OF NET LOSS AND DISTRIBUTABLE INCOME 

                                                        [Enlarge/Download Table]

                                                             YEARS ENDED DECEMBER 31,  
                                                             ------------------------- 
                                                                2001          2000     
                                                             -----------   ----------- 
                                                                                       
INCOME:                                                                                
  Oil and gas royalty proceeds.............................. $        --   $        -- 
  Interest income...........................................      15,936        41,414 
                                                             -----------   ----------- 
          TOTAL INCOME......................................      15,936        41,414 
EXPENSES:                                                                              
  Trust administrative expenses.............................    (581,243)     (339,992)
                                                             -----------   ----------- 
          Net loss.......................................... $  (565,307)  $  (298,578)
                                                             ===========   =========== 
          Net loss per unit................................. $      (.04)  $      (.02)
                                                             ===========   =========== 
Distributable income........................................ $        --   $        -- 
                                                             ===========   =========== 
Distributable income per Unit............................... $        --   $        -- 
                                                             ===========   =========== 
Units outstanding...........................................  14,975,390    14,975,390 
                                                             ===========   =========== 

The accompanying notes are an integral part of these financial statements.
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FREEPORT-MCMORAN OIL AND GAS ROYALTY TRUST

STATEMENTS OF CHANGES IN TRUST EQUITY 

                                                        [Enlarge/Download Table]

                                                          RESERVE FOR                            
                                                          FUTURE TRUST                TOTAL TRUST
                                                            EXPENSES    TRUST CORPUS    EQUITY   
                                                          ------------  ------------  -----------
                                                                                                 
January 1, 2000..........................................  $ 886,576       $  --       $ 886,576 
     NET LOSS............................................   (298,578)         --        (298,578)
                                                           ---------       -----       --------- 
December 31, 2000........................................    587,998          --         587,998 
     NET LOSS............................................   (565,307)         --        (565,307)
                                                           ---------       -----       --------- 
December 31, 2001........................................  $  22,691       $  --       $  22,691 
                                                           =========       =====       ========= 

The accompanying notes are an integral part of these financial statements.
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FREEPORT-MCMORAN OIL AND GAS ROYALTY TRUST

STATEMENTS OF CASH FLOWS

                                                        [Enlarge/Download Table]

                                                             YEARS ENDED DECEMBER 31, 
                                                             -------------------------
                                                                2001          2000    
                                                             -----------   -----------
                                                                                      
Cash flows from operating activities:                                                 
     NET LOSS...............................................  $(565,307)    $(298,578)
Change in accrued liabilities...............................    (27,461)       17,417 
                                                              ---------     --------- 
Net change in cash from operating activities................   (592,768)     (281,161)
Cash and cash equivalents, beginning of period..............    615,459       896,620 
                                                              ---------     --------- 
Cash and cash equivalents, end of period....................  $  22,691     $ 615,459 
                                                              =========     ========= 

The accompanying notes are an integral part of these financial statements.
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FREEPORT-MCMORAN OIL AND GAS ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS 

1.  BACKGROUND AND STATUS                                                       

Freeport-McMoRan Oil and Gas Royalty Trust (the "Trust") was created  
effective September 30, 1983. On that date, Freeport-McMoRan Inc. ("FTX")       
transferred to a Partnership (the "Partnership") a net overriding royalty       
interest in certain offshore oil and gas properties (the "Royalty Properties")  
equal to 90 percent of the Net Proceeds (as defined in the Conveyance referred  
to below) from FTX's working interests in such properties and conveyed a 99.9   
percent general partnership interest in the Partnership to the Trust. Such net  
overriding royalty interest is referred to herein as the "Royalty". The         
Overriding Royalty Conveyance which created the Royalty is referred to herein as
the "Conveyance". IMC Global Inc. ("IMC") succeeded to FTX effective December   
22, 1997, following the merger of FTX into IMC. Until October 12, 2001, IMC was 
the working interest owner in the properties. However, on October 21, 2001, IMC 
sold the oil and gas interests burdened by the Royalty to Texas Standard Oil    
Company, a Texas corporation ("TXS"). TXS is the owner of the oil and gas       
interests burdened by the Royalty as of the date of this report.                

 The Conveyance provides that the owner of the interests burdened by the
Royalty (the "Working Interest Owner") will calculate and pay monthly to the    
Partnership an amount equal to 90 percent of the net proceeds for the preceding 
month. Net Proceeds generally consist of the excess of gross revenues received  
from the Royalty Properties (Gross Proceeds), on a cash basis, over operating   
costs, capital expenditures and other charges, on an accrual basis. The Trust is
passive, with JP Morgan Chase Bank as Trustee. The Trustee has only such powers 
as are necessary for the collection and distribution of revenues attributable to
the Royalty, the payment of Trust liabilities and the protection of Trust       
assets.                                                                         

    The Trust Indenture provides generally that the Trust shall terminate upon
the first to occur of: (i) the sale of all the Trust's interest in the          
Partnership, or the sale by the Partnership of all the assets of the Partnership
including the Royalty, or (ii) a decision to terminate the Trust by the         
affirmative vote of Unitholders representing a majority of the Units. The Trust 
Indenture originally stated that the Trust must also terminate if the amount of 
cash per year received by the Trust for each of three successive years          
commencing after December 31, 1990 is less than $3 million. The Trust's cash    
receipts were less than $3 million in 1996, 1997 and 1998. However, at a special
meeting of the Unit holders held on March 12, 1999, the Unit holders approved a 
shareholder proposal to amend the Trust Indenture to extend the life of the     
Trust for at least two years. This extension expired on December 31, 2000, as   
there were no payments in respect of the Royalty during 1999 and 2000.          
Therefore, the Trust Indenture provided that the Trustee must sell the Trust's  
interest in the Partnership or cause the Partnership to sell the Royalty.       

At a Special Meeting of Unitholders held on October 5, 2001, the      
Unitholders approved a shareholder proposal to amend the Trust Indenture        
instructing the Trustee to cause the Partnership to sell the Royalty to TXS, and
to delay any liquidating distribution of Trust assets, less amounts withheld by 
the Trustee for contingent liabilities of the Trust, until completion of an     
exchange offer by TXS or December 31, 2001, whichever occurs first. On October  
11, 2001, in accordance with a shareholder proposal approved at the Special     
Meeting of the Unitholders held on October 5, 2001, the Trustee caused the      
Partnership to sell the Royalty to TXS for $1,000 in cash.                      

    The Trust's remaining assets are the proceeds from the sale to TXS and the
expense reserve established by the Trustee to pay the Trust's ongoing           
administrative expenses. The combined amount of these assets was $54,008.49 on  
December 31, 2001. Because TXS did not complete its proposed exchange offer for 
the outstanding units of the Trust prior to December 31, 2001, and in order that
the Unitholders might still have an opportunity to participate in the exchange  
offer with TXS, the Trustee currently anticipates it will not terminate the     
Trust until completion of the exchange offer by TXS or depletion of the Trust's 
expense reserve, whichever occurs first.                                        

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FREEPORT-MCMORAN OIL AND GAS ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

 The Trustee anticipates that the entire amount of the Trust's remaining
assets will be needed to pay the costs to wind up the affairs of the Trust,     
including the additional administrative expenses the Trust will incur until the 
Trust is terminated upon completion of the exchange offer by TXS or depletion of
the Trust's expense reserve, whichever occurs first. Therefore, the Trustee is  
withholding the remaining amount of the expense reserve to pay the expenses     
associated with the termination of the Trust and does not expect to make a      
liquidating distribution.                                                       

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                  

CASH AND CASH EQUIVALENTS                                                   

     The Trust considers all highly liquid investments purchased with a maturity
of three months or less to be cash equivalents. The Trust's funds are invested  
in certificates of deposits which mature every thirty days.                     

ROYALTY INTEREST IN OIL AND GAS PROPERTIES                                  

   As stated in Note 1 above, the Trustee caused the Partnership to sell the
Royalty to TXS and the Trust has no further rights in the Royalty.              

     The initial carrying amount of the Royalty represented the Working Interest
Owner's net book value applicable to the interest in the properties conveyed to 
the Trust on the date of creation of the Trust. Amortization of the Royalty was 
recorded using the future net revenue method. This method provides for          
calculating amortization by dividing the unamortized portion of the Royalty by  
estimated future net revenues from proved reserves and applying the resulting   
rate to the Trust's share of royalty proceeds.                                  

 The carrying value of the Royalty was limited to the discounted present
value (at 10 percent) of estimated future net cash flows. Any excess carrying   
value was reduced and the adjustment was charged to expense. The carrying value 
of the Royalty was $0 at September 30, 2001 and December 31, 2000. The carrying 
value was not necessarily indicative of the fair market value of the Royalty.   

INCOME TAXES                                                                

Because the Trust is a grantor trust which is not a taxable entity, no
income taxes are reported in the Trust's financial statements. The tax          
consequences of owning Units are included in the federal, state and local income
tax returns of the individual Unitholders.                                      

3.  COST CARRYFORWARD                                                           

 As a result of the capital costs incurred in recent years, a cumulative
excess Class A cost carryforward of $13.7 million and $19.8 million existed as  
of September 30, 2001 and December 31, 2000, respectively. The cost carryforward
was subject to and included an interest amount at the prime rate, which totaled 
$7.8 million and $6.8 million net to the Trust at September 30, 2001 and        
December 31, 2000, respectively. This excess Class A cost carryforward would had
to have been recouped by the Working Interest Owner out of future Gross Proceeds
before distributions to the Unitholders could have resumed. See Note 1. This    
recoupment did not occur before the Trustee caused the Partnership to sell the  
Royalty to TXS.                                                                 

4.  GAS BALANCING ARRANGEMENTS                                                  

     As a result of past curtailments in gas takes by the principal purchaser of
production from the Royalty Properties, certain quantities of gas were sold by  
other parties with interests in the Royalty Properties pursuant to gas balancing
arrangements. Proceeds from gas produced from the Royalty Properties but sold   

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FREEPORT-MCMORAN OIL AND GAS ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

by other parties pursuant to such balancing arrangements (underproduction) were 
not included in Gross Proceeds for purposes of calculating the Royalty. As of   
September 30, 2001 and December 31, 2000, the unrecovered quantity of gas sold  
by third parties pursuant to such gas balancing arrangements since inception of 
the Trust was approximately .2 billion cubic feet (bcf), net to the Trust.      
Because the Trustee has caused the Partnership to sell the Royalty, the         
Unitholders have no rights to these future proceeds.                            

5.  GAS CONTRACT SETTLEMENT                                                     

    The Working Interest Owner has brought suit against a prior gas purchaser,
seeking reimbursement as excess royalty of a portion of amounts paid to the     
Minerals Management Service ("MMS") by the Working Interest Owner to settle     
claims made by the MMS for additional royalty resulting from the Working        
Interest Owner's compromise of claims against the gas purchaser. The Trust's    
interest in the proceeds of the gas contract settlement was included in the     
Trust's Gross Proceeds and the funds paid to the MMS reduced the Trust's Gross  
Proceeds. Discovery in this suit is proceeding and the trial date which was set 
for August 28, 2001 has been postponed with no firm date set. The amount of any 
recovery with respect to this claim is presently indeterminable. Because the    
Trustee has caused the Partnership to sell the Royalty, the Trust will not      
benefit from any recovery in the lawsuit.                                       

6.  ESTABLISHMENT OF AN EXPENSE RESERVE                                         

    Because of the decline in Royalty income, at certain times since late 1993
the Trust was unable to pay its ongoing administrative expenses. To permit the  
Trust to pay its routine administrative expenses, the Trustee, in accordance    
with the Trust Indenture, established an expense reserve of $2.4 million of     
which $.2 million and $.6 million remained as of September 30, 2001 and December
31, 2000, respectively. During the first nine months of 2001, $.4 million was   
withdrawn from the expense reserve to pay Trust administrative expenses,        
including expenses related to the shareholder proposal and the special meeting  
of Unitholders at which the proposal was approved, and $.3 million was withdrawn
from the expense reserve during 2000 to pay Trust administrative expenses.      

 The funding for this reserve is deposited with JP Morgan Chase Bank and
invested in JP Morgan Chase Bank collateralized certificates of deposit. The    
average interest rate earned on these funds was 5.5 percent for 2000.           

    The expense reserve is established at the Trust level and was unrelated to
the items, including the cost carryforward, that were taken into account by the 
Working Interest Owner in determining whether amounts were payable pursuant to  
the Royalty.                                                                    

7.  RESERVE FOR FUTURE ESTIMATED ABANDONMENT COSTS                              

     While the Trust had rights in the Royalty, the estimated future abandonment
costs were accrued over the life of the Trust's properties based on current laws
and regulations. Such costs are by their nature imprecise and can be expected to
be revised over time because of changes in general and specific cost levels,    
government regulations, operations or technology. As of September 30, 2001 and  
December 31, 2000, the estimated remaining aggregate abandonment costs that     
would have been incurred for all of the Trust's properties totaled $4.2 million 
net to the Trust, all of which was taken into account in computing the Class A  
cost carryforward. See Note 3.                                                  

8.  TRANSPORTATION AGREEMENT                                                    

In December 1997, the Working Interest Owner entered into a crude oil 
agreement with an oil pipeline company to deliver on a daily basis specified    
quantities of crude oil from West Cameron 498. Under the terms of the agreement 
the Working Interest Owner agreed to pay a transportation fee                   

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FREEPORT-MCMORAN OIL AND GAS ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

calculated at a sliding monthly rate based upon the total average daily volumes 
delivered from West Cameron 498 during the month. Should the annual minimum     
delivery volume not be met, a deficiency payment is assessed by the pipeline.   

During 2000 and 1999, the Working Interest Owner did not deliver the  
minimum volume under the agreement, therefore, the pipeline company billed the  
Working Interest Owner for the deficiencies. In 2001 the pipeline company billed
the Working Interest Owner approximately $.5 million for the 2000 deficiency.   
This amount was taken into account in computing the cost carryforward of $19.8  
million at December 31, 2000. See Note 3.                                       

9.  SUPPLEMENTARY PROVED OIL AND GAS RESERVE INFORMATION (UNAUDITED)            

   Pursuant to the Financial Accounting Standards Board's ("FASB") and SEC's
disclosure standards for oil and gas producing activities, the Trust is required
to include, as supplementary information, estimates of quantities of proved oil 
and gas reserves that were attributable to the Trust. Since the Royalty was a   
net profits interest, the Partnership did not own and was not entitled to       
receive any specific volume of reserves. Reserves that were attributable to the 
Partnership have been estimated based on projections of reserves and future net 
cash flows that were attributable to the combined interests of the Working      
Interest Owner and the Partnership, and a formula based upon estimates of future
net cash flows. As a result of estimating reserve volumes by using a formula    
based upon estimates of future net cash flows, such reserves are affected by    
changes in various economic factors including prices, costs and the level and   
timing of capital expenditures on the properties. Therefore, the reserve volume 
estimates are hypothetical and are not comparable to estimates of reserves      
attributable to a working interest.                                             

The reserve volume and cash flow amounts are for the interest in the  
Royalty that was attributable to the Trust, based on the Trust's 99.9 percent   
interest in the Partnership. Estimates of proved oil and gas reserves that were 
attributable to the Trust's interest are based on a report of Ryder Scott       
Company L.P. ("Ryder Scott"). In accordance with the requirements of the FASB,  
the reserve estimates were calculated using year-end oil and gas prices being   
received and current operating and abandonment cost levels. In preparing its    
estimates, Ryder Scott did not take into account (a) revenues received after    
November 30 attributable to production during the fourth quarter of the         
respective year, (b) as of December 31, 2000 and 1999, approximately .2 billion 
cubic feet of natural gas at each date, sold by other parties pursuant to       
certain gas balancing arrangements and (c) an excess cost carryforward of $19.8 
million and $22.4 million at December 31, 2000 and 1999, respectively. For      
purposes of the reserve volume and cash flow amounts, the estimates of Ryder    
Scott were adjusted to take into account the foregoing factors, based on        
calculations supplied by the Working Interest Owner. In making such adjustment, 
the Working Interest Owner subtracted amounts attributable to the items referred
to in (a), (b) and (c) of the preceding sentence. Based on the estimates of     
Ryder Scott, as adjusted for the effect of the cost carryforward and as         
calculated in accordance with the FASB's and SEC's standards, at December 31,   
2000 and 1999 there were no proved reserves and no estimated future net cash    
flow attributable to the Royalty.                                               

   It is emphasized that this supplementary information represents estimates
which may be imprecise, and extreme caution should accompany its use and        
interpretation. The estimates were based on various assumptions, many of which  
are subject to uncertainties, and therefore, the estimates should not be        
considered to be a prediction of actual amounts to be received. Additionally, as
required under FASB's and SEC's standards, the supplementary information        
excludes consideration of anticipated future oil and gas prices and costs and   
does not consider additional potentially recoverable oil and gas reserves not   
currently classified as proved. Such factors should be considered in estimating 
the cash flows which ultimately could be derived from production of the related 
oil and gas reserves or sale of the reserves in-place.                          

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TEXAS STANDARD OIL COMPANY

DEALER PROSPECTUS DELIVERY OBLIGATION 

UNTIL JULY 8, 2002, ALL DEALERS THAT EFFECT TRANSACTIONS IN THE COMMON
STOCK OF TEXAS STANDARD OIL COMPANY, WHETHER OR NOT PARTICIPATING IN THIS       
EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO 
THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND 
WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.                       

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PART II 

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20.  INDEMNIFICATION OF DIRECTORS AND OFFICERS                             

Article 2.02-1 of the Texas Business Corporation Act provides that any
director or officer of a Texas corporation may be indemnified against judgments,
penalties (including excise and similar taxes), fines, settlements and          
reasonable expenses actually incurred by him in connection with or in defending 
any action, suit or proceeding in which he was, is, or is threatened to be made 
a named defendant or respondent by reason of his position as director or        
officer, provided that he conducted himself in good faith and reasonably        
believed that, in the case of conduct in his official capacity as a director or 
officer of the corporation, such conduct was in the corporation's best          
interests; and, in all other cases, that such conduct was at least not opposed  
to the corporation's best interests. In the case of any criminal proceeding, a  
director or officer may be indemnified only if he had no reasonable cause to    
believe his conduct was unlawful. If a director or officer is found liable to   
the corporation, or is found liable on the basis that he received an improper   
personal benefit, indemnification is limited to the reimbursement of reasonable 
expenses actually incurred. No indemnification is available if the officer or   
director is found liable for willful or intentional misconduct in the           
performance of his duty to the corporation. If a director or officer is wholly  
successful, on the merits or otherwise, in connection with such a proceeding,   
such indemnification is mandatory.                                              

    Our certificate of incorporation and bylaws allows us to indemnify each of
our directors and our officers to the fullest extent permitted by applicable    
law.                                                                            

ITEM 21.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                            

                                                                [Download Table]

       EXHIBIT                                                               
ITEM   NUMBER                        EXHIBIT DESCRIPTION                     
----   -------                       -------------------                     
                                                                             
  1              Underwriting agreement*                                     
  2              Plan of acquisition, reorganization, arrangement,           
                 liquidation, or succession                                  
         2.1     Purchase and Sale Agreement dated August 7, 2001 between IMC
                 Global, Inc. and Texas Standard Oil Company+                
  3              Articles of Incorporation and By-laws                       
         3.1     Articles of Incorporation of Texas Standard Oil Company+    
         3.2     Articles of Amendment of Articles of Incorporation of Texas 
                 Standard Oil Company+                                       
         3.3     Bylaws of Texas Standard Oil Company+                       
  4              Instruments defining the rights of holders, including       
                 indentures                                                  
         4.1     Form of common stock certificate+                           
  5              Opinion regarding legality                                  
         5.1     Opinion of Haynes and Boone, LLP+                           
  8              Opinion regarding tax matters                               
         8.1     Tax Opinion of Haynes and Boone, LLP+                       
  9              Voting trust agreement*                                     
 10              Material contracts                                          
        10.1     Promissory Note payable to Roberson Oil Company dated July  
                 31, 2001+                                                   
        10.2     Purchase and Sale Agreement dated August 27, 2001 between   
                 IMC Global, Inc. and Texas Standard Oil Company (included in
                 exhibit 2.1)+                                               
        10.3     Texas Standard Oil Company 2002 Equity Incentive Plan+      
 11              Statement regarding computation of per share earnings*      
 13              Annual or Quarterly Reports*                                
 15              Letter regarding unaudited interim financial information*   

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                                                                [Download Table]

       EXHIBIT                                                              
ITEM   NUMBER                        EXHIBIT DESCRIPTION                    
----   -------                       -------------------                    
                                                                            
 16              Letter on change in certifying accountant*                 
 21              Subsidiaries of the registrant*                            
 23              Consent of experts and counsel                             
        23.1     Consent of Haynes and Boone, LLP (included in Exhibit 5.1)+
        23.2     Consent of Hein + Associates LLP+                          
        23.3     Consent of Ryder Scott Company, L.P.+                      
 24              Power of attorney                                          
        24.2     Power of Attorney (included on the signature page of this  
                 Registration Statement)+                                   
 25              Statement of eligibility of Trustee*                       
 26              Invitations for competitive bids*                          
 99              Additional exhibits                                        
        99.1     Form of Letter to Record Holders                           
        99.2     Form of Letter to Clients                                  
        99.3     Form of Letter of Transmittal                              

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

* Inapplicable to this filing                                                   
+ Previously filed                                                              

ITEM 22.  UNDERTAKINGS                                                          

     (e) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Securities Act") may be permitted to directors, officers and  
controlling persons of the Registrant pursuant to the foregoing provisions, or  
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as        
expressed in the Securities Act and is, therefore, unenforceable. In the event  
that a claim for indemnification against such liabilities (other than the       
payment by the Registrant of expenses incurred or paid by a director, officer,  
or controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person 
in connection with the securities being registered, the Registrant will, unless 
in the opinion of its counsel the matter has been settled by controlling        
precedent, submit to a court of appropriate jurisdiction the question whether   
such indemnification by it is against public policy as expressed in the         
Securities Act and will be governed by the final adjudication of such issue.    

The undersigned Registrant undertakes to respond to requests for      
information that is incorporated by reference into the prospectus under Items 4,
10(b), 11, or 13 of this form, within one business day of receipt of such       
request, and to send the incorporated documents by first class mail or other    
equally prompt means. This includes information contained in documents filed    
subsequent to the effective date of the registration statement through the date 
of responding to the request.                                                   

The undersigned Registrant undertakes to supply by means of a         
post-effective amendment all information concerning a transaction, and the      
company being acquired involved therein, that was not the subject of and        
included in the registration statement when it became effective.                

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SIGNATURES

     Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the            
undersigned, thereunto duly authorized, in the city of Houston, state of Texas, 
on April 3, 2002.                                                               

                              TEXAS STANDARD OIL COMPANY
                (Registrant)

                                  By:    /s/ TIMOTHY M. ROBERSON
                                            ------------------------------------
                                           Timothy M. Roberson
                                           Chief Executive
                                           Officer and President

Pursuant to the requirements of the Securities Act of 1933, this      
Registration Statement has been signed by the following persons in the          
capacities and on the dates indicated.                                          

                                                        [Enlarge/Download Table]

                   SIGNATURE                                   CAPACITIES                  DATE     
                   ---------                                   ----------                  ----     
                                                                                                    

            /s/ TIMOTHY M. ROBERSON                President, Chief Executive Officer  April 3, 2002
------------------------------------------------              and Chairman                          
              Timothy M. Roberson                     (principal executive officer)                 

          /s/ JOSEPH F. LANGSTON, JR.*                 Chief Financial Officer and     April 3, 2002
------------------------------------------------    Director (principal financial and               
            Joseph F. Langston, Jr.                        accounting officer)                      

            /s/ CHARLES A. SHARMAN*                             Director               April 3, 2002
------------------------------------------------                                                    
               Charles A. Sharman                                                                   

*By:            /s/ TIMOTHY M. ROBERSON                                                             
       ------------------------------------------                                                   
                  Timothy M. Roberson,                                                              
            pursuant to a power of attorney                                                         

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EXHIBIT INDEX 

                                                                [Download Table]

       EXHIBIT                                                               
ITEM   NUMBER                        EXHIBIT DESCRIPTION                     
----   -------                       -------------------                     
                                                                             
  1              Underwriting agreement*                                     
  2              Plan of acquisition, reorganization, arrangement,           
                 liquidation, or succession                                  
         2.1     Purchase and Sale Agreement dated August 7, 2001 between IMC
                 Global, Inc. and Texas Standard Oil Company+                
  3              Articles of Incorporation and By-laws                       
         3.1     Articles of Incorporation of Texas Standard Oil Company+    
         3.2     Articles of Amendment of Articles of Incorporation of Texas 
                 Standard Oil Company+                                       
         3.3     Bylaws of Texas Standard Oil Company+                       
  4              Instruments defining the rights of holders, including       
                 indentures                                                  
         4.1     Form of common stock certificate+                           
  5              Opinion regarding legality                                  
         5.1     Opinion of Haynes and Boone, LLP+                           
  8              Opinion regarding tax matters                               
         8.1     Tax Opinion of Haynes and Boone, LLP+                       
  9              Voting trust agreement*                                     
 10              Material contracts                                          
        10.1     Promissory Note payable to Roberson Oil Company dated July  
                 31, 2001+                                                   
        10.2     Purchase and Sale Agreement dated August 27, 2001 between   
                 IMC Global, Inc. and Texas Standard Oil Company (included in
                 exhibit 2.1)+                                               
        10.3     Texas Standard Oil Company 2002 Equity Incentive Plan+      
 11              Statement regarding computation of per share earnings*      
 13              Annual or Quarterly Reports*                                
 15              Letter regarding unaudited interim financial information*   
 16              Letter on change in certifying accountant*                  
 21              Subsidiaries of the registrant*                             
 23              Consent of experts and counsel                              
        23.1     Consent of Haynes and Boone, LLP (included in Exhibit 5.1)+ 
        23.2     Consent of Hein + Associates LLP+                           
        23.3     Consent of Ryder Scott Company, L.P.+                       
 24              Power of attorney                                           
        24.2     Power of Attorney (included on the signature page of this   
                 Registration Statement)+                                    
 25              Statement of eligibility of Trustee*                        
 26              Invitations for competitive bids*                           
 99              Additional exhibits                                         
        99.1     Form of Letter to Record Holders                            
        99.2     Form of Letter to Clients                                   
        99.3     Form of Letter of Transmittal                               

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

* Inapplicable to this filing                                                   
+ Previously filed                                                              

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘S-4/A’ Filing		Date		First		Last			Other Filings
		7/8/02		100					None on these Dates
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		4/2/02		11		69
		4/1/02		29		68
		3/1/02		44
		2/27/02		91
		2/22/02		42
		2/15/02		44		68
		2/1/02		44
		1/11/02		43
		1/7/02		1		53
		1/4/02		53		90
		1/1/02		44
		12/31/01		12		96
		12/26/01		6		28
		12/10/01		69
		11/30/01		27		74
		11/27/01		55
		11/20/01		82
		11/1/01		80
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		10/12/01		23		96
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		10/5/01		6		96
		9/30/01		8		98
		9/24/01		28
		8/31/01		26
		8/30/01		28
		8/28/01		98
		8/27/01		101		104
		8/7/01		101		104
		7/31/01		101		104
		7/13/01		55
		7/3/01		26		28
		6/30/01		68
		4/2/01		11
		3/31/01		68
		3/30/01		25
		3/28/01		25
		3/27/01		42		78
		2/15/01		44
		2/5/01		24
		2/2/01		24
		1/7/01		45
		1/3/01		24
		1/1/01		43		80
		12/31/00		12		99
		12/29/00		24
		9/30/00		68
		6/30/00		68
		3/31/00		68
		1/1/00		84		94
		12/31/99		39		99
		3/12/99		9		96
		12/22/97		96
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