<PAGE>

                                                                      EXHIBIT 99
 
                  [LOGO OF SABINE ROYALTY TRUST APPEARS HERE]
 
 
                                TAX INFORMATION
 
                                      1997
 
 
         This booklet contains tax information relevant to ownership of
             Units of Sabine Royalty Trust and should be retained.
 
<PAGE>
 
                             SABINE ROYALTY TRUST
 
                                 MARCH 1, 1998
 
TO UNIT HOLDERS:
 
  This booklet provides 1997 tax information which will allow you to determine
your pro rata share of income and deductions attributable to your investment
in Sabine Royalty Trust (the "Trust"). Each Unit holder is encouraged to read
the entire booklet very carefully.
 
  The material included in this booklet enables you to compute the information
to be included in your Federal and state income tax returns. This booklet is
the only information source for Unit holders to determine their share of the
items of income and expense of the Trust for the entire 1997 calendar year.
The Trust does not file nor does it furnish a Form 1099 to Unit holders
(except where Federal backup withholding is required). Unit holders should
retain this booklet as part of their tax records.
 
  The material herein is not intended and should not be construed as
professional tax or legal advice. Unit holders are encouraged to consult their
own tax advisors concerning its use.
 
Very truly yours,
 


Sabine Royalty Trust,
By NationsBank of Texas N.A., Trustee
1-800-365-6541
<PAGE>
 
                              SABINE ROYALTY TRUST
                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                           PAGE
                                                                           ----
1997 TAX INFORMATION
<S>                                                                        <C>
 . Reading the Income and Expense Schedules................................   1
 . Identifying Which Income and Expense Schedules to Use...................   1
 . Applying the Data From the Income and Expense Schedules.................   1
 . Computing Depletion.....................................................   1
 . Sale or Exchange of Units...............................................   3
 . Classification of Investment............................................   3
 . Nonresident Foreign Unit Holders........................................   3
 . Backup Withholding......................................................   3
 . State Income Tax........................................................   3
 . Table of 1997 Monthly Record Dates and Cash Distributions Per Unit......   3
 . Tax Computation Worksheet...............................................   4
 . Supplement to Tax Computation Worksheet.................................   5
 . Tax Information Schedules...............................................   6
 . .Form 1041, Grantor Trust for Calendar Year 1997.......................   6
 . .Form 1041, Grantor Trust for January 1997.............................   7
 . .Form 1041, Grantor Trust for February 1997............................   8
 . .Form 1041, Grantor Trust for March 1997...............................   9
 . .Form 1041, Grantor Trust for April 1997...............................  10
 . .Form 1041, Grantor Trust for May 1997.................................  11
 . .Form 1041, Grantor Trust for June 1997................................  12
 . .Form 1041, Grantor Trust for July 1997................................  13
 . .Form 1041, Grantor Trust for August 1997..............................  14
 . .Form 1041, Grantor Trust for September 1997...........................  15
 . .Form 1041, Grantor Trust for October 1997.............................  16
 . .Form 1041, Grantor Trust for November 1997............................  17
 . .Form 1041, Grantor Trust for December 1997............................  18
 . .Depletion Schedule I..................................................  19
 . .Depletion Schedule II.................................................  19
 . .Depletion Schedule III................................................  20
 . .Depletion Schedule IV.................................................  20
 . .Depletion Schedule V..................................................  21
 . .Depletion Schedule VI.................................................  21
 . .Depletion Schedule VII................................................  22
 . .Depletion Schedule VIII...............................................  22
 . .Depletion Schedule IX.................................................  23
 . .Depletion Schedule X..................................................  23
 . .Depletion Schedule XI.................................................  24
 . .Depletion Schedule XII................................................  24
 . .Depletion Schedule XIII...............................................  25
 . .Depletion Schedule XIV................................................  25
 . .Depletion Schedule XV.................................................  26
 . .Depletion Schedule XVI................................................  26
 . .Depletion Schedule XVII...............................................  27
 . Sample Tax Forms for Individual Unit Holders............................  28
 . Comprehensive Example...................................................  30
DISCUSSION OF TAX CONSIDERATIONS PERTAINING TO THE OWNERSHIP OF UNITS IN
SABINE ROYALTY TRUST
 . Effect of Tax Reform.................................................... A-1
 . Taxation of the Original Distribution of Units.......................... A-1
 . Tax Background Information.............................................. A-1
 . .Effect of Escrow Arrangement.......................................... A-2
 . Depletion............................................................... A-2
 . .Cost Depletion........................................................ A-2
 . .Percentage Depletion.................................................. A-3
 . Nonresident Foreign Unit Holders........................................ A-3
 . Sale or Exchange of Units............................................... A-4
 . Backup Withholding...................................................... A-4
 . State Income Tax........................................................ A-4
</TABLE>
 
  (SRT 1997 TAX)
<PAGE>
 
                             SABINE ROYALTY TRUST
 
                             1997 TAX INFORMATION
 
READING THE INCOME AND EXPENSE SCHEDULES
 
  The accompanying income and expense schedules reflect tax information
attributable to Sabine Royalty Trust (the "Trust") for 1997. This information
has been assembled on a per Unit basis and is expressed in decimal fractions
of one dollar. A cumulative schedule for the twelve months ended December 31,
1997, and separate noncumulative schedules for the months of January through
December 1997 are enclosed. Separate depletion schedules are enclosed which
provide the necessary information for Unit holders to compute cost depletion
with respect to their interests in the Trust.
 
IDENTIFYING WHICH INCOME AND EXPENSE SCHEDULES TO USE
 
  Pursuant to the terms of the Trust agreement and the escrow agreement, the
Trust receives income and incurs expenses only on Monthly Record Dates.
Furthermore, only Unit holders of record on Monthly Record Dates are entitled
to cash distributions. On the basis of these agreements, both cash and accrual
basis Unit holders should be considered as realizing income and incurring
expenses only on Monthly Record Dates. Therefore, if you were not the Unit
holder of record of the Units on a specified Monthly Record Date, you should
not use the tax information for the month in which that Monthly Record Date
falls. A table of Monthly Record Dates and cash distributions per Unit is
included on page 3.
 
  The appropriate schedules to be used by a Unit holder will depend upon (i)
the date the Unit holder became a holder of record of the Units, (ii) if
applicable, the date the Unit holder ceased to be the holder of record of the
Units, and (iii) the tax year end of the Unit holder. For instance, a Unit
holder reporting on the calendar year basis who acquired Units and became a
Unit holder of record on June 16, 1997 and who still owned only those Units on
December 15, 1997 must use each of the separate monthly schedules for June
through December 1997, and Depletion Schedule XVII for such Units. However,
Unit holders reporting on a calendar year basis who became Unit holders of
record prior to January 15, 1997 and who continued to own only those Units on
December 15, 1997, must use only the cumulative schedule for calendar year
1997 and the appropriate depletion schedule(s).
 
APPLYING THE DATA FROM THE INCOME AND EXPENSE SCHEDULES
 
  The tax data, other than depletion, specifically applicable to a Unit holder
may be determined by multiplying the appropriate decimal fractions times the
number of Units owned. Unit holders who must use the separate monthly income
and expense schedules should combine the individual income and expense factors
from the monthly schedules for each month during which the Units were owned on
a Monthly Record Date. For a worksheet approach to computing these decimal
fractions, see the Supplement to Tax Computation Worksheet on page 5.
 
COMPUTING DEPLETION
 
  Depletion schedules are included which provide information for Unit holders
to compute cost depletion deductions with respect to their interests in the
Trust. To compute depletion for any taxable period, Unit holders should
multiply the depletion factor indicated on the relevant schedule times their
original tax basis in the respective Unit(s), reduced by the cost depletion
that was allowable as a deduction (whether or not deducted) in prior calendar
years during which they owned the Units. A factor for percentage depletion is
not included, as cost depletion exceeded the percentage depletion calculated.
 
(SRT 1997 TAX)
 
                                       1
<PAGE>
 
  Noncorporate Unit holders who acquired Units in the original distribution
from Sabine Corporation ("Sabine") should use Depletion Schedule I to compute
1997 depletion on those Units. Corporate Unit holders that acquired Units in
the original distribution from Sabine should use Depletion Schedule II to
compute 1997 depletion on those Units. The proper depletion schedule to be
utilized for Units owned is reflected below.
 
<TABLE>
<CAPTION>
          DATE(S) UNITS                                 DEPLETION SCHEDULE
          WERE ACQUIRED                                   TO BE UTILIZED
          -------------                                 ------------------
      <S>                                            <C>
      Original Distribution Before12/16/83           See preceding paragraph I
      12/16/83--12/17/84                             III
      12/18/84--12/16/85                             IV
      12/17/85-- 3/17/86                             V
       3/18/86--12/15/86                             VI
      12/16/86--12/15/87                             VII
      12/16/87--12/15/88                             VIII
      12/16/88--12/15/89                             IX
      12/16/89--12/17/90                             X
      12/18/90--12/16/91                             XI
      12/17/91--12/15/92                             XII
      12/16/92--12/15/93                             XIII
      12/16/93--12/15/94                             XIV
      12/16/94--12/15/95                             XV
      12/16/95--12/16/96                             XVI
      12/17/96--12/15/97                             XVII
      12/16/97--12/31/97                             No 1997 depletion allowed
</TABLE>
 
  As discussed at page A-3 in the back portion of this booklet, the composite
depletion factors are determined on the basis of a weighted average ratio of
current production from each Trust property to the estimated future production
from such property. This method of weighting the depletion factors permits the
presentation of a single depletion factor for all Unit holders acquiring Units
during a period in which there is no substantial change in the relative fair
market values of the Trust properties. Primarily as a result of the decline in
oil prices which occurred during 1986, there was a change in the relative fair
market values of the Trust properties. Accordingly, two mutually exclusive
depletion schedules are included herein reflecting the composite depletion
factors required to compute depletion for Units acquired in 1986. The proper
depletion schedule to use in computing 1997 depletion is dependent upon the
date upon which the Units were acquired as reflected in the preceding
paragraph.
 
  The amount of depletion attributable to a specific state may be determined
by multiplying the depletion factor indicated for the particular state times
the Federal tax basis in the Unit(s) held, reduced by prior calendar years'
allowable Federal depletion, if any. The Federal and state depletion factors
contained on Depletion Schedule I through Depletion Schedule XVI are presented
on a cumulative basis for 1997. However, the Federal and state depletion
factors contained on Depletion Schedule XVII are summarized separately; and
the state factors are presented on a noncumulative basis. If you are using
Depletion Schedule XVII for your state income tax return(s), you may either
calculate the applicable state depletion for each month and add the monthly
depletion amounts together, or you may add together the applicable monthly
depletion factors for the relevant state and multiply this created composite
depletion factor times your adjusted basis in your Units. The result should be
the same using either method.
 
  Different depletion schedules may be required to be used for Units acquired
in different years by a Unit holder. Therefore, Unit holders are encouraged to
maintain records indicating the date of acquisition and the acquisition price
for each Unit or lot of Units acquired.
 
(SRT 1997 TAX)
 
                                       2
<PAGE>
 
SALE OR EXCHANGE OF UNITS
 
  A discussion concerning the tax consequences associated with the sale or
exchange of Units is presented on page A-4 in the back portion of this
booklet.
 
CLASSIFICATION OF INVESTMENT
 
  Tax Reform measures enacted in 1986 and 1987 require items of income and
expense to be categorized as "passive," "active" or "portfolio" in nature. An
explanation of the application of these rules to the items of income and
expense reported by the Trust are contained on page A-1 in the back portion of
this booklet.
 
NONRESIDENT FOREIGN UNIT HOLDERS
 
  Nonresident alien individual and foreign corporation Unit holders ("Foreign
Taxpayer(s)") are subject to special tax rules with respect to their
investments in the Trust. These rules are outlined beginning on page A-3 in
the back portion of this booklet.
 
BACKUP WITHHOLDING
 
  Unit holders who have had amounts withheld in 1997 pursuant to the Federal
backup withholding provisions should have received a Form 1099-MISC from the
Trust. The Form 1099-MISC reflects the total Federal income tax withheld from
distributions. The amount reported on the Form 1099-MISC should not be
included as additional income in computing taxable income, as such amount is
already included in the per Unit income items on the income and expense
schedules. The Federal income tax withheld, as reported on the Form 1099-MISC,
should be considered as a credit by the Unit holder in computing any Federal
income tax liability. Individual Unit holders should include the amount of
backup withholding on line 54 of page 2 of the 1997 Form 1040. For a further
discussion of backup withholding, see page A-4 in the back portion of this
booklet.
 
STATE INCOME TAX
 
  Since the Trust holds royalty interests and receives income that is
attributable to various states, Unit holders may be obligated to file a return
and may have a tax liability in states in addition to their state of
residence. The accompanying schedules have been prepared in such a manner that
income and deductions attributable to the various states may be determined by
each Unit holder. State income tax matters are more fully discussed on page A-
5 in the back portion of this booklet.
 
TABLE OF 1997 MONTHLY RECORD DATES AND CASH DISTRIBUTIONS PER UNIT
 
  Unit holders, as reflected in the transfer books of the Trust on a Monthly
Record Date, received the following per Unit cash distributions for 1997. The
per Unit cash distributions reflected below have not been reduced by any taxes
that may have been withheld from distributions to Foreign Taxpayers or from
distributions to Unit holders subject to the Federal backup withholding rules.
The distribution checks were dated and mailed on the corresponding Date
Payable.
 
<TABLE>
<CAPTION>
     MONTHLY RECORD                                                           DISTRIBUTION
          DATE                        DATE PAYABLE                              PER UNIT
     --------------                   ------------                            ------------
   <S>                             <C>                                        <C>
   January 15, 1997                January 29, 1997                             $.12625
   February 18, 1997               February 28, 1997                            $.18552
   March 17, 1997                  March 31, 1997                               $.16251
   April 15, 1997                  April 29, 1997                               $.14383
   May 15, 1997                    May 29, 1997                                 $.19078
   June 16, 1997                   June 30, 1997                                $.12408
   July 15, 1997                   July 29, 1997                                $.14499
   August 15, 1997                 August 29, 1997                              $.15155
   September 15, 1997              September 29, 1997                           $.11482
   October 15, 1997                October 29, 1997                             $.11836
   November 17, 1997               November 28, 1997                            $.10268
   December 15, 1997               December 29, 1997                            $.07919
</TABLE>
 
(SRT 1997 TAX)
 
                                       3
<PAGE>
 
                             SABINE ROYALTY TRUST
                           TAX COMPUTATION WORKSHEET
 
                                     1997
 
         (RETAIN THIS WORKPAPER AS PART OF YOUR PERMANENT TAX RECORDS)
 
                                    PART I
 
                              INCOME AND EXPENSE
 
<TABLE>
<CAPTION>
                              A                 B               C
 
                                         AMOUNTS PER UNIT
                          NUMBER OF      FROM APPROPRIATE
                         UNITS OWNED       SCHEDULE(S)                  WHERE TO REFLECT ON
ITEM                      (NOTE 1)           (NOTE 2)         TOTALS  1997 FORM 1040 (NOTE 3)
----                     -----------     ----------------     ------  -----------------------
<S>                      <C>         <C> <C>              <C> <C>    <C>
Gross Royalty Income....              X                    =         Line 4, Part I,Schedule E
                         -----------     ----------------     ------
Severance Tax...........              X                    =         Line 16, Part I,Schedule E
                         -----------     ----------------     ------

Interest Income.........              X                    =         Line 1, Part I,Schedule B
                         -----------     ----------------     ------

Administrative Expense..              X                    =         Line 18, Part I,Schedule E
                         -----------     ----------------     ------
</TABLE>
 
                                    PART II
 
                            COST DEPLETION (NOTE 4)
 
<TABLE>
<CAPTION>
                      COST DEPLETION
                    ALLOWABLE IN PRIOR     ADJUSTED BASIS FOR       APPROPRIATE 1997
                      CALENDAR YEARS         COST DEPLETION       COST DEPLETION FACTOR
ORIGINAL BASIS           (NOTE 5)               PURPOSES                (NOTE 4)            1997 COST DEPLETION*
--------------      ------------------     ------------------     ---------------------     --------------------
<S>             <C> <C>                <C> <C>                <C> <C>                   <C> <C>
                -                      =                      X                         =
--------------      ------------------     ------------------     ---------------------     --------------------
</TABLE>
 
*Reflect cost depletion on 1997 Form 1040, line 20, Part 1, Schedule E (Note
3).
 
                                   PART III
 
                 COMPUTATION OF GAIN OR (LOSS) FOR UNITS SOLD
 
<TABLE>
<CAPTION>
         NET                                                 WHERE TO REFLECT ON
        SALES          ADJUSTED BASIS          GAIN            1997 FORM 1040
        PRICE             (NOTE 6)            (LOSS)              (NOTE 3)
        -----          --------------         ------         -------------------
<S>      <C>   <C>              <C>   <C>      <C>           <C>
                  -                      =                        Form 4797
        -----          --------------         ------         

</TABLE>
 
NOTES
-----

(1) In order to correctly calculate total income and expense to be reported on
    your 1997 Federal and, if applicable, state income tax returns, it is
    recommended that you reproduce and complete a separate Tax Computation
    Worksheet for each block of Units acquired at different times. Only the
    total of each item of income and expense obtained by adding the separate
    Tax Computation Worksheet totals, if more than one is required, should be
    reported on your applicable 1997 income tax returns.
(2) If you did not become a Unit holder of record of any Unit(s) or did not
    cease to be a Unit holder of record of any Unit(s) during the period from
    January 15, 1997 through December 15, 1997, then the amounts reflected on
    the cumulative schedule for 1997 should be used to complete Part I. If any
    Units were held of record for only part of the period defined above, the
    Supplement to Tax Computation Worksheet on page 5 should be used to derive
    the income and expense factors to be inserted in column B.
(3) The Trustee believes that individual Unit holders owning the Units as an
    investment should report the amounts determined in this manner. The U.S.
    Corporation Income Tax Return (Form 1120) does not require that royalty
    income and related expenses be separately identified on any specific
    schedules. Note: Schedule D should be utilized to report the Sale of Units
    acquired before January 1, 1987. (See "Sale or Exchange of Units" on page
    A-4.)
(4) The appropriate depletion schedule(s) to be utilized is generally
    dependent upon the date on which the Units were acquired. See "Computing
    Cost Depletion" on page 1 to determine the proper schedule(s) to be used.
(5) Cost depletion allowable in prior calendar years cannot be computed from
    the schedules contained in this booklet. Depletion schedules contained in
    prior years' Sabine Royalty Trust Tax Information Booklet(s) should be
    used in order to determine the appropriate cost depletion amount(s)
    allowable in prior calendar years.
(6) The adjusted basis is equal to the cost or other basis of the Unit(s) less
    the cost depletion allowable from the date of acquisition through the date
    of sale (whether or not deducted).
 
(SRT 1997 TAX)
 
                                       4
<PAGE>
 
                             SABINE ROYALTY TRUST
 
                    SUPPLEMENT TO TAX COMPUTATION WORKSHEET
 
                                     1997
 
                   FOR UNITS HELD FOR ONLY PART OF THE YEAR
 
  This worksheet should be used by Unit holders who became holders of record
of Units or ceased to be holders of record of Units during the period from
January 15, 1997 through December 15, 1997. This worksheet is designed to
assist Unit holders in determining the proper income and expense factors to be
used on the Tax Computation Worksheet-- Part I, under the heading entitled
"Amounts Per Unit from Appropriate Schedule(s)". In order to complete this
schedule, Unit holders should insert only the individual income and expense
factors from the monthly schedules (pages 7-18) for each month during which
the Units were owned on a Monthly Record Date. (See page 3 for a list of
Monthly Record Dates).
 
<TABLE>
<CAPTION>
                                MONTH(S) DURING WHICH UNITS WERE OWNED ON A MONTHLY RECORD DATE                 CALCULATED
                 ----------------------------------------------------------------------------------------------   FACTOR
                 JANUARY FEBRUARY MARCH  APRIL   MAY    JUNE   JULY  AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER PER  UNIT*
                 ------- -------- ------ ------ ------ ------ ------ ------ --------- ------- -------- -------- ----------
<S>              <C>     <C>      <C>    <C>    <C>    <C>    <C>    <C>    <C>       <C>     <C>      <C>      <C>
Gross Royalty
 Income.........
                 ------   ------  ------ ------ ------ ------ ------ ------  ------   ------   ------   ------    ------
Severance Tax...
                 ------   ------  ------ ------ ------ ------ ------ ------  ------   ------   ------   ------    ------
Interest
 Income.........
                 ------   ------  ------ ------ ------ ------ ------ ------  ------   ------   ------   ------    ------
Administrative
 Expense........
                 ------   ------  ------ ------ ------ ------ ------ ------  ------   ------   ------   ------    ------
</TABLE>
-------
* This column of calculated factors per Unit should be inserted in column B of
  the Income and Expense section (Part I) of the Tax Computation Worksheet on
  page 4.
(SRT 1997 TAX)
 
                                       5
<PAGE>
 
                                                                CUMULATIVE 1997
 
                             SABINE ROYALTY TRUST
 
                                EIN 75-6297143
                           FORM 1041, GRANTOR TRUST
 
                   Federal and State Income Tax Information
                           See Instructions for Use
 
                                   SECTION I
                          INCOME AND EXPENSE PER UNIT
 
<TABLE>
<CAPTION>
                                                             OTHER INCOME
                           ROYALTY INCOME AND EXPENSE         AND EXPENSE
                          ----------------------------- -----------------------
                                                 NET
                            GROSS   SEVERANCE  ROYALTY  INTEREST ADMINISTRATIVE
  SOURCE                   INCOME      TAX    PAYMENTS   INCOME     EXPENSE
  ------                  --------- --------- --------- -------- --------------
<S>                       <C>       <C>       <C>       <C>      <C>
Florida.................. $ .041435 $.011371  $ .030064 $  *        $.003103
Louisiana................   .180960  .011761    .169199  .001217     .018363
Mississippi..............   .065631  .005021    .060610    *         .005768
New Mexico...............   .095345  .004661    .090684    *         .009045
Oklahoma.................   .359375  .039631    .319744    *         .031058
Texas....................  1.212589  .071879   1.140710  .009595     .109926
                          --------- --------  --------- --------    --------
  TOTAL.................. $1.955335 $.144324  $1.811011 $.010812    $.177263
                          ========= ========  ========= ========    ========
</TABLE>
 
                                  SECTION II
 
                 RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
 
<TABLE>
<CAPTION>

                      ITEM                                             AMOUNT
                      ----                                            ---------
<S>                                                                   <C>
1. Total Net Royalty Payments........................................ $1.811011
2. Interest Income...................................................   .010812
3. Administrative Expense............................................  (.177263)
                                                                      ---------
4. Cash Distribution Per Unit **..................................... $1.644560
                                                                      =========
</TABLE>
--------
 
* Revenue attributable to these states was invested and earned interest
  income. Since the investments were made in Dallas, Texas, and the interest
  was paid there, such interest is included in the Texas interest income.
 
** Includes amounts withheld by the Trust from distributions to nonresident
   alien individuals and foreign corporations and remitted directly to the
   United States Treasury. This also includes amounts withheld pursuant to the
   backup withholding provisions.
 
(SRT 1997 TAX)
 
                                       6
<PAGE>
 
                                                                FOR JANUARY 1997
 
                              SABINE ROYALTY TRUST
 
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST
 
                    Federal and State Income Tax Information
                            See Instructions for Use
 
                                   SECTION I
                          INCOME AND EXPENSE PER UNIT
 
<TABLE>
<CAPTION>
                                                             OTHER INCOME
                            ROYALTY INCOME AND EXPENSE        AND EXPENSE
                            --------------------------- -----------------------
                                                 NET
                             GROSS   SEVERANCE ROYALTY  INTEREST ADMINISTRATIVE
  SOURCE                     INCOME     TAX    PAYMENTS  INCOME     EXPENSE
  ------                    -------- --------- -------- -------- --------------
<S>                         <C>      <C>       <C>      <C>      <C>
Florida.................... $.003009 $.000285  $.002724 $  *        $.000317
Louisiana..................  .009643  .000360   .009283  .000103     .001303
Mississippi................  .003540  .000179   .003361    *         .000373
New Mexico.................  .008189  .000687   .007502    *         .000863
Oklahoma...................  .026605  .003071   .023534    *         .002805
Texas......................  .100277  .005045   .095232  .000745     .010573
                            -------- --------  -------- --------    --------
  TOTAL.................... $.151263 $.009627  $.141636 $.000848    $.016234
                            ======== ========  ======== ========    ========
</TABLE>
 
                                   SECTION II
                 RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
 
<TABLE>
<CAPTION>
                    ITEM                                               AMOUNT
                    ----                                              ---------
<S>                                                                   <C>
1. Total Net Royalty Payments........................................ $ .141636
2. Interest Income...................................................   .000848
3. Administrative Expense............................................  (.016234)
                                                                      ---------
4. Cash Distribution Per Unit **..................................... $ .126250
                                                                      =========
</TABLE>
--------
 
 * Revenue attributable to these states was invested and earned interest
   income. Since the investments were made in Dallas, Texas, and the interest
   was paid there, such interest is included in Texas interest income.
 
** Includes amounts withheld by the Trust from distributions to nonresident
   alien individuals and foreign corporations and remitted directly to the
   United States Treasury. This also includes amounts withheld pursuant to the
   backup withholding provisions.
 
(SRT 1997 TAX)
 
                                       7
<PAGE>
 
                                                               FOR FEBRUARY 1997
 
                              SABINE ROYALTY TRUST
 
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST
 
                    Federal and State Income Tax Information
                            See Instructions for Use
 
                                   SECTION I
                          INCOME AND EXPENSE PER UNIT
 
<TABLE>
<CAPTION>
                                                          OTHER INCOME
                         ROYALTY INCOME AND EXPENSE       AND EXPENSE
                         --------------------------- -----------------------
                                              NET
                          GROSS   SEVERANCE ROYALTY  INTEREST ADMINISTRATIVE
  SOURCE                  INCOME     TAX    PAYMENTS  INCOME     EXPENSE
  ------                 -------- --------- -------- -------- --------------
<S>                      <C>      <C>       <C>      <C>      <C>           
Florida................. $.003866 $.000748  $.003118 $  *        $.000167
Louisiana...............  .033591  .001341   .032250  .000190     .001739
Mississippi.............  .011103  .000810   .010293    *         .000480
New Mexico..............  .011173  .001075   .010098    *         .000483
Oklahoma................  .027881  .002455   .025426    *         .001206
Texas...................  .118673  .006253   .112420  .000935     .005135
                         -------- --------  -------- --------    --------
  TOTAL................. $.206287 $.012682  $.193605 $.001125    $.009210
                         ======== ========  ======== ========    ========
</TABLE>
 
                                   SECTION II
                 RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
 
<TABLE>
<CAPTION>
               ITEM                                                     AMOUNT
               ----                                                    --------
<S>                                                                    <C>
1. Total Net Royalty Payments......................................... $.193605
2. Interest Income....................................................  .001125
3. Administrative Expense............................................. (.009210)
                                                                       --------
4. Cash Distribution Per Unit **...................................... $.185520
                                                                       ========
</TABLE>
--------
 * Revenue attributable to these states was invested and earned interest
   income. Since the investments were made in Dallas, Texas, and the interest
   was paid there, such interest is included in the Texas interest income.
 
** Includes amounts withheld by the Trust from distributions to nonresident
   alien individuals and foreign corporations and remitted directly to the
   United States Treasury. This also includes amounts withheld pursuant to the
   backup withholding provisions.
 
(SRT 1997 TAX)
 
                                       8
<PAGE>
 
                                                                  FOR MARCH 1997
 
                              SABINE ROYALTY TRUST
 
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST
 
                    Federal and State Income Tax Information
                            See Instructions for Use
 
                                   SECTION I
                          INCOME AND EXPENSE PER UNIT
 
<TABLE>
<CAPTION>
                                                             OTHER INCOME
                            ROYALTY INCOME AND EXPENSE        AND EXPENSE
                            --------------------------- -----------------------
                                                 NET
                             GROSS   SEVERANCE ROYALTY  INTEREST ADMINISTRATIVE
  SOURCE                     INCOME     TAX    PAYMENTS  INCOME     EXPENSE
  ------                    -------- --------- -------- -------- --------------
<S>                         <C>      <C>       <C>      <C>      <C>
Florida.................... $.004279 $.000788  $.003491 $  *        $.000152
Louisiana..................  .010411  .000489   .009922  .000082     .000656
Mississippi................  .005508  .000312   .005196    *         .000196
New Mexico.................  .007427  .000691   .006736    *         .000264
Oklahoma...................  .030068  .002259   .027809    *         .001070
Texas......................  .121642  .006515   .115127  .000813     .004328
                            -------- --------  -------- --------    --------
  TOTAL.................... $.179335 $.011054  $.168281 $.000895    $.006666
                            ======== ========  ======== ========    ========
</TABLE>
 
                                   SECTION II
                 RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
 
<TABLE>
<CAPTION>
              ITEM                                                     AMOUNT
              ----                                                    ---------
<S>                                                                   <C>
1. Total Net Royalty Payments........................................ $ .168281
2. Interest Income...................................................   .000895
3. Administrative Expense............................................  (.006666)
                                                                      ---------
4. Cash Distribution Per Unit **..................................... $ .162510
                                                                      =========
</TABLE>
--------
 
 * Revenue attributable to these states was invested and earned interest
   income. Since the investments were made in Dallas, Texas, and the interest
   was paid there, such interest is included in the Texas interest income.
 
** Includes amounts withheld by the Trust from distributions to nonresident
   alien individuals and foreign corporations and remitted directly to the
   United States Treasury. This also includes amounts withheld pursuant to the
   backup withholding provisions.
 
(SRT 1997 TAX)
 
                                       9
<PAGE>
 
                                                                  FOR APRIL 1997
 
                              SABINE ROYALTY TRUST
 
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST
 
                    Federal and State Income Tax Information
                            See Instructions for Use
 
                                   SECTION I
                          INCOME AND EXPENSE PER UNIT
 
<TABLE>
<CAPTION>
                                                             OTHER INCOME
                            ROYALTY INCOME AND EXPENSE        AND EXPENSE
                            --------------------------- -----------------------
                                                 NET
                             GROSS   SEVERANCE ROYALTY  INTEREST ADMINISTRATIVE
  SOURCE                     INCOME     TAX    PAYMENTS  INCOME     EXPENSE
  ------                    -------- --------- -------- -------- --------------
<S>                         <C>      <C>       <C>      <C>      <C>
Florida.................... $.000163 $.000017  $.000146 $  *        $.000010
Louisiana..................  .024795  .001138   .023657  .000140     .001746
Mississippi................  .006145  .000463   .005682    *         .000362
New Mexico.................  .007139  .000691   .006448    *         .000420
Oklahoma...................  .038864  .002650   .036214    *         .002288
Texas......................  .085470  .004974   .080496  .000905     .005032
                            -------- --------  -------- --------    --------
  TOTAL.................... $.162576 $.009933  $.152643 $.001045    $.009858
                            ======== ========  ======== ========    ========
</TABLE>
 
                                   SECTION II
                 RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
 
<TABLE>
<CAPTION>
                ITEM                                                   AMOUNT
                ----                                                  ---------
<S>                                                                   <C>
1.  Total Net Royalty Payments....................................... $ .152643
2.  Interest Income..................................................   .001045
3.  Administrative Expense...........................................  (.009858)
                                                                      ---------
4.  Cash Distribution Per Unit **.................................... $ .143830
                                                                      =========
</TABLE>
--------
 
 * Revenue attributable to these states was invested and earned interest
   income. Since the investments were made in Dallas, Texas, and the interest
   was paid there, such interest is included in the Texas interest income.
 
** Includes amounts withheld by the Trust from distributions to nonresident
   alien individuals and foreign corporations and remitted directly to the
   United States Treasury. This also includes amounts withheld pursuant to the
   backup withholding provisions.
 
 
(SRT 1997 TAX)
 
                                       10
<PAGE>
 
                                                                    FOR MAY 1997
 
                              SABINE ROYALTY TRUST
 
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST
 
                    Federal and State Income Tax Information
                            See Instructions for Use
 
                                   SECTION I
                          INCOME AND EXPENSE PER UNIT
 
<TABLE>
<CAPTION>
                                                             OTHER INCOME
                            ROYALTY INCOME AND EXPENSE        AND EXPENSE
                            --------------------------- -----------------------
                                                 NET
                             GROSS   SEVERANCE ROYALTY  INTEREST ADMINISTRATIVE
  SOURCE                     INCOME     TAX    PAYMENTS  INCOME     EXPENSE
  ------                    -------- --------- -------- -------- --------------
<S>                         <C>      <C>       <C>      <C>      <C>
Florida.................... $.006502 $.000873  $.005629 $  *        $.000240
Louisiana..................  .016705  .000514   .016191  .000121     .000902
Mississippi................  .004854  .000328   .004526    *         .000179
New Mexico.................  .010646  .000881   .009765    *         .000392
Oklahoma...................  .033945  .002579   .031366    *         .001251
Texas......................  .138323  .008142   .130181  .001063     .005098
                            -------- --------  -------- --------    --------
  TOTAL.................... $.210975 $.013317  $.197658 $.001184    $.008062
                            ======== ========  ======== ========    ========
</TABLE>
 
                                   SECTION II
                 RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
 
<TABLE>
<CAPTION>
              ITEM                                                     AMOUNT
              ----                                                    ---------
<S>                                                                   <C>
1. Total Net Royalty Payments........................................ $ .197658
2. Interest Income...................................................   .001184
3. Administrative Expense............................................  (.008062)
                                                                      ---------
4. Cash Distribution Per Unit **..................................... $ .190780
                                                                      =========
</TABLE>
--------
 * Revenue attributable to these states was invested and earned interest
   income. Since the investments were made in Dallas, Texas, and the interest
   was paid there, such interest is included in the Texas interest income.
 
** Includes amounts withheld by the Trust from distributions to nonresident
   alien individuals and foreign corporations and remitted directly to the
   United States Treasury. This also includes amounts withheld pursuant to the
   backup withholding provisions.
 
(SRT 1997 TAX)
 
                                       11
<PAGE>
 
                                                                   FOR JUNE 1997
 
                              SABINE ROYALTY TRUST
 
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST
 
                    Federal and State Income Tax Information
                            See Instructions for Use
 
                                   SECTION I
                          INCOME AND EXPENSE PER UNIT
 
<TABLE>
<CAPTION>
                                                             OTHER INCOME
                            ROYALTY INCOME AND EXPENSE        AND EXPENSE
                            --------------------------- -----------------------
                                                 NET
                             GROSS   SEVERANCE ROYALTY  INTEREST ADMINISTRATIVE
  SOURCE                     INCOME     TAX    PAYMENTS  INCOME     EXPENSE
  ------                    -------- --------- -------- -------- --------------
<S>                         <C>      <C>       <C>      <C>      <C>
Florida.................... $.007117 $.005330  $.001787 $  *        $.000296
Louisiana..................  .014863  .001286   .013577  .000112     .000905
Mississippi................  .007283  .000589   .006694    *         .000303
New Mexico.................  .006200  .001288   .004912    *         .000258
Oklahoma...................  .048762  .014554   .034208    *         .002030
Texas......................  .074814  .006076   .068738  .000958     .003114
                            -------- --------  -------- --------    --------
  TOTAL.................... $.159039 $.029123  $.129916 $.001070    $.006906
                            ======== ========  ======== ========    ========
</TABLE>
 
                                   SECTION II
                 RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
 
<TABLE>
<CAPTION>
                ITEM                                                   AMOUNT
                ----                                                  ---------
<S>                                                                   <C>
1. Total Net Royalty Payments........................................ $ .129916
2. Interest Income...................................................   .001070
3. Administrative Expense............................................  (.006906)
                                                                      ---------
4. Cash Distribution Per Unit **..................................... $ .124080
                                                                      =========
</TABLE>
--------
 
 * Revenue attributable to these states was invested and earned interest
   income. Since the investments were made in Dallas, Texas, and the interest
   was paid there, such interest is included in the Texas interest income.
 
** Includes amounts withheld by the Trust from distributions to nonresident
   alien individuals and foreign corporations and remitted directly to the
   United States Treasury. This also includes amounts withheld pursuant to the
   backup withholding provisions.
 
(SRT 1997 TAX)
 
                                       12
<PAGE>
 
                                                                   FOR JULY 1997
 
                              SABINE ROYALTY TRUST
 
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST
 
                    Federal and State Income Tax Information
                            See Instructions for Use
 
                                   SECTION I
                          INCOME AND EXPENSE PER UNIT
 
<TABLE>
<CAPTION>
                                                              OTHER INCOME
                            ROYALTY INCOME AND EXPENSE         AND EXPENSE
                            ---------------------------- -----------------------
                                                  NET
                             GROSS   SEVERANCE  ROYALTY  INTEREST ADMINISTRATIVE
  SOURCE                     INCOME     TAX     PAYMENTS  INCOME     EXPENSE
  ------                    -------- ---------  -------- -------- --------------
<S>                         <C>      <C>        <C>      <C>      <C>
Florida.................... $.005192 $.001833   $.003359 $  *        $.000250
Louisiana..................  .010092  .000621    .009471  .000086     .000772
Mississippi................  .004425  .000313    .004112    *         .000213
New Mexico.................  .002650 (.004635)   .007285    *         .000128
Oklahoma...................  .026044  .000746    .025298    *         .001253
Texas......................  .110337  .007874    .102463  .000841     .005309
                            -------- --------   -------- --------    --------
  TOTAL.................... $.158740 $.006752   $.151988 $.000927    $.007925
                            ======== ========   ======== ========    ========
</TABLE>
 
                                   SECTION II
                 RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
 
<TABLE>
<CAPTION>
                ITEM                                                   AMOUNT
                ----                                                   ------
<S>                                                                   <C>
1. Total Net Royalty Payments........................................ $ .151988
2. Interest Income...................................................   .000927
3. Administrative Expense............................................  (.007925)
                                                                      ---------
4. Cash Distribution Per Unit **..................................... $ .144990
                                                                      =========
</TABLE>
--------
 
 * Revenue attributable to these states was invested and earned interest
   income. Since the investments were made in Dallas, Texas, and the interest
   was paid there, such interest is included in the Texas interest income.
 
** Includes amounts withheld by the Trust from distributions to nonresident
   alien individuals and foreign corporations and remitted directly to the
   United States Treasury. This also includes amounts withheld pursuant to the
   backup withholding provisions.
 
 
(SRT 1997 TAX)
 
                                       13
<PAGE>
 
                                                                 FOR AUGUST 1997
 
                              SABINE ROYALTY TRUST
 
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST
 
                    Federal and State Income Tax Information
                            See Instructions for Use
 
                                   SECTION I
                          INCOME AND EXPENSE PER UNIT
 
<TABLE>
<CAPTION>
                                                              OTHER INCOME
                             ROYALTY INCOME AND EXPENSE        AND EXPENSE
                             --------------------------- -----------------------
                                                  NET
                              GROSS   SEVERANCE ROYALTY  INTEREST ADMINISTRATIVE
SOURCE                        INCOME     TAX    PAYMENTS  INCOME     EXPENSE
------                       -------- --------- -------- -------- --------------
<S>                          <C>      <C>       <C>      <C>      <C>
Florida..................... $.002022 $.000150  $.001872 $  *        $.000097
Louisiana...................  .012814  .000697   .012117  .000114     .000901
Mississippi.................  .004166  .000458   .003708    *         .000200
New Mexico..................  .011538  .000996   .010542    *         .000554
Oklahoma....................  .029805  .002437   .027368    *         .001431
Texas.......................  .111864  .008295   .103569  .000815     .005372
                             -------- --------  -------- --------    --------
  TOTAL..................... $.172209 $.013033  $.159176 $.000929    $.008555
                             ======== ========  ======== ========    ========
</TABLE>
 
                                   SECTION II
                 RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
 
<TABLE>
<CAPTION>
     ITEM                                                              AMOUNT
     ----                                                             ---------
<S>                                                                   <C>
1. Total Net Royalty Payments........................................ $ .159176
2. Interest Income...................................................   .000929
3. Administrative Expense............................................  (.008555)
                                                                      ---------
4. Cash Distribution Per Unit **..................................... $ .151550
                                                                      =========
</TABLE>
--------
 
 * Revenue attributable to these states was invested and earned interest
   income. Since the investments were made in Dallas, Texas, and the interest
   was paid there, such interest is included in the Texas interest income.
 
** Includes amounts withheld by the Trust from distributions to nonresident
   alien individuals and foreign corporations and remitted directly to the
   United States Treasury. This also includes amounts withheld pursuant to the
   backup withholding provisions.
(SRT 1997 TAX)
 
                                       14
<PAGE>
 
                                                              FOR SEPTEMBER 1997
 
                              SABINE ROYALTY TRUST
 
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST
 
                    Federal and State Income Tax Information
                            See Instructions for Use
 
                                   SECTION I
                          INCOME AND EXPENSE PER UNIT
 
<TABLE>
<CAPTION>
                                                             OTHER INCOME
                            ROYALTY INCOME AND EXPENSE        AND EXPENSE
                            --------------------------- -----------------------
                                                 NET
                             GROSS   SEVERANCE ROYALTY  INTEREST ADMINISTRATIVE
  SOURCE                     INCOME     TAX    PAYMENTS  INCOME     EXPENSE
  ------                    -------- --------- -------- -------- --------------
<S>                         <C>      <C>       <C>      <C>      <C>
Florida.................... $.003013 $.000606  $.002407 $  *        $.000518
Louisiana..................  .015919  .000822   .015097  .000092     .003022
Mississippi................  .007421  .000787   .006634    *         .001276
New Mexico.................  .007765  .000565   .007200    *         .001335
Oklahoma...................  .027888  .004153   .023735    *         .004794
Texas......................  .090987  .005451   .085536  .000705     .015641
                            -------- --------  -------- --------    --------
  TOTAL.................... $.152993 $.012384  $.140609 $.000797    $.026586
                            ======== ========  ======== ========    ========
</TABLE>
 
                                   SECTION II
                 RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
 
<TABLE>
<CAPTION>
                 ITEM                                                  AMOUNT
                 ----                                                 ---------
<S>                                                                   <C>
1. Total Net Royalty Payments........................................ $ .140609
2. Interest Income...................................................   .000797
3. Administrative Expense............................................  (.026586)
                                                                      ---------
4. Cash Distribution Per Unit **..................................... $ .114820
                                                                      =========
</TABLE>
--------
 
 * Revenue attributable to these states was invested and earned interest
   income. Since the investments were made in Dallas, Texas, and the interest
   was paid there, such interest is included in the Texas interest income.
 
** Includes amounts withheld by the Trust from distributions to nonresident
   alien individuals and foreign corporations and remitted directly to United
   States Treasury. This also includes amounts withheld pursuant to the backup
   withholding provisions.
 
(SRT 1997 TAX)
 
                                       15
<PAGE>
 
                                                                FOR OCTOBER 1997
 
                              SABINE ROYALTY TRUST
 
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST
 
                    Federal and State Income Tax Information
                            See Instructions for Use
 
                                   SECTION I
                          INCOME AND EXPENSE PER UNIT
 
<TABLE>
<CAPTION>
                                                             OTHER INCOME
                            ROYALTY INCOME AND EXPENSE        AND EXPENSE
                            --------------------------- -----------------------
                                                 NET
                             GROSS   SEVERANCE ROYALTY  INTEREST ADMINISTRATIVE
  SOURCE                     INCOME     TAX    PAYMENTS  INCOME     EXPENSE
  ------                    -------- --------- -------- -------- --------------
<S>                         <C>      <C>       <C>      <C>      <C>
Florida.................... $.002777 $.000389  $.002388 $  *        $.000141
Louisiana..................  .013503  .003555   .009948  .000054     .000974
Mississippi................  .003517  .000278   .003239    *         .000179
New Mexico.................  .007449  .001069   .006380    *         .000379
Oklahoma...................  .024956  .001700   .023256    *         .001271
Texas......................  .084259  .004537   .079722  .000608     .004291
                            -------- --------  -------- --------    --------
  TOTAL.................... $.136461 $.011528  $.124933 $.000662    $.007235
                            ======== ========  ======== ========    ========
</TABLE>
 
                                   SECTION II
                 RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
 
<TABLE>
<CAPTION>
          ITEM                                                        AMOUNT
          ----                                                       ---------
<S>                                                                  <C>
1. Total Net Royalty Payments....................................... $ .124933
2. Interest Income..................................................   .000662
3. Administrative Expense...........................................  (.007235)
                                                                     ---------
4. Cash Distribution Per Unit **.................................... $ .118360
                                                                     =========
</TABLE>
--------
 
 * Revenue attributable to these states was invested and earned interest
   income. Since the investments were made in Dallas, Texas, and the interest
   was paid there, such interest is included in the Texas interest income.
 
** Includes amounts withheld by the Trust from distributions to nonresident
   alien individuals and foreign corporations and remitted directly to the
   United States Treasury. This also includes amounts withheld pursuant to the
   backup withholding provisions.
 
(SRT 1997 TAX)
 
                                       16
<PAGE>
 
                                                               FOR NOVEMBER 1997
 
                              SABINE ROYALTY TRUST
 
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST
 
                    Federal and State Income Tax Information
                            See Instructions for Use
 
                                   SECTION I
                          INCOME AND EXPENSE PER UNIT
 
<TABLE>
<CAPTION>
                                                              OTHER INCOME
                             ROYALTY INCOME AND EXPENSE        AND EXPENSE
                             --------------------------- -----------------------
                                                  NET
                              GROSS   SEVERANCE ROYALTY  INTEREST ADMINISTRATIVE
SOURCE                        INCOME     TAX    PAYMENTS  INCOME     EXPENSE
------                       -------- --------- -------- -------- --------------
<S>                          <C>      <C>       <C>      <C>      <C>
Florida..................... $.002724 $.000320  $.002404 $  *        $.000714
Louisiana...................  .009257  .000486   .008771  .000064     .002712
Mississippi.................  .004930  .000350   .004580    *         .001292
New Mexico..................  .008993  .000830   .008163    *         .002357
Oklahoma....................  .026531  .001725   .024806    *         .006953
Texas.......................  .099054  .005935   .093119  .000762     .025961
                             -------- --------  -------- --------    --------
  TOTAL..................... $.151489 $.009646  $.141843 $.000826    $.039989
                             ======== ========  ======== ========    ========
</TABLE>
 
                                   SECTION II
                 RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
 
<TABLE>
<CAPTION>
             ITEM                                                      AMOUNT
             ----                                                     ---------
<S>                                                                   <C>
1. Total Net Royalty Payments........................................ $ .141843
2. Interest Income...................................................   .000826
3. Administrative Expense............................................  (.039989)
                                                                      ---------
4. Cash Distribution Per Unit **..................................... $ .102680
                                                                      =========
</TABLE>
--------
 
 * Revenue attributable to these states was invested and earned interest
   income. Since the investments were made in Dallas, Texas, and the interest
   was paid there, such interest is included in the Texas interest income.
 
** Includes amounts withheld by the Trust from distributions to nonresident
   alien individuals and foreign corporations and remitted directly to the
   United States Treasury. This also includes amounts withheld pursuant to the
   backup withholding provisions.
 
 
(SRT 1997 TAX)
 
                                       17
<PAGE>
 
                                                               FOR DECEMBER 1997
 
                              SABINE ROYALTY TRUST
 
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST
 
                    Federal and State Income Tax Information
                            See Instructions for Use
 
                                   SECTION I
                          INCOME AND EXPENSE PER UNIT
 
<TABLE>
<CAPTION>
                                                             OTHER INCOME
                            ROYALTY INCOME AND EXPENSE        AND EXPENSE
                            --------------------------- -----------------------
                                                 NET
                             GROSS   SEVERANCE ROYALTY  INTEREST ADMINISTRATIVE
  SOURCE                     INCOME     TAX    PAYMENTS  INCOME     EXPENSE
  ------                    -------- --------- -------- -------- --------------
<S>                         <C>      <C>       <C>      <C>      <C>
Florida.................... $.000771 $.000032  $.000739 $  *        $.000201
Louisiana..................  .009367  .000452   .008915  .000059     .002731
Mississippi................  .002739  .000154   .002585    *         .000715
New Mexico.................  .006176  .000523   .005653    *         .001612
Oklahoma...................  .018026  .001302   .016724    *         .004706
Texas......................  .076889  .002782   .074107  .000445     .020072
                            -------- --------  -------- --------    --------
  TOTAL.................... $.113968 $.005245  $.108723 $.000504    $.030037
                            ======== ========  ======== ========    ========
</TABLE>
 
                                   SECTION II
                 RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
 
<TABLE>
<CAPTION>
                 ITEM                                                  AMOUNT
                 ----                                                 ---------
<S>                                                                   <C>
1. Total Net Royalty Payments........................................ $ .108723
2. Interest Income...................................................   .000504
3. Administrative Expenses...........................................  (.030037)
                                                                      ---------
4. Cash Distribution Per Unit **..................................... $ .079190
                                                                      =========
</TABLE>
--------
 
 * Revenue attributable to these states was invested and earned interest
   income. Since the investments were made in Dallas, Texas, and the interest
   was paid there, such interest is included in the Texas interest income.
 
** Includes amounts withheld by the Trust from distributions to nonresident
   alien individuals and foreign corporations and remitted directly to the
   United States Treasury. This also includes amounts withheld pursuant to the
   backup withholding provisions.
 
 
(SRT 1997 TAX)
 
                                       18
<PAGE>
 
                             SABINE ROYALTY TRUST
 
                             DEPLETION SCHEDULE I
 
  The cumulative depletion factors reflected in Depletion Schedule I should be
used to compute 1997 federal and state depletion amounts attributable to Units
acquired by noncorporate Unit holders in the original distribution from Sabine
Corporation and all other Units purchased in 1983 by any Unit holder for which
the Unit holder was entitled to one or more 1983 monthly distributions. This
schedule should not be used to compute depletion amounts for any other Units
owned. (See the accompanying information for computation instructions.)
 
<TABLE>
<CAPTION>
                               LAST MONTH IN WHICH UNITS WERE OWNED ON THE MONTHLY RECORD DATE IN 1997
                 ----------------------------------------------------------------------------------------------------
                 JANUARY FEBRUARY  MARCH   APRIL    MAY    JUNE    JULY   AUGUST  SEPTEMBER OCTOBER NOVEMBER DECEMBER
                 ------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- --------
<S>              <C>     <C>      <C>     <C>     <C>     <C>     <C>     <C>     <C>       <C>     <C>      <C>
FEDERAL
 DEPLETION
 FACTOR......... .012017 .028697  .040141 .049374 .063849 .075404 .090210 .105400  .117989  .128861 .140299  .149960
                 ======= =======  ======= ======= ======= ======= ======= =======  =======  ======= =======  =======
STATE DEPLETION
 FACTORS

Florida......... .000005 .000012  .000019 .000019 .000030 .000049 .000060 .000064  .000073  .000080 .000085  .000088
Louisiana....... .000457 .001873  .002379 .003108 .003599 .004236 .004696 .005366  .006120  .006629 .007073  .007569
Mississippi..... .000343 .001176  .001490 .001887 .002215 .002867 .003235 .003615  .004362  .004684 .005103  .005301
New Mexico...... .000192 .000443  .000572 .000712 .000927 .001090 .001112 .001442  .001683  .001885 .002108  .002267
Oklahoma........ .001107 .002303  .003240 .004416 .005537 .007609 .008736 .010133  .011377  .012498 .013610  .014351
Texas........... .009913 .022890  .032441 .039232 .051541 .059553 .072371 .084780  .094374  .103085 .112320  .120384
</TABLE>
 
                             DEPLETION SCHEDULE II
 
  The cumulative depletion factors reflected in Depletion Schedule II should
be used to compute 1997 federal and state depletion amounts attributable to
Units acquired in the original distribution from Sabine Corporation by
corporate Unit holders. This schedule should not be used to compute depletion
amounts for any other Units owned. (See the accompanying information for
computation instructions.)
 
<TABLE>
<CAPTION>
                               LAST MONTH IN WHICH UNITS WERE OWNED ON THE MONTHLY RECORD DATE IN 1997
                 ----------------------------------------------------------------------------------------------------
                 JANUARY FEBRUARY  MARCH   APRIL    MAY    JUNE    JULY   AUGUST  SEPTEMBER OCTOBER NOVEMBER DECEMBER
                 ------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- --------
<S>              <C>     <C>      <C>     <C>     <C>     <C>     <C>     <C>     <C>       <C>     <C>      <C>
FEDERAL
 DEPLETION
 FACTOR......... .012810 .033256  .045427 .056732 .071541 .086240 .101351 .117524  .133149  .145051 .157707  .167807
                 ======= =======  ======= ======= ======= ======= ======= =======  =======  ======= =======  =======
STATE DEPLETION
 FACTORS

Florida.........     --      --       --      --      --      --      --      --       --       --      --       --
Louisiana....... .001185 .004858  .006172 .008064 .009337 .010990 .012183 .013920  .015877  .017197 .018348  .019634
Mississippi..... .001727 .005918  .007499 .009498 .011149 .014433 .016287 .018202  .021963  .023584 .025691  .026687
New Mexico...... .000241 .000557  .000720 .000896 .001167 .001372 .001400 .001815  .002119  .002373 .002653  .002852
Oklahoma........ .001647 .003427  .004822 .006572 .008240 .011323 .013001 .015080  .016931  .018599 .020254  .021357
Texas........... .008010 .018496  .026214 .031702 .041648 .048122 .058480 .068507  .076259  .083298 .090761  .097277
</TABLE>
 
(SRT 1997 TAX)
 
                                      19
<PAGE>
 
                             SABINE ROYALTY TRUST
 
                            DEPLETION SCHEDULE III
 
  The cumulative depletion factors reflected in Depletion Schedule III should
be used to compute 1997 federal and state depletion amounts attributable to
Units purchased for which the Unit holder initially became entitled to
distributions in 1984. This schedule should not be used to compute depletion
amounts for any other Units owned. (See the accompanying information for
computation instructions.)
 
<TABLE>
<CAPTION>
                               LAST MONTH IN WHICH UNITS WERE OWNED ON THE MONTHLY RECORD DATE IN 1997
                 ----------------------------------------------------------------------------------------------------
                 JANUARY FEBRUARY  MARCH   APRIL    MAY    JUNE    JULY   AUGUST  SEPTEMBER OCTOBER NOVEMBER DECEMBER
                 ------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- --------
<S>              <C>     <C>      <C>     <C>     <C>     <C>     <C>     <C>     <C>       <C>     <C>      <C>
FEDERAL
 DEPLETION
 FACTOR......... .011222 .027019  .037754 .046453 .059978 .070748 .084635 .098822  .110614  .120776 .131438  .140507
                 ======= =======  ======= ======= ======= ======= ======= =======  =======  ======= =======  =======
STATE DEPLETION FACTORS

Florida......... .000005 .000012  .000020 .000020 .000031 .000050 .000062 .000066  .000075  .000082 .000087  .000090
Louisiana....... .000552 .002262  .002874 .003755 .004348 .005118 .005674 .006483  .007394  .008009 .008545  .009144
Mississippi..... .000302 .001035  .001312 .001662 .001951 .002526 .002850 .003185  .003843  .004127 .004496  .004670
New Mexico...... .000120 .000277  .000358 .000445 .000579 .000681 .000695 .000901  .001052  .001178 .001317  .001416
Oklahoma........ .000963 .002004  .002820 .003843 .004818 .006621 .007602 .008818  .009900  .010875 .011842  .012487
Texas........... .009280 .021429  .030370 .036728 .048251 .055752 .067752 .079369  .088350  .096505 .105151  .112700
</TABLE>
 
                             DEPLETION SCHEDULE IV
 
  The cumulative depletion factors reflected in Depletion Schedule IV should
be used to compute 1997 federal and state depletion amounts attributable to
Units purchased for which the Unit holder initially became entitled to
distributions in 1985. This schedule should not be used to compute depletion
amounts for any other Units owned. (See the accompanying information for
computation instructions.)
 
<TABLE>
<CAPTION>
                               LAST MONTH IN WHICH UNITS WERE OWNED ON THE MONTHLY RECORD DATE IN 1997
                 ----------------------------------------------------------------------------------------------------
                 JANUARY FEBRUARY  MARCH   APRIL    MAY    JUNE    JULY   AUGUST  SEPTEMBER OCTOBER NOVEMBER DECEMBER
                 ------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- --------
<S>              <C>     <C>      <C>     <C>     <C>     <C>     <C>     <C>     <C>       <C>     <C>      <C>
FEDERAL
 DEPLETION
 FACTOR......... .011715 .027869  .039023 .060706 .074848 .085982 .100472 .115246  .127490  .138048 .149200  .158592
                 ======= =======  ======= ======= ======= ======= ======= =======  =======  ======= =======  =======
STATE DEPLETION
 FACTORS

Florida......... .000005 .000012  .000019 .000020 .000030 .000047 .000057 .000061  .000069  .000075 .000080  .000082
Louisiana....... .000336 .001377  .001749 .003223 .003584 .004053 .004391 .004883  .005438  .005812 .006138  .006503
Mississippi..... .000389 .001333  .001689 .002765 .003137 .003877 .004295 .004726  .005573  .005938 .006413  .006637
New Mexico...... .000184 .000425  .000549 .000854 .001060 .001216 .001237 .001553  .001784  .001977 .002190  .002342
Oklahoma........ .000961 .002000  .002814 .005296 .006270 .008069 .009048 .010261  .011341  .012314 .013280  .013924
Texas........... .009840 .022722  .032203 .048548 .060767 .068720 .081444 .093762  .103285  .111932 .121099  .129104
</TABLE>
 
 
 
(SRT 1997 TAX)
 
                                      20
<PAGE>
 
                             SABINE ROYALTY TRUST
 
                             DEPLETION SCHEDULE V
 
  The cumulative depletion factors reflected in Depletion Schedule V should be
used to compute 1997 federal and state depletion amounts attributable to Units
purchased for which the Unit holder initially became entitled to distributions
on the January 15, February 17 or March 17, 1986 Monthly Record Date. This
schedule should not be used to compute depletion amounts for any other Units
owned. (See the accompanying information for computation instructions.)
 
<TABLE>
<CAPTION>
                               LAST MONTH IN WHICH UNITS WERE OWNED ON THE MONTHLY RECORD DATE IN 1997
                 ----------------------------------------------------------------------------------------------------
                 JANUARY FEBRUARY  MARCH   APRIL    MAY    JUNE    JULY   AUGUST  SEPTEMBER OCTOBER NOVEMBER DECEMBER
                 ------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- --------
<S>              <C>     <C>      <C>     <C>     <C>     <C>     <C>     <C>     <C>       <C>     <C>      <C>
FEDERAL
 DEPLETION
 FACTOR......... .011220 .026520  .037197 .045607 .059185 .069720 .083627 .097775  .109392  .119484 .130147  .139142
                 ======= =======  ======= ======= ======= ======= ======= =======  =======  ======= =======  =======
STATE DEPLETION
 FACTORS

Florida......... .000006 .000014  .000022 .000022 .000034 .000055 .000067 .000071  .000081  .000089 .000095  .000098
Louisiana....... .000255 .001046  .001329 .001737 .002011 .002367 .002624 .002998  .003420  .003704 .003952  .004229
Mississippi..... .000319 .001093  .001385 .001754 .002059 .002665 .003007 .003361  .004056  .004355 .004744  .004928
New Mexico...... .000186 .000430  .000555 .000690 .000899 .001057 .001079 .001399  .001633  .001829 .002045  .002199
Oklahoma........ .000888 .001848  .002600 .003544 .004443 .006105 .007009 .008130  .009128  .010027 .010919  .011514
Texas........... .009566 .022089  .031306 .037860 .049739 .057471 .069841 .081816  .091074  .099480 .108392  .116174
</TABLE>
 
                             DEPLETION SCHEDULE VI
 
  The cumulative depletion factors reflected in Depletion Schedule VI should
be used to compute 1997 federal and state depletion amounts attributable to
Units purchased for which the Unit holder initially became entitled to
distributions after the March 17, 1986 Monthly Record Date and before the
January 15, 1987 Monthly Record Date. This schedule should not be used to
compute depletion amounts for any other units owned. (See the accompanying
information for computation instructions.)
 
<TABLE>
<CAPTION>
                               LAST MONTH IN WHICH UNITS WERE OWNED ON THE MONTHLY RECORD DATE IN 1997
                 ----------------------------------------------------------------------------------------------------
                 JANUARY FEBRUARY  MARCH   APRIL    MAY    JUNE    JULY   AUGUST  SEPTEMBER OCTOBER NOVEMBER DECEMBER
                 ------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- --------
<S>              <C>     <C>      <C>     <C>     <C>     <C>     <C>     <C>     <C>       <C>     <C>      <C>
FEDERAL
 DEPLETION
 FACTOR......... .010663 .025309  .035453 .043494 .056381 .066427 .079591 .093059  .104158  .113765 .123910  .132468
                 ======= =======  ======= ======= ======= ======= ======= =======  =======  ======= =======  =======
STATE DEPLETION
 FACTORS

Florida......... .000005 .000012  .000019 .000019 .000029 .000047 .000057 .000061  .000070  .000076 .000081  .000083
Louisiana....... .000291 .001192  .001514 .001978 .002290 .002695 .002988 .003414  .003894  .004218 .004500  .004815
Mississippi..... .000319 .001094  .001386 .001756 .002061 .002668 .003011 .003365  .004060  .004360 .004749  .004933
New Mexico...... .000209 .000482  .000623 .000775 .001009 .001187 .001211 .001570  .001833  .002053 .002295  .002468
Oklahoma........ .000833 .001733  .002438 .003323 .004166 .005725 .006573 .007624  .008560  .009403 .010239  .010797
Texas........... .009006 .020796  .029473 .035643 .046826 .054105 .065751 .077025  .085741  .093655 .102046  .109372
</TABLE>
 
(SRT 1997 TAX)
 
                                      21
<PAGE>
 
                             SABINE ROYALTY TRUST
 
                            DEPLETION SCHEDULE VII
 
  The cumulative depletion factors reflected in Depletion Schedule VII should
be used to compute 1997 federal and state depletion amounts attributable to
Units purchased for which the Unit holder initially became entitled to
distributions in 1987. This schedule should not be used to compute depletion
for any other Units owned. (See the accompanying information for computation
instructions.)
 
<TABLE>
<CAPTION>
                               LAST MONTH IN WHICH UNITS WERE OWNED ON THE MONTHLY RECORD DATE IN 1997
                 ----------------------------------------------------------------------------------------------------
                 JANUARY FEBRUARY  MARCH   APRIL    MAY    JUNE    JULY   AUGUST  SEPTEMBER OCTOBER NOVEMBER DECEMBER
                 ------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- --------
<S>              <C>     <C>      <C>     <C>     <C>     <C>     <C>     <C>     <C>       <C>     <C>      <C>      <C>
FEDERAL
 DEPLETION
 FACTOR......... .011334 .026778  .037565 .046063 .059786 .070462 .084497 .098799  .110527  .120734 .131505  .140595
                 ======= =======  ======= ======= ======= ======= ======= =======  =======  ======= =======  =======  ===
STATE DEPLETION
 FACTORS
Florida......... .000016 .000038  .000061 .000062 .000095 .000153 .000187 .000199  .000227  .000248 .000264  .000272
Louisiana....... .000270 .001106  .001405 .001835 .002125 .002501 .002772 .003167  .003612  .003912 .004174  .004467
Mississippi..... .000296 .001015  .001286 .001629 .001912 .002476 .002794 .003123  .003769  .004047 .004409  .004580
New Mexico...... .000204 .000471  .000609 .000758 .000987 .001161 .001185 .001536  .001793  .002008 .002245  .002414
Oklahoma........ .000920 .001915  .002694 .003672 .004604 .006326 .007263 .008425  .009459  .010391 .011315  .011931
Texas........... .009628 .022233  .031510 .038107 .050063 .057845 .070296 .082349  .091667  .100128 .109098  .116931
</TABLE>
 
                            DEPLETION SCHEDULE VIII
 
  The cumulative depletion factors reflected in Depletion Schedule VIII should
be used to compute 1997 federal and state depletion amounts attributable to
Units purchased for which the Unit holder initially became entitled to
distributions in 1988. This schedule should not be used to compute depletion
for any other Units owned. (See the accompanying information for computation
instructions.)
 
<TABLE>
<CAPTION>
                               LAST MONTH IN WHICH UNITS WERE OWNED ON THE MONTHLY RECORD DATE IN 1997
                 ----------------------------------------------------------------------------------------------------
                 JANUARY FEBRUARY  MARCH   APRIL    MAY    JUNE    JULY   AUGUST  SEPTEMBER OCTOBER NOVEMBER DECEMBER
                 ------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- --------
<S>              <C>     <C>      <C>     <C>     <C>     <C>     <C>     <C>     <C>       <C>     <C>      <C>      <C>
FEDERAL
 DEPLETION
 FACTOR......... .011487 .027121  .038041 .046726 .060602 .071596 .085777 .100281  .112184  .122559 .133481  .142681
                 ======= =======  ======= ======= ======= ======= ======= =======  =======  ======= =======  =======  ===
STATE DEPLETION
 FACTORS
Florida......... .000020 .000048  .000077 .000078 .000120 .000193 .000237 .000252  .000288  .000315 .000335  .000345
Louisiana....... .000302 .001240  .001575 .002058 .002383 .002805 .003110 .003553  .004053  .004390 .004684  .005012
Mississippi..... .000272 .000932  .001181 .001496 .001756 .002273 .002565 .002867  .003460  .003715 .004047  .004204
New Mexico...... .000207 .000478  .000618 .000769 .001001 .001177 .001201 .001557  .001818  .002036 .002276  .002447
Oklahoma........ .001100 .002288  .003219 .004387 .005501 .007559 .008679 .010067  .011303  .012417 .013522  .014258
Texas........... .009586 .022135  .031371 .037938 .049841 .057589 .069985 .081985  .091262  .099686 .108617  .116415
</TABLE>
 
(SRT 1997 TAX)
 
                                      22
<PAGE>
 
                             SABINE ROYALTY TRUST
 
                             DEPLETION SCHEDULE IX
 
  The cumulative depletion factors reflected in Depletion Schedule IX should
be used to compute 1997 federal and state depletion amounts attributable to
Units purchased for which the Unit holder initially became entitled to
distributions in 1989. This schedule should not be used to compute depletion
for any other Units owned. (See the accompanying information for computation
instructions.)
 
<TABLE>
<CAPTION>
                               LAST MONTH IN WHICH UNITS WERE OWNED ON THE MONTHLY RECORD DATE IN 1997
                 ----------------------------------------------------------------------------------------------------
                 JANUARY FEBRUARY  MARCH   APRIL    MAY    JUNE    JULY   AUGUST  SEPTEMBER OCTOBER NOVEMBER DECEMBER
                 ------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- --------
<S>              <C>     <C>      <C>     <C>     <C>     <C>     <C>     <C>     <C>       <C>     <C>      <C>
FEDERAL
 DEPLETION
 FACTOR......... .011430 .027015  .037857 .046612 .060352 .071675 .085727 .100131  .112119  .122478 .133384  .142475
                 ======= =======  ======= ======= ======= ======= ======= =======  =======  ======= =======  =======
STATE DEPLETION
 FACTORS
Florida......... .000034 .000081  .000130 .000132 .000203 .000326 .000399 .000424  .000484  .000529 .000563  .000580
Louisiana....... .000290 .001189  .001510 .001973 .002284 .002688 .002980 .003405  .003884  .004207 .004488  .004803
Mississippi..... .000363 .001243  .001575 .001995 .002342 .003032 .003421 .003823  .004613  .004953 .005395  .005604
New Mexico...... .000193 .000445  .000575 .000715 .000931 .001095 .001117 .001448  .001690  .001893 .002117  .002276
Oklahoma........ .001331 .002769  .003896 .005310 .006657 .009147 .010502 .012182  .013677  .015024 .016360  .017251
Texas........... .009219 .021288  .030171 .036487 .047935 .055387 .067308 .078849  .087771  .095872 .104461  .111961
</TABLE>
 
                             DEPLETION SCHEDULE X
 
  The cumulative depletion factors reflected in Depletion Schedule X should be
used to compute 1997 federal and state depletion amounts attributable to Units
purchased for which the Unit holder initially became entitled to distributions
in 1990. This schedule should not be used to compute depletion for any other
Units owned. (See the accompanying information for computation instructions.)
 
<TABLE>
<CAPTION>
                               LAST MONTH IN WHICH UNITS WERE OWNED ON THE MONTHLY RECORD DATE IN 1997
                 ----------------------------------------------------------------------------------------------------
                 JANUARY FEBRUARY  MARCH   APRIL    MAY    JUNE    JULY   AUGUST  SEPTEMBER OCTOBER NOVEMBER DECEMBER
                 ------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- --------
<S>              <C>     <C>      <C>     <C>     <C>     <C>     <C>     <C>     <C>       <C>     <C>      <C>
FEDERAL
 DEPLETION
 FACTOR......... .011338 .026864  .037618 .046333 .059973 .071223 .085090 .099427  .111332  .121640 .132464  .141511
                 ======= =======  ======= ======= ======= ======= ======= =======  =======  ======= =======  =======
STATE DEPLETION
 FACTORS
Florida......... .000047 .000112  .000179 .000181 .000279 .000449 .000550 .000585  .000668  .000730 .000777  .000800
Louisiana....... .000356 .001461  .001856 .002425 .002808 .003305 .003664 .004186  .004775  .005172 .005518  .005905
Mississippi..... .000305 .001046  .001325 .001678 .001970 .002551 .002879 .003218  .003883  .004170 .004542  .004718
New Mexico...... .000259 .000598  .000773 .000962 .001253 .001473 .001503 .001948  .002274  .002547 .002848  .003062
Oklahoma........ .001317 .002740  .003855 .005254 .006588 .009052 .010393 .012055  .013535  .014868 .016191  .017073
Texas........... .009054 .020907  .029630 .035833 .047075 .054393 .066101 .077435  .086197  .094153 .102588  .109953
</TABLE>
 
(SRT 1997 TAX)
 
                                      23
<PAGE>
 
                             SABINE ROYALTY TRUST
 
                             DEPLETION SCHEDULE XI
 
  The cumulative depletion factors reflected in Depletion Schedule XI should
be used to compute 1997 federal and state depletion amounts attributable to
Units purchased for which the Unit holder initially became entitled to
distributions in 1991. This schedule should not be used to compute depletion
for any other Units owned. (See the accompanying information for computation
instructions.)
 
<TABLE>
<CAPTION>
                               LAST MONTH IN WHICH UNITS WERE OWNED ON THE MONTHLY RECORD DATE IN 1997
                 ----------------------------------------------------------------------------------------------------
                 JANUARY FEBRUARY  MARCH   APRIL    MAY    JUNE    JULY   AUGUST  SEPTEMBER OCTOBER NOVEMBER DECEMBER
                 ------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- --------
<S>              <C>     <C>      <C>     <C>     <C>     <C>     <C>     <C>     <C>       <C>     <C>      <C>
FEDERAL
 DEPLETION
 FACTOR......... .011271 .026946  .037569 .046414 .059899 .071309 .084695 .099108  .111136  .121485 .132317  .141342
                 ======= =======  ======= ======= ======= ======= ======= =======  =======  ======= =======  =======
STATE DEPLETION
 FACTORS
Florida......... .000057 .000136  .000217 .000220 .000338 .000542 .000663 .000705  .000805  .000880 .000936  .000964
Louisiana....... .000513 .002102  .002670 .003488 .004039 .004754 .005270 .006021  .006867  .007438 .007936  .008492
Mississippi..... .000288 .000987  .001250 .001583 .001858 .002405 .002714 .003033  .003660  .003930 .004281  .004447
New Mexico...... .000541 .001248  .001612 .002005 .002611 .003070 .003133 .004061  .004741  .005309 .005936  .006383
Oklahoma........ .001415 .002944  .004142 .005646 .007079 .009728 .011169 .012955  .014545  .015978 .017399  .018347
Texas........... .008457 .019529  .027678 .033472 .043974 .050810 .061746 .072333  .080518  .087950 .095829  .102709
</TABLE>
 
                            DEPLETION SCHEDULE XII
 
  The cumulative depletion factors reflected in Depletion Schedule XII should
be used to compute 1997 federal and state depletion amounts attributable to
Units purchased for which the Unit holder initially became entitled to
distributions in 1992. This schedule should not be used to compute depletion
for any other Units owned. (See the accompanying information for computation
instructions.)
 
<TABLE>
<CAPTION>
                               LAST MONTH IN WHICH UNITS WERE OWNED ON THE MONTHLY RECORD DATE IN 1997
                 ----------------------------------------------------------------------------------------------------
                 JANUARY FEBRUARY  MARCH   APRIL    MAY    JUNE    JULY   AUGUST  SEPTEMBER OCTOBER NOVEMBER DECEMBER
                 ------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- --------
<S>              <C>     <C>      <C>     <C>     <C>     <C>     <C>     <C>     <C>       <C>     <C>      <C>
FEDERAL
 DEPLETION
 FACTOR......... .011460 .026821  .037510 .046465 .060089 .071946 .085437 .100081  .112178  .122700 .133740  .142797
                 ======= =======  ======= ======= ======= ======= ======= =======  =======  ======= =======  =======
STATE DEPLETION
 FACTORS
Florida......... .000030 .000072  .000115 .000116 .000178 .000286 .000350 .000372  .000425  .000465 .000495  .000510
Louisiana....... .000274 .001124  .001428 .001866 .002161 .002544 .002820 .003222  .003675  .003980 .004246  .004544
Mississippi..... .000269 .000922  .001168 .001480 .001737 .002249 .002538 .002836  .003422  .003675 .004003  .004158
New Mexico...... .000588 .001357  .001753 .002181 .002840 .003339 .003408 .004418  .005158  .005776 .006458  .006944
Oklahoma........ .001909 .003972  .005588 .007616 .009549 .013122 .015066 .017475  .019620  .021553 .023470  .024748
Texas........... .008390 .019374  .027458 .033206 .043624 .050406 .061255 .071758  .079878  .087251 .095068  .101893
</TABLE>
 
 
(SRT 1997 TAX)
 
                                      24
<PAGE>
 
                             SABINE ROYALTY TRUST
 
                            DEPLETION SCHEDULE XIII
 
  The cumulative depletion factors reflected in Depletion Schedule XIII should
be used to compute 1997 federal and state depletion amounts attributable to
Units purchased for which the Unit holder initially became entitled to
distributions in 1993. This schedule should not be used to compute depletion
for any other Units owned. (See the accompanying information for computation
instructions.)
 
<TABLE>
<CAPTION>
                               LAST MONTH IN WHICH UNITS WERE OWNED ON THE MONTHLY RECORD DATE IN 1997
                 ----------------------------------------------------------------------------------------------------
                 JANUARY FEBRUARY  MARCH   APRIL    MAY    JUNE    JULY   AUGUST  SEPTEMBER OCTOBER NOVEMBER DECEMBER
                 ------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- --------
<S>              <C>     <C>      <C>     <C>     <C>     <C>     <C>     <C>     <C>       <C>     <C>      <C>
FEDERAL
 DEPLETION
 FACTOR......... .011651 .027868  .038805 .048123 .061985 .074291 .087922 .102871  .115442  .126235 .137483  .146769
                 ======= =======  ======= ======= ======= ======= ======= =======  =======  ======= =======  =======
STATE DEPLETION
 FACTORS
Florida......... .000092 .000219  .000350 .000354 .000543 .000871 .001066 .001134  .001294  .001415 .001505  .001550
Louisiana....... .000593 .002432  .003090 .004037 .004675 .005503 .006100 .006970  .007950  .008611 .009187  .009831
Mississippi..... .000282 .000966  .001224 .001550 .001819 .002355 .002657 .002969  .003582  .003846 .004190  .004352
New Mexico...... .000659 .001521  .001965 .002444 .003182 .003741 .003818 .004949  .005778  .006470 .007234  .007778
Oklahoma........ .001836 .003820  .005375 .007326 .009185 .012621 .014491 .016808  .018871  .020730 .022574  .023803
Texas........... .008189 .018910  .026801 .032412 .042581 .049200 .059790 .070041  .077967  .085163 .092793  .099455
</TABLE>
 
                            DEPLETION SCHEDULE XIV
 
  The depletion factors reflected in Depletion Schedule XIV should be used to
compute 1997 federal and state depletion amounts attributable to Units
purchased for which the Unit holder initially became entitled to distributions
in 1994. This schedule should not be used to compute depletion for any other
Units owned. (See the accompanying information for computation instructions.)
 
<TABLE>
<CAPTION>
                               LAST MONTH IN WHICH UNITS WERE OWNED ON THE MONTHLY RECORD DATE IN 1997
                 ----------------------------------------------------------------------------------------------------
                 JANUARY FEBRUARY  MARCH   APRIL    MAY    JUNE    JULY   AUGUST  SEPTEMBER OCTOBER NOVEMBER DECEMBER
                 ------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- --------
<S>              <C>     <C>      <C>     <C>     <C>     <C>     <C>     <C>     <C>       <C>     <C>      <C>      <C>
FEDERAL
 DEPLETION
 FACTOR......... .011559 .028216  .039171 .048685 .062434 .075095 .088733 .103524  .116258  .127050 .138204  .147461
                 ======= =======  ======= ======= ======= ======= ======= =======  =======  ======= =======  =======  ===
STATE DEPLETION
 FACTOR
Florida......... .000154 .000367  .000586 .000593 .000911 .001462 .001789 .001903  .002172  .002374 .002526  .002601
Louisiana....... .000892 .003657  .004646 .006070 .007029 .008274 .009172 .010480  .011953  .012947 .013813  .014781
Mississippi..... .000312 .001068  .001353 .001714 .002012 .002604 .002938 .003283  .003961  .004253 .004633  .004813
New Mexico...... .000505 .001166  .001506 .001873 .002439 .002868 .002927 .003794  .004429  .004960 .005546  .005963
Oklahoma........ .001887 .003926  .005524 .007529 .009440 .012972 .014894 .017276  .019397  .021308 .023203  .024467
Texas........... .007809 .018032  .025556 .030906 .040603 .046915 .057013 .066788  .074346  .081208 .088483  .094836
</TABLE>
 
(SRT 1997 TAX)
 
                                      25
<PAGE>
 
                             SABINE ROYALTY TRUST
 
                             DEPLETION SCHEDULE XV
 
  The depletion factors reflected in Depletion Schedule XV should be used to
compute 1997 federal and state depletion amounts attributable to Units
purchased for which the Unit holder initially became entitled to distributions
in 1995. This schedule should not be used to compute depletion for any other
Units owned. (See the accompanying information for computation instructions.)
 
<TABLE>
<CAPTION>
                               LAST MONTH IN WHICH UNITS WERE OWNED ON THE MONTHLY RECORD DATE IN 1997
                 ----------------------------------------------------------------------------------------------------
                 JANUARY FEBRUARY  MARCH   APRIL    MAY    JUNE    JULY   AUGUST  SEPTEMBER OCTOBER NOVEMBER DECEMBER
                 ------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- --------
<S>              <C>     <C>      <C>     <C>     <C>     <C>     <C>     <C>     <C>       <C>     <C>      <C>
FEDERAL
 DEPLETION
 FACTOR......... .011611 .027926  .038923 .048241 .062137 .075300 .089120 .103839  .116685  .127539 .138781  .147914
                 ======= =======  ======= ======= ======= ======= ======= =======  =======  ======= =======  =======
STATE DEPLETION
 FACTORS
Florida......... .000281 .000669  .001068 .001081 .001660 .002664 .003261 .003469  .003960  .004329 .004606  .004742
Louisiana....... .000610 .002500  .003176 .004149 .004804 .005654 .006268 .007162  .008169  .008848 .009440  .010102
Mississippi..... .000420 .001438  .001822 .002308 .002709 .003507 .003957 .004422  .005336  .005730 .006242  .006484
New Mexico...... .000512 .001181  .001526 .001898 .002471 .002905 .002965 .003843  .004486  .005024 .005617  .006039
Oklahoma........ .002036 .004237  .005961 .008124 .010186 .013997 .016071 .018641  .020929  .022991 .025036  .026400
Texas........... .007752 .017901  .025370 .030681 .040307 .046573 .056598 .066302  .073805  .080617 .087840  .094147
</TABLE>
 
                            DEPLETION SCHEDULE XVI
 
  The depletion factors reflected in Depletion Schedule XV should be used to
compute 1997 federal and state depletion amounts attributable to Units
purchased for which the Unit holder initially became entitled to distributions
in 1996. This schedule should not be used to compute depletion for any other
Units owned. (See the accompanying information for computation instructions.)
 
<TABLE>
<CAPTION>
                               LAST MONTH IN WHICH UNITS WERE OWNED ON THE MONTHLY RECORD DATE IN 1997
                 ----------------------------------------------------------------------------------------------------
                 JANUARY FEBRUARY  MARCH   APRIL    MAY    JUNE    JULY   AUGUST  SEPTEMBER OCTOBER NOVEMBER DECEMBER
                 ------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- --------
<S>              <C>     <C>      <C>     <C>     <C>     <C>     <C>     <C>     <C>       <C>     <C>      <C>
FEDERAL
 DEPLETION
 FACTOR......... .011526 .027618  .038464 .047949 .061614 .075092 .088595 .103277  .116027  .126877 .138056  .147101
                 ======= =======  ======= ======= ======= ======= ======= =======  =======  ======= =======  =======
STATE DEPLETION
 FACTORS
Florida......... .000251 .000597  .000953 .000964 .001481 .002377 .002910 .003095  .003533  .003862 .004109  .004231
Louisiana....... .000678 .002780  .003532 .004614 .005343 .006289 .006972 .007966  .009086  .009841 .010499  .011235
Mississippi..... .000315 .001080  .001368 .001733 .002034 .002633 .002971 .003320  .004006  .004302 .004686  .004868
New Mexico...... .000551 .001272  .001643 .002044 .002661 .003129 .003193 .004139  .004832  .005411 .006050  .006505
Oklahoma........ .002542 .005289  .007441 .010142 .012716 .017474 .020063 .023272  .026128  .028702 .031255  .032957
Texas........... .007189 .016600  .023527 .028452 .037379 .043190 .052486 .061485  .068442  .074759 .081457  .087305
</TABLE>
 
(SRT 1997 TAX)
 
                                      26
<PAGE>
 
                              SABINE ROYALTY TRUST
 
                             DEPLETION SCHEDULE XVI
 
  The cumulative depletion factors reflected in Depletion Schedule XVII should
be used to compute 1997 federal and state depletion amounts attributable to
Units purchased for which the Unit holder initially became entitled to
distributions in 1997. This schedule should not be used to compute depletion
for any other Units owned. (See the accompanying information for computation
instructions.)
 
<TABLE>
<CAPTION>
  FIRST MONTH IN
 WHICH UNITS WERE
   OWNED ON THE                  LAST MONTH IN WHICH UNITS WERE OWNED ON THE MONTHLY RECORD DATE IN 1997
  MONTHLY RECORD   ----------------------------------------------------------------------------------------------------
   DATE IN 1997    JANUARY FEBRUARY  MARCH   APRIL    MAY    JUNE    JULY   AUGUST  SEPTEMBER OCTOBER NOVEMBER DECEMBER
-----------------  ------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- --------
<S>                <C>     <C>      <C>     <C>     <C>     <C>     <C>     <C>     <C>       <C>     <C>      <C>
January..........  .012232 .029948  .041573 .051721 .066285 .080284 .094736 .110335  .124007  .135515 .147352  .157083
February.........      --  .017716  .029341 .039489 .054053 .068052 .082504 .098103  .111775  .123283 .135120  .144851
March............      --      --   .011625 .021773 .036337 .050336 .064788 .080387  .094059  .105567 .117404  .127135
April............      --      --       --  .010148 .024712 .038711 .053163 .068762  .082434  .093942 .105779  .115510
May..............      --      --       --      --  .014564 .028563 .043015 .058614  .072286  .083794 .095631  .105362
June.............      --      --       --      --      --  .013999 .028451 .044050  .057722  .069230 .081067  .090798
July.............      --      --       --      --      --      --  .014452 .030051  .043723  .055231 .067068  .076799
August...........      --      --       --      --      --      --      --  .015599  .029271  .040779 .052616  .062347
September........      --      --       --      --      --      --      --      --   .013672  .025180 .037017  .046748
October..........      --      --       --      --      --      --      --      --       --   .011508 .023345  .033076
November.........      --      --       --      --      --      --      --      --       --       --  .011837  .021568
December.........      --      --       --      --      --      --      --      --       --       --      --   .009731
<CAPTION>
 STATE DEPLETION
     FACTORS       JANUARY FEBRUARY  MARCH   APRIL    MAY    JUNE    JULY   AUGUST  SEPTEMBER OCTOBER NOVEMBER DECEMBER
-----------------  ------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- --------
<S>                <C>     <C>      <C>     <C>     <C>     <C>     <C>     <C>     <C>       <C>     <C>      <C>
Florida..........  .000268 .000370  .000381 .000012 .000552 .000958 .000569 .000198  .000468  .000352 .000264  .000130
Louisiana........  .000993 .003077  .001101 .001585 .001067 .001385 .001000 .001455  .001639  .001106 .000964  .001077
Mississippi......  .000371 .000901  .000340 .000430 .000355 .000706 .000399 .000412  .000809  .000349 .000453  .000214
New Mexico.......  .000521 .000681  .000351 .000378 .000583 .000442 .000061 .000894  .000655  .000547 .000604  .000430
Oklahoma.........  .002220 .002399  .001880 .002359 .002249 .004156 .002261 .002803  .002495  .002248 .002230  .001487
Texas............  .007859 .010288  .007572 .005384 .009758 .006352 .010162 .009837  .007606  .006906 .007322  .006393
                   ------- -------  ------- ------- ------- ------- ------- -------  -------  ------- -------  -------
 TOTAL...........  .012232 .017716  .011625 .010148 .014564 .013999 .014452 .015599  .013672  .011508 .011837  .009731
                   ======= =======  ======= ======= ======= ======= ======= =======  =======  ======= =======  =======
</TABLE>
 
 
 
 
 
 
 
(SRT 1997 TAX)
 
                                       27
<PAGE>
 
                        [SAMPLE TAX FORM APPEARS HERE]

                                      28

<PAGE>
 
                        [SAMPLE TAX FORM APPEARS HERE]

                                      29
<PAGE>
 
                            COMPREHENSIVE EXAMPLE 1
 
  The following example illustrates the computations necessary for an
individual to determine income and expense attributable to Units acquired in
March of 1984 and held throughout 1997.
 
 
 COMPUTATION OF INCOME AND EXPENSE FOR UNITS OWNED ON ALL MONTHLY RECORD DATES
                                    IN 1997
 
                              SABINE ROYALTY TRUST
                           TAX COMPUTATION WORKSHEET
 
                                      1997
 
         (RETAIN THIS WORKPAPER AS PART OF YOUR PERMANENT TAX RECORDS)
 
                                     PART I
 
                               INCOME AND EXPENSE
 
<TABLE>
<CAPTION>
                               A                 B                  C
 
                                          AMOUNTS PER UNIT
                           NUMBER OF      FROM APPROPRIATE
                          UNITS OWNED       SCHEDULE(S)                         WHERE TO REFLECT ON
          ITEM             (NOTE 1)           (NOTE 2)           TOTALS       1997 FORM 1040 (NOTE 3)
          ----            -----------     ----------------     ----------  -----------------------------
<S>                       <C>         <C> <C>              <C> <C>         <C>
Gross Royalty Income....      100       X    $1.955335       =   $195.53   Line  4, Part I,   Schedule E
                          ----------      --------------       ----------
Severance Tax...........      100       X    $ .144324       =   $ 14.43   Line 16, Part I,   Schedule E
                          ----------      --------------       ----------
Interest Income.........      100       X    $ .010812       =   $  1.08   Line  1, Part I,   Schedule B
                          ----------      --------------       ----------
Administrative Expense..      100       X    $ .177263       =   $ 17.73   Line 18, Part I,   Schedule E
                          ----------      --------------       ----------
</TABLE>
 
                                    PART II
 
                            COST DEPLETION (NOTE 4)
 
<TABLE>
<CAPTION>
                       COST DEPLETION
                     ALLOWABLE IN PRIOR     ADJUSTED BASIS FOR
                       CALENDAR YEARS         COST DEPLETION         APPROPRIATE 1997
OIGINAL BASISR            (NOTE 5)               PURPOSES          COST DEPLETION FACTOR     1997 COST DEPLETION*
 --------------      ------------------     ------------------     ---------------------     --------------------
 <S>             <C> <C>                <C> <C>                <C> <C>                   <C> <C>
 $2,100.00       -       $1,806.99      =        $293.01       X          .140507        =          $41.17
 ----------            -------------          --------------         ----------------         ----------------
</TABLE>
 
*Reflect cost depletion on 1997 Form 1040, line 20, Part 1, Schedule E (Note
 3).
 
                                    PART III
 
                  COMPUTATION OF GAIN OR (LOSS) FOR UNITS SOLD
 
<TABLE>
<CAPTION>
                                                    WHERE TO REFLECT ON
      NET SALES       ADJUSTED BASIS      GAIN        1997 FORM 1040
        PRICE            (NOTE 6)        (LOSS)          (NOTE 3)
      ----------      --------------     ------     -------------------
      <S>         <C> <C>            <C> <C>              
      Not Appli-
       cable       -        --        =    --            Form 4797
      ----------       -----------         --      
</TABLE>
 
                        See Page 4 for Applicable Notes.
(SRT 1997 TAX)
 
                                       30
<PAGE>
 
                            COMPREHENSIVE EXAMPLE 2
 
  The following example illustrates the computations necessary for an
individual to determine income and expenses and gain or loss on units disposed
of during 1997.
 
<TABLE>
<CAPTION>
ACQUISITION       UNITS           ORIGINAL           SALES          UNITS           SALES
   DATE          ACQUIRED           BASIS            DATE           SOLD            PRICE
-----------      --------         --------           -----          -----           -----
<S>              <C>              <C>               <C>             <C>           <C>
03-21-84           100            $2,100.00         04-3-97          100          $1,275.00
</TABLE>
 
            COMPUTATION OF INCOME AND EXPENSE FOR UNITS SOLD IN 1997
 
                              SABINE ROYALTY TRUST
                           TAX COMPUTATION WORKSHEET
 
                                      1997
 
         (RETAIN THIS WORKPAPER AS PART OF YOUR PERMANENT TAX RECORDS)
 
                                     PART I
 
                               INCOME AND EXPENSE
 
<TABLE>
<CAPTION>
                               A                 B                  C
                                          AMOUNTS PER UNIT
                           NUMBER OF      FROM APPROPRIATE
                          UNITS OWNED       SCHEDULE(S)                         WHERE TO REFLECT ON
          ITEM             (NOTE 1)           (NOTE 2)           TOTALS       1997 FORM 1040 (NOTE 3)
          ----            -----------     ----------------     ----------  -----------------------------
<S>                       <C>         <C> <C>              <C> <C>         <C>
Gross Royalty Income....      100       X     $.536885       =   $53.69    Line  4, Part I,   Schedule E
                          ----------      --------------       ----------
Severance Tax...........      100       X     $.033363       =   $ 3.34    Line 16, Part I,   Schedule E
                          ----------      --------------       ----------
Interest Income.........      100       X     $.002868       =   $  .29    Line  1, Part I,   Schedule B
                          ----------      --------------       ----------
Administrative Expense..      100       X     $.032110       =   $ 3.21    Line 18, Part I,   Schedule E
                          ----------      --------------       ----------
</TABLE>
 
                                    PART II
 
                            COST DEPLETION (NOTE 4)
 
<TABLE>
<CAPTION>
                       COST DEPLETION
                     ALLOWABLE IN PRIOR     ADJUSTED BASIS FOR
                       CALENDAR YEARS         COST DEPLETION         APPROPRIATE 1997
OIGINAL BASISR            (NOTE 5)               PURPOSES          COST DEPLETION FACTOR     1997 COST DEPLETION*
 --------------      ------------------     ------------------     ---------------------     --------------------
 <S>             <C> <C>                <C> <C>                <C> <C>                   <C> <C>
 $2,100.00       -       $1,806.99      =        $293.01       X          .037754        =          $11.06
  ----------           -------------          --------------         ----------------         ----------------
</TABLE>
 
*Reflect cost depletion on 1997 Form 1040, line 20, Part 1, Schedule E (Note
 3).
 
                                    PART III
 
                  COMPUTATION OF GAIN OR (LOSS) FOR UNITS SOLD
 
<TABLE>
<CAPTION>
                                                        WHERE TO REFLECT ON
      NET SALES         ADJUSTED BASIS      GAIN          1997 FORM 1040
        PRICE              (NOTE 6)        (LOSS)            (NOTE 3)
      ---------         --------------     -------      -------------------
       <S>          <C> <C>            <C> <C>          <C>
      $1,275.00     -      $281.95     =   $993.05           Form 4797
       ---------         ------------      -------
</TABLE>
 
                        See Page 4 for Applicable Notes.
(SRT 1997 TAX)
 
                                       31
<PAGE>
 
                            COMPREHENSIVE EXAMPLE 2
                                  (CONTINUED)
 
                             SABINE ROYALTY TRUST
 
                    SUPPLEMENT TO TAX COMPUTATION WORKSHEET
 
                                     1997
 
                   FOR UNITS HELD FOR ONLY PART OF THE YEAR
 
  This worksheet should be used by Unit holders who became holders of record
of Units or ceased to be holders of record of Units during the period from
January 15, 1997 through December 15, 1997. This worksheet is designed to
assist Unit holders in determining the proper income and expense factors to be
used on the Tax Computation Worksheet-- Part I, under the heading entitled
"Amounts Per Unit from Appropriate Schedule(s)". In order to complete this
schedule, Unit holders should insert only the individual income and expense
factors from the monthly schedules (pages 7-18) for each month during which
the Units were owned on a Monthly Record Date. (See page 3 for a list of
Monthly Record Dates.)
 
<TABLE>
<CAPTION>
                                 MONTH(S) DURING WHICH UNITS WERE OWNED ON A MONTHLY RECORD DATE                 CALCULATED
                 -----------------------------------------------------------------------------------------------   FACTOR
                 JANUARY FEBRUARY  MARCH  APRIL   MAY    JUNE   JULY  AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER PER UNIT*
                 ------- -------- ------- ------ ------ ------ ------ ------ --------- ------- -------- -------- ----------
<S>              <C>     <C>      <C>     <C>    <C>    <C>    <C>    <C>    <C>       <C>     <C>      <C>      <C>
Gross Royalty
 Income......... .151263 .206287  .179335   --     --     --     --     --      --       --       --       --     .536885
                 ------- -------  ------- ------ ------ ------ ------ ------  ------   ------   ------   ------   -------
Severance Tax... .009627 .012682  .011054   --     --     --     --     --      --       --       --       --     .023363
                 ------- -------  ------- ------ ------ ------ ------ ------  ------   ------   ------   ------   -------
Interest
 Income......... .000848 .001125  .000895   --     --     --     --     --      --       --       --       --     .002868
                 ------- -------  ------- ------ ------ ------ ------ ------  ------   ------   ------   ------   -------
Administrative
 Expense........ .016234 .009210  .006666   --     --     --     --     --      --       --       --       --     .032110
                 ------- -------  ------- ------ ------ ------ ------ ------  ------   ------   ------   ------   -------
</TABLE>
-------
* This column of calculated factors per Unit should be inserted in column B of
  the Income and Expense section (Part I) of the Tax Computation Worksheet on
  page 4.
(SRT 1997 TAX)
 
                                      32
<PAGE>
 
                             SABINE ROYALTY TRUST
 
              DISCUSSION OF TAX CONSIDERATIONS PERTAINING TO THE
                  OWNERSHIP OF UNITS IN SABINE ROYALTY TRUST
 
 
  The tax law requires individuals, estates, trusts, closely held C
corporations and personal service corporations to categorize income and
expense into one of three classes, "active," "portfolio" or "passive", based
upon the nature of the activity and the involvement of the taxpayer in such
activity. Since the Trust is a grantor trust, the Unit holders are deemed to
hold the investment in the royalty interests directly and the proper
classification of the Trust income and expense will be dependent upon the
relevant facts and circumstances of each Unit holder. Generally, income or
loss resulting from an interest in the Trust is properly classified as
portfolio and as such can be reported as directed on the tax computation
worksheet (page 4). However, under certain limited circumstances a different
classification may be appropriate, accordingly Unit holders should consult
their tax advisor concerning this matter.
 
TAXATION OF THE ORIGINAL DISTRIBUTION OF UNITS
 
  A detailed discussion of the Federal income tax consequences arising from
the original distribution of Units was included in the 1983 tax information
booklet of the Trust. The majority of that discussion was applicable only to
Unit holders who received Units in the distribution from Sabine Corporation
("Sabine"). Unit holders who desire a copy of this material may obtain copies
of the information by writing the Trustee of the Trust at:
 
      Sabine Royalty Trust
      1983 Tax Booklet
      NationsBank of Texas N.A., Trustee
      P.O. Box 830650
      Dallas, Texas 75283-0650
 
TAX BACKGROUND INFORMATION
 
  Sabine received a private letter ruling from the Internal Revenue Service,
dated May 2, 1983 (the "Ruling"), concerning certain tax considerations
relevant to the creation and continued existence of the Trust. Pursuant to the
Ruling, the Trust is classified for Federal income tax purposes as a "grantor
trust" and not as an association taxable as a corporation. A grantor trust is
not subject to Federal income tax. Instead, its beneficiaries (the Unit
holders in the case of the Trust) are generally considered to own the trust's
income and principal as though no trust were in existence. A grantor trust
simply files an information return reflecting all items of income and/or
deductions that will be included in the returns of the beneficiaries.
Accordingly, each Unit holder of the Trust is taxable on his pro rata share of
the Trust income and/or deductions.
 
  The income received or accrued and deductions paid or incurred by the Trust
are deemed to be received or accrued and paid or incurred, respectively, by
each Unit holder at the same time as the Trust. Thus, the taxable year for
reporting a Unit holder's share of the Trust's income and deductions is
controlled by the Unit holder's taxable year and method of accounting rather
than the taxable year and method of accounting of the Trust. For example, a
cash basis Unit holder should recognize income attributable to his Units as
such income is received by the Trust; and deductions attributable to his Units
should be claimed when such deductions are paid by the Trust.
 
(SRT 1997 TAX)
 
                                      A-1
<PAGE>
 
 
 Effect of Escrow Arrangement
 
  The assets of the Trust include royalty and mineral interests in certain
producing and proved undeveloped oil and gas properties (the "Properties"),
which constitute economic interests in gross production of oil, gas and other
minerals free of the costs of production. The Properties are located in six
states and were not carved out of any of Sabine's working interests in
effecting the distribution. In order to facilitate creation of the Trust and
avoid the administrative expense and inconvenience of daily reporting to Unit
holders, the conveyances by Sabine of the Properties located in five of the
six states provided for the execution of an escrow agreement by Sabine, the
Trustee and InterFirst Bank Dallas, N.A., in its capacity as escrow agent. The
conveyances by Sabine of the Properties located in Louisiana provided for the
execution of a substantially identical escrow agreement by Sabine and a
Louisiana bank, in the capacities of escrow agent and of trustee under Sabine
Louisiana Royalty Trust. Sabine Louisiana Royalty Trust, the sole beneficiary
of which is the Trust, was established in order to avoid uncertainty under
Louisiana law as to the legality of the Trustee's holding record title to the
Properties located in Louisiana.
 
  Pursuant to the terms of the escrow agreement and the conveyances of the
Properties by Sabine, the proceeds of production from the Properties for each
calendar month, and interest thereon, are collected by the escrow agents and
are paid to and received by the Trust only on the next Monthly Record Date.
The escrow agents have agreed to endeavor to assure that they incur and pay
expenses for each calendar month only on the Monthly Record Date. The Trust
Agreement also provides that the Trustee is to endeavor to assure that income
of the Trust will be accrued and received and expenses of the Trust will be
incurred and paid only on each Monthly Record Date. Assuming the escrow
arrangement is recognized for Federal income tax purposes and the Trustee and
the escrow agents are able to control the timing of income and expenses, as
stated above, both cash and accrual basis Unit holders will be treated as
realizing income only on each Monthly Record Date. The Trustee is treating the
escrow arrangement as effective for tax purposes and the accompanying tax
information has been presented accordingly.
 
  If the escrow arrangement is not recognized for Federal income tax purposes,
a mismatching of income and deductions could occur between a transferor and a
transferee upon the sale or exchange of Units. In addition, the Trustee would
be required to report the proceeds from production, interest income thereon
and any deductions to the Unit holders on a daily basis, resulting in a
substantial increase in the administrative expenses of the Trust.
 
DEPLETION
 
 Cost Depletion
 
  Pursuant to the previously mentioned Ruling, each Unit holder is entitled to
deduct cost depletion with respect to his pro rata interest in the Properties.
This cost depletion deduction is computed by reference to the Unit holder's
basis in each of his Units.
 
  The deduction for cost depletion must be computed by a Unit holder with
respect to each separate property in the Trust. A Unit holder's tax basis in
each separate property generally must be determined at the time each Unit is
acquired by allocating such Unit holder's cost in each Unit among all
properties in the Trust based on their relative fair market values. However, a
corporate Unit holder that acquired Units in the distribution from Sabine must
determine its tax basis in each separate property in the Trust at the time of
the distribution by reference to Sabine's tax basis in each separate property
included in the distribution. The cost depletion deduction attributable to
each separate property is calculated for a taxable year by multiplying the tax
basis of the property times the decimal derived when estimated total
 
(SRT 1997 TAX)
 
                                      A-2
<PAGE>
 
equivalent units of production (barrels of oil and MCF's of gas) expected to
be recovered from the property as of the beginning of the taxable year is
divided into the number of equivalent units produced and sold from such
property during the taxable year. The resulting deduction for cost depletion
cannot exceed the adjusted tax basis in the property. The composite depletion
factors presented herein were derived in a manner that encompasses this
separate property concept.
 
 Percentage Depletion
 
  Prior to the Revenue Reconciliation Act of 1990, Unit holders were
prohibited from claiming percentage depletion on transferred proven oil and
gas properties. Since substantially all of the properties were "proven
properties" on the date of the original distribution, the percentage depletion
deduction has limited applicability to Unit holders which became Unit holders
prior to October 12, 1990.
 
  For Unit holders which become Unit owners from transfers of Units occurring
after October 11, 1990, the Revenue Reconciliation Act of 1990 repeals the
prohibition on claiming percentage depletion. A computation of percentage
depletion has been made with respect to the post October 11, 1990 transfers.
However, since cost depletion exceeds any otherwise allocable percentage
depletion, percentage depletion factors have not been presented by reference
to the number of units a Unit holder owns. Percentage depletion will continue
to be computed and compared to cost depletion on an annual basis for
applicable transfers occurring after October 11, 1990.
 
NONRESIDENT FOREIGN UNIT HOLDERS
 
  Nonresident alien individual and foreign corporation Unit holders ("Foreign
Taxpayer(s)"), in general, are subject to tax on the gross income attributable
to the Trust at a rate equal to 30 percent (or the lower rate under any
applicable treaty) without any deductions. This tax is withheld by the Trust
and remitted directly to the United States Treasury. Foreign Taxpayers who
have had tax withheld in 1997 should have received a Form 1042S from the
Trust. The Form 1042S will reflect the total Federal income tax withheld from
distributions. The amount reported on the Form 1042S should not be included as
additional income in computing taxable income, as such amount is already
included in the per Unit income items on the income and expense schedules. The
Federal income tax withheld, as reported on the Form 1042S, should be
considered as a credit by the Unit holder in computing any Federal income tax
liability.
 
  A Foreign Taxpayer holding income producing real property may elect to treat
the income from such real property as effectively connected with the conduct
of a United States trade or business. The income attributable to the
Properties is considered as income produced from real property. Therefore,
this election should be available to Foreign Taxpayers with respect to the
taxable income resulting from the ownership of Units. A Unit holder so
electing is entitled to claim all deductions with respect to such income, but
must file a United States income tax return to claim such deductions. This
election once made is generally irrevocable unless an applicable treaty allows
the election to be made periodically.
 
  The Foreign Investment in Real Property Tax Act of 1980, as amended
("FIRPTA"), generally treats interests in trusts owning United States real
property as United States real property interests. However, pursuant to
applicable Treasury regulations, Units in Trust, for purposes of FIRPTA only,
are not considered United States real property interests unless they are owned
by a Unit holder having greater than a 5% interest in the Trust. Additionally,
certain reporting provisions are applicable with respect to Foreign Taxpayers
owning a greater than 5% interest in the Trust.
 
  Generally, income tax is required to be withheld from any proceeds
distributed to Foreign Taxpayers at the rate of 10% of the amount realized by
Foreign Taxpayers upon the sale, exchange
 
(SRT 1997 TAX)
 
                                      A-3
<PAGE>
 
or other disposition of a Unit. This withholding is required only when the
FIRPTA provisions apply, as described in the preceding paragraph. In addition,
distributions, if any, that represent the Foreign Taxpayer's allocable share
of gain realized upon the sale, exchange or other disposition of a United
States real property interest by the Trust, will generally be subject to
withholding tax at a 34% rate.
 
  In order to avoid such withholding when the FIRPTA provisions apply, Foreign
Taxpayers will be required to furnish the applicable withholding agent with an
exemption statement certifying why such withholding is not required. Foreign
Taxpayers are encouraged to consult their own tax advisors concerning the tax
consequences of their investment in the Trust.
 
SALE OR EXCHANGE OF UNITS
 
  Generally, a Unit Holder realizes gain or loss upon the sale or exchange of
any Unit measured by the difference between the amount realized from the sale
or exchange and the adjusted tax basis of such Unit. The adjusted tax basis of
a Unit is the original basis of such Unit reduced by depletion deductions
allowable (whether deducted or not) with respect to such Unit. Trust income
allocable to such Unit to the date of sale is taxable to the selling Unit
holder. The purchaser of a Unit is taxable on Trust income allocable to such
Unit from the date of purchase forward. For Federal income tax purposes, Trust
income should generally be allocable only to the holder of record of a Unit on
each Monthly Record Date. Gain or loss on the sale of a Unit by a Unit holder
who acquired the Unit(s) prior to January 1, 1987 who is not a "dealer" with
respect to such Unit, who holds it as a capital asset and who has held it for
the required amount of time will, in general, be treated as a long-term
capital gain or loss.
 
  A Unit holder who is not a dealer who sells a Unit acquired on or after
January 1, 1987 must recapture the depletion deductions taken with respect to
such Unit by recognizing as ordinary income the lesser of (1) the depletion
deductions taken or (2) the amount realized upon the sale less the adjusted
basis of the Unit. Gain in excess of the recaptured depletion deduction will,
in general, be treated as a capital gain.
 
  Units acquired after 1987 qualifying as capital assets must be owned more
than 1 year to qualify for long-term capital gain or loss treatment.
 
BACKUP WITHHOLDING
 
  A payer is required under specified circumstances to withhold tax at the
rate of 31% on "reportable interest or dividend payments" and "other
reportable payments" (including certain oil and gas royalty payments).
Generally, this "backup withholding" is required on payments if the payee has
failed to furnish the payer a taxpayer identification number or if the payer
is notified by the Secretary of the Treasury to withhold taxes on such
payments with respect to the payee.
 
  Amounts withheld by payers pursuant to the backup withholding provisions are
remitted to the Internal Revenue Service and are considered a credit against
the payee's Federal income tax liability. If the payee does not incur a
Federal income tax liability for the year in which the taxes are withheld, the
payee will be required to file the appropriate income tax return to claim a
refund of the taxes withheld.
 
STATE INCOME TAX
 
  Unit holders may be required to file state income tax returns and may be
liable for state income tax as a result of their ownership of Units. The
Properties are located in Florida, Louisiana, Mississippi, New Mexico,
Oklahoma and Texas. The tax information included in this booklet is being
presented in
 
(SRT 1997 TAX)
 
                                      A-4
<PAGE>
 
a manner to enable Unit holders to compute the income and deductions of the
Trust attributable to each of these states. Unit holders will need this
information to comply with the state income tax filing requirements in those
states imposing a state income tax. The laws pertaining to income tax in any
given state may vary from those of another state and from those applicable to
Federal income tax. Accordingly, Unit holders are urged to consult their own
tax advisors concerning this matter.
 
  The Trustee has been informed that certain states have contacted Unit
holders regarding underpayments of the state income tax imposed on the Unit
holders' income from the Trust. Failure by Unit holders to properly report
their state tax liability could result in the direct withholding of state
taxes from Trust distributions. Accordingly, Unit holders are urged to
carefully review the various filing requirements of the states listed below in
order to determine if a current or prior year state income tax liability
exists as a result of the ownership of Units in the Trust.
 
  The state of Texas does not impose an individual income tax; therefore, no
part of the income attributable to the Trust will be subject to state income
tax in Texas for individuals. However, corporations (and Limited Liability
Companies) doing business in Texas are subject to the Texas Franchise Tax
which now includes a calculation based on the corporation's taxable income for
Federal income tax purposes. The state of Florida imposes an income tax on
resident and nonresident corporations but not individuals. Each of the other
states in which the Properties are located imposes an income tax applicable to
both resident and nonresident individuals and corporations. Generally, the
state income tax in these states is computed as a percentage of taxable income
attributable to the particular state. Furthermore, even though there are
variances from state to state, taxable income for state purposes is often
computed in a manner similar to the computation of taxable income for Federal
income tax purposes.
 
  All states have not adopted Federal law with respect to the percentage
method of computing depletion nor are such methods consistent among the
various states. It should be noted, however, that cost depletion is allowed by
those states indicated above which impose a state income tax. Included herein
is information to assist you in determining the respective allowable cost
depletion deductions by state.
 
  The following table reflects calendar year corporate and individual income
tax return due dates for the states in which the Properties are located. The
state income tax return due dates for fiscal year taxpayers will generally
allow the same period of time following the end of their respective fiscal
years as is allowed for calendar year taxpayers. However, the Texas franchise
tax return is generally due for all corporations on May 15.
 
<TABLE>
<CAPTION>
                                   CORPORATE                                         INDIVIDUAL
      STATE                        TAXPAYER                                           TAXPAYER
      -----                        ---------                                         ----------
   <S>                             <C>                                             <C>
   Texas                           May 15                                          Not Applicable
   Florida                         April 1                                         Not Applicable
   Louisiana                       April 15                                        May 15
   Mississippi                     March 15                                        April 15
   Oklahoma                        March 15                                        April 15
   New Mexico                      March 15                                        April 15
</TABLE>
 
Unit holders should consult their own tax advisors concerning the type of
state income tax returns that may be required and their applicable due dates.
 
(SRT 1997 TAX)
 
                                      A-5
<PAGE>
 
  Following is a list of names and addresses of the various state taxing
authorities from which you may obtain additional information:
 
<TABLE>
<S>           <C>           <C>
  Florida                   Florida Department of Revenue
                            5050 W. Tennessee Street, Bldg K
                            Tallahassee, Florida 32399-0135
                            (904) 488-6800
  New Mexico  Individuals:  State of New Mexico
                            Taxation and Revenue Department
                            1200 Saint Francis Drive
                            P.O. Box 630
                            Santa Fe, New Mexico 87509-0630
                            (505) 827-0700, (505) 827-0830
              Corporations: New Mexico Taxation and Revenue Department
                            Attention: Corporate Income and Franchise Tax
                            P.O Box 25127
                            Santa Fe, New Mexico 87504-5127
                            (505) 827-0939
  Mississippi               Mississippi State Tax Commission
                            Bureau of Revenue
                            P.O. Box 23050
                            Jackson, Mississippi 39225-3050
                            (601) 359-1105, (601) 359-1141
  Louisiana   Individuals:  Department of Revenue and Taxation
                            State of Louisiana
                            P.O Box 3440
                            Baton Rouge, Louisiana 70823-3440
                            (504) 925-4611
              Corporations: Secretary of Revenue and Taxation
                            State of Louisiana
                            P.O. Box 91011
                            Baton Rouge, Louisiana 70821-9011
                            (504) 925-4611
  Oklahoma    Individuals:  Income Tax Division
                            Connors Bldg.
                            2501 N. Lincoln Blvd.
                            Oklahoma City, OK 73194
              Corporations: Oklahoma Tax Commission
                            P.O. Box 26800
                            Oklahoma City, Oklahoma 73126-0800
                            (405) 521-3125
  Texas                     Texas Comptroller of Public Accounts
                            Austin, Texas 78774-0100
                            (800) 252-5555
</TABLE>
 
(SRT 1997 TAX)
 
                                      A-6