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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 Form 10-Q x Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934  OR o Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 
 Commission File Number: 1-8424 SABINE ROYALTY TRUST  Texas
    
    75-6297143(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or
    
    Identification No.)organization
 U.S. Trust, Bank of America
Private Wealth Management
Bank of America Plaza
901 Main Street
17th Floor
Dallas, Texas 75202
(Address of principal executive offices)
(Zip Code) (214) 209-2400
(Registrants telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes x No o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes o   No o Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See definitions of
large accelerated filer, accelerated filer,
and smaller reporting company in Rule 12b-2 of the Exchange Act.
(Check one): Large accelerated filer x
Accelerated filer o
Non-accelerated filer o Smaller
reporting company o Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act). Yes o No
x Number of units of beneficial
interest outstanding at May 1, 2009:
14,579,345




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TABLE OF CONTENTS  PART I  FINANCIAL INFORMATIONItem 1. Financial Statements.Item 2. Trustees Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market Risk.Item 4. Controls and Procedures.PART II  OTHER INFORMATIONItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 6. ExhibitsSIGNATURESEX-31EX-32    Table of Contents  SABINE ROYALTY TRUST 
 PART I  FINANCIAL INFORMATION 
 Item 1. Financial Statements. The condensed financial statements included herein have been prepared
by Bank of America, N.A. (as successor to NationsBank, N.A.), as Trustee (the
Trustee) of Sabine Royalty Trust (the Trust), pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in annual financial statements have been
condensed or omitted pursuant to such rules and regulations, although the
Trustee believes that the disclosures are adequate to make the information
presented not misleading. The condensed financial statements of the Trust
presented herein are unaudited. It is suggested that these
condensed financial statements and notes thereto be read in conjunction with the financial
statements and notes thereto included in the Trusts latest annual report on
Form 10-K. The December 31, 2008 condensed balance sheet is derived from the audited
balance sheet as of that date. In the opinion of the Trustee, all adjustments
necessary to present fairly the assets, liabilities and trust corpus of the
Trust as of March 31, 2009, the distributable income and the changes in trust
corpus for the three-month periods ended March 31, 2009 and 2008, have been
included. The distributable income for such interim periods is not necessarily
indicative of the distributable income for the full year. The
condensed financial statements as of March 31, 2009 and for the
three-month  periods ended March 31, 2009 and 2008, included
herein, have been reviewed by Deloitte & Touche LLP, an independent registered
public accounting firm, as stated in their report appearing herein. 2




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


3



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SABINE ROYALTY TRUST  March 31,
    
    
    December 31,Note
    
    
    2009
    
    
    2008AssetsCash and short-term investments
    
    
    
    
    
    $
    4,639,696
    
    
    $
    6,383,892Royalty interests in oil and gas properties
(less accumulated amortization of
$21,683,213
and $21,660,941 at March 31, 2009 and
December 31, 2008)
    
    
    
    
    
    
    711,972
    
    
    
    734,244TOTAL
    
    
    
    
    
    $
    5,351,668
    
    
    $
    7,118,136Liabilities and Trust CorpusTrust expenses payable
    
    
    
    
    
    $
    211,209
    
    
    $
    143,197Other payables
    
    
    4
    
    
    
    1,009,332
    
    
    
    239,6741,220,541
    
    
    
    382,871Contingencies
    
    
    6Trust corpus  14,579,345 units of beneficial
interest authorized and outstanding
    
    
    
    
    
    
    4,131,127
    
    
    
    6,735,265TOTAL
    
    
    
    
    
    $
    5,351,668
    
    
    $
    7,118,136
 The accompanying notes are an integral part of these condensed financial
statements. 4




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SABINE ROYALITY TRUST  Three Months EndedMarch 31,Notes
    
    
    2009
    
    
    2008Royalty Income
    
    
    
    
    
    $
    10,876,919
    
    
    $
    18,856,155Interest Income
    
    
    
    
    
    
    19,155
    
    
    
    81,376Total
    
    
    
    
    
    
    10,896,074
    
    
    
    18,937,531General and administrative expenses
    
    
    
    
    
    
    (619,558
    )
    
    
    (556,031
    )Distributable Income
    
    
    
    
    
    $
    10,276,516
    
    
    $
    18,381,500Distributable Income per unit
(14,579,345 units)
    
    
    1,3,5
    
    
    $
    .70
    
    
    $
    1.26
 The accompanying notes are an integral part of these condensed financial
statements. 5




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SABINE ROYALITY TRUST  Three Months EndedMarch 31,Note
    
    
    2009
    
    
    2008Trust corpus, beginning of period
    
    
    
    
    
    $
    6,735,265
    
    
    $
    5,822,655Amortization of royalty interests
    
    
    
    
    
    
    (22,272
    )
    
    
    (25,733
    )Distributable income
    
    
    
    
    
    
    10,276,516
    
    
    
    18,381,500Distributions
    
    
    3
    
    
    
    (12,858,382
    )
    
    
    (17,306,121
    )Trust corpus, end of period
    
    
    
    
    
    $
    4,131,127
    
    
    $
    6,872,301Distributions per unit (14,579,345 units)
    
    
    3
    
    
    $
    .88
    
    
    $
    1.19
 The accompanying notes are an integral part of these condensed financial
statements. 6




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SABINE ROYALTY TRUST NOTES TO CONDENSED
FINANCIAL STATEMENTS (UNAUDITED) 1. TRUST ORGANIZATION AND
PROVISIONS Sabine Royalty Trust (the Trust) was established by the Sabine
Corporation Royalty Trust Agreement (the Trust Agreement), made and entered
into effective as of December 31, 1982, to receive a distribution from Sabine
Corporation (Sabine) of royalty and mineral interests, including landowners
royalties, overriding royalty interests, minerals (other than executive rights,
bonuses and delay rentals), production payments and any other similar,
nonparticipatory interests, in certain producing and proved undeveloped oil and
gas properties located in Florida, Louisiana, Mississippi, New Mexico, Oklahoma
and Texas (the Royalties). Certificates evidencing units of beneficial interest (the Units) in the
Trust were mailed on December 31, 1982 to Sabines shareholders of record on
December 23, 1982, on the basis of one Unit for each share of Sabines
outstanding common stock. In May 1988, Sabine was acquired by Pacific
Enterprises (Pacific), a California corporation. Through a series of mergers,
Sabine was merged into Pacific Enterprises Oil Company (USA) (Pacific (USA)),
a California corporation and a wholly owned subsidiary of Pacific, effective
January 1, 1990. This acquisition and the subsequent mergers had no effect on
the Units. Pacific (USA), as successor to Sabine, has assumed by operation of
law all of Sabines rights and obligations with respect to the Trust. The Units
are listed and traded on the New York Stock Exchange. In connection with the transfer of the Royalties to the Trust upon its
formation, Sabine had reserved to itself all executive rights, including rights
to execute leases and to receive bonuses and delay rentals. In January 1993,
Pacific (USA) completed the sale of substantially all its producing oil and gas
assets to a third party. The sale did not include executive rights relating to
the Royalties, and Pacific (USA)s ownership of such rights was not affected by
the sale. Bank of America, N.A.
(the Trustee), acts as trustee of the Trust. In 2007 the
Bank of America private wealth management group officially became
known as U.S. Trust, Bank of America Private Wealth
Management. The legal entity that serves as the Trustee of the
Trust did not change, and references in this Form 10-Q to U.S. Trust,
Bank of America Private Wealth Management shall describe the legal
entity Bank of America, N.A. The terms of the Trust Agreement provide, among other things, that:  
    
    The Trust shall not engage in any business or commercial activity of any kind
or acquire assets other than those initially transferred to the Trust.
    
    The Trustee may not sell all or any part of its assets unless approved by the
holders of a majority of the outstanding Units in which case the sale must be
for cash and the proceeds, after satisfying all existing liabilities,
promptly distributed to Unit holders.
    
    The Trustee may establish a cash reserve for the payment of any liability
that is contingent or uncertain in amount or that otherwise is not currently
due or payable.
    
    The Trustee will use reasonable efforts to cause the Trust and the Unit
holders to recognize income and expenses on monthly record dates.
    
    The Trustee is authorized to borrow funds to pay liabilities of the Trust
provided that such borrowings are repaid in full before any further
distributions are made to Unit holders.
    
    The Trustee will make monthly cash distributions to Unit holders of record on
the monthly record date (see Note 3). 7




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Because of the passive nature of the Trust and the restrictions and
limitations on the powers and activities of the Trustee contained in the Trust
Agreement, the Trustee does not consider any of the officers and employees of
the Trustee to be officers or executive officers of the Trust as such terms
are defined under applicable rules and regulations adopted under the Securities
Exchange Act of 1934. The proceeds of production from the Royalties are receivable from hundreds
of separate payors. In order to facilitate creation of the Trust and to avoid
the administrative expense and inconvenience of daily reporting to Unit holders,
the conveyances by Sabine of the Royalties located in five of the six states
provided for the execution of an escrow agreement by Sabine and the initial
trustee of the Trust, in its capacities as trustee of the Trust and as escrow
agent. The conveyances by Sabine of the Royalties 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 the name
of 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 Royalties located in Louisiana. The Trust now only has one escrow
agent, which is the Trustee, and a single escrow agreement. Pursuant to the terms of the escrow agreement and the conveyances of the
properties by Sabine, the proceeds of production from the Royalties for each
calendar month, and interest thereon, are collected by the Trustee,
as escrow agent, and are
paid to and received by the Trust only on the next monthly record
date. The Trustee, as
escrow agent, has agreed to endeavor to assure that it incurs and pays expenses
and fees for each calendar month only on the next 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 that the escrow
agreement is recognized for Federal income tax purposes and that the
Trustee is able to control the timing of income and expenses, as
stated above, cash and accrual basis Unit holders should be treated as realizing
income only on each monthly record date. The Trustee is treating the escrow
agreement as effective for tax purposes. However, for financial reporting
purposes, royalty and interest income are recorded in the calendar month in
which the amounts are received by either the escrow agent or the Trust. Distributable income as determined for financial reporting purposes for a
given quarter will not usually equal the sum of distributions made during that
quarter. Distributable income for a given quarter will approximate the sum of
the distributions made during the last two months of such quarter and the first
month of the next quarter. 8




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2. ACCOUNTING POLICIES Basis of Accounting The financial statements of the Trust are prepared on the following basis
and are not intended to present financial position and results of operations in
conformity with accounting principles generally accepted in the United States of
America (GAAP):  
    
    Royalty income, net of severance and ad valorem tax, and interest income are
recognized in the month in which amounts are received by the Trust (see Note
1).
    
    Trust expenses, consisting principally of routine general and administrative
costs, include payments made during the accounting period. Expenses are
accrued to the extent of amounts that become payable on the next monthly
record date following the end of an accounting period. Reserves for
liabilities that are contingent or uncertain in amount may also be
established if considered necessary.
    
    Royalties that are producing properties are amortized using
the unit-of-production method. This amortization is shown as a
reduction of Trust corpus.
    
    Distributions to Unit holders are recognized when declared by the Trustee
(see Note 3). The financial statements of the Trust differ from financial statements
prepared in conformity with accounting principles generally accepted in the
United States of America because of the following:  
    
    Royalty income is recognized in the month received rather than in the month
of production.
    
    Expenses other than those expected to be paid on the following monthly record
date are not accrued.
    
    Amortization of the Royalties is shown as a reduction to Trust corpus and not
as a charge to operating results.
    
    Reserves may be established for contingencies that would not be recorded
under accounting principles generally accepted in the United States of
America. This comprehensive basis of accounting other than GAAP corresponds to the
accounting permitted for royalty trusts by the U.S. Securities and Exchange
Commission, as specified by Staff Accounting Bulletin Topic 12:E, Financial
Statements of Royalty Trusts. In December 2008, the Securities and Exchange Commission (SEC) released Final Rule,
Modernization of Oil and Gas Reporting.  The new disclosure requirements include provisions
that permit the use of new technologies to determine proved reserves if those technologies have
been demonstrated empirically to lead to reliable conclusions about reserves volumes.  The new
requirements also will allow companies to disclose their probable and possible reserves to
investors.  In addition, the new disclosure requirements require companies to:  (a) report the
independence and qualifications of its reserves preparer or auditor; (b) file reports when a third
party is relied upon to prepare reserves estimates or conducts a reserves audit; and (c) report oil
and gas reserves using an average price based upon the prior 12-month period rather than year-end prices.  The new disclosure requirements are effective for financial statements for fiscal years
ending on or after December 31, 2009.  The effect of adopting the SEC rule has not been
determined, but it is not expected to have a significant effect on the Trusts reported financial position or
distributable income. Use of Estimates The preparation of financial statements in conformity with the basis of
accounting described above requires the Trustee to make estimates and assumptions
that affect reported amounts of certain assets, liabilities, revenues and
expenses as of and for the reporting periods. Actual results may differ from
such estimates. Impairment The Trustee routinely reviews the Trusts royalty interests in oil and gas
properties for impairment whenever events or circumstances indicate that the
carrying amount of an asset may not be recoverable. If an impairment event
occurs and it is determined that the carrying value of the Trusts royalty
interests may not be recoverable, an impairment will be recognized as measured
by the amount by which the carrying amount of the royalty interests exceeds the
fair value of these assets, which would likely be measured by discounting
projected cash flows. As of March 31, 2009, no impairment is
required. 9




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New
Accounting Standards In July 2006, the FASB
issued FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, which
clarifies the accounting for uncertainty in income taxes recognized in the financial statements in
accordance with SFAS No. 109, Accounting for Income Taxes. FIN 48 is effective for fiscal years
beginning after December 15, 2006. The adoption of this statement did not have an effect on the
Trusts financial statements. In September 2006, the FASB
issued SFAS No. 157, Fair Value Measurements. This statement defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles (GAAP), and expands
disclosures about fair value measurements. This statement is effective for financial statements
issued for fiscal years beginning after November 15, 2007.  The adoption of this statement did not
have an effect on the Trusts financial statements. In February 2007, the FASB
issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities-Including
an amendment of FASB Statement No. 115. This statement permits entities to choose to measure many
financial instruments and certain other items at fair value. This statement is effective as of the
beginning of an entitys first fiscal year that begins after November 15, 2007.  The adoption of
this statement did not have an effect on the Trusts financial statements. In December 2007 the FASB
issued SFAS No. 141(R), Business Combinations. This statement requires the acquiring entity in a
business combination to recognize the full fair value of assets acquired and liabilities assumed
in the transaction (whether a full or partial acquisition); establishes the acquisition-date fair
value as the measurement objective for all assets acquired and liabilities assumed; requires
expensing of most transaction and restructuring costs; and requires the acquirer to disclose to
investors and other users all of the information needed to evaluate and understand the nature and
financial effect of the business combination. This statement applies prospectively to business
combinations for which the acquisition date is on or after January 1, 2009. The  adoption
of this statement did not  have an effect on the Trusts financial
statements. In December 2007, the FASB
issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements - an amendment
of Accounting Research Bulletin No. 51. This statement requires reporting entities to present
noncontrolling (minority) interests as equity (as opposed to as a liability or mezzanine equity)
and provides guidance on the accounting for transactions between an entity and noncontrolling
interests. This statement applies prospectively as of January 1, 2009, except for the presentation
and disclosure requirements which will be applied retrospectively for all periods presented. The  adoption
of this statement did not  have an effect on the Trusts financial
statements. In March 2008, the FASB
issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities,
an amendment of FASB Statement No. 133 (SFAS No. 161), effective for fiscal years and interim
periods beginning after November 15, 2008, with early adoption allowed. SFAS No. 161 amends and
expands the disclosure requirements of SFAS No. 133 with the intent to provide users of financial
statements with an enhanced understanding of an entitys use of derivative instruments and the
effect of those derivative instruments on an entitys financial statements.  The  adoption
of this statement did not  have an effect on the Trusts financial
statements. In May 2008, the FASB
issued Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles.
This statement identifies the sources of accounting principles and the framework for selecting
the principles used in the preparation of financial statements in conformity with GAAP, and is
effective 60 days following the SECs approval of the Public Company Accounting
Oversight Board Auditing amendments to AU section 411, The Meaning of Present Fairly in
Conformity with Generally Accepted Accounting Principles.  The Trustee does not believe that
the adoption of this statement will have a material effect on the Trusts financial statements. In April 2009, the FASB issued FSP FAS115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments. This FASB Staff Position amends the other-than-temporary
impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to
improve the presentation and disclosure of other-than-temporary impairments on debt and equity
securities in the financial statements. This FSP does not amend existing recognition and
measurement guidance related to other-than-temporary impairments of equity securities. This
statement is effective for interim and annual reporting periods ending after June 15, 2009, with
early adoption permitted for periods ending after March 15,
2009. The adoption of these statements did not have an  effect on the Trusts financial statements. Distributable Income per Unit Basic distributable income per Unit is computed by dividing distributable income by the weighted
average Units outstanding. Distributable income per Unit assuming dilution is computed by
dividing distributable income by the weighted average number of Units and equivalent
Units outstanding. The Trust had no equivalent Units outstanding for any period
presented. Therefore, basic distributable income per Unit and distributable income per Unit assuming dilution are the
same. 10




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Federal
Tax Considerations The Internal Revenue Service has ruled that the Trust is classified as a
grantor trust for Federal income tax purposes and therefore is not subject to
taxation at the trust level. The Unit holders are considered, for Federal income
tax purposes, to own the Trusts income and principal as though no trust were in
existence. Accordingly, no provision for Federal income tax expense has been
made in these financial statements. The income of the Trust will be deemed to
have been received or accrued by each Unit holder at the time such income is
received or accrued by the Trust (on the applicable monthly record
date) if the escrow arrangement discussed in Note 1
to these financial statements is respected by the Internal Revenue Service. In
the absence of the escrow arrangement, Unit holders would be deemed to receive
or accrue income from production from the royalty properties (and interest
income) on a daily basis, in accordance with their method of accounting, as the
proceeds from production and interest thereon were received or accrued by the
Trust. The Trustee is treating the escrow arrangement as effective for tax
purposes and furnishes tax information to Unit holders on that basis. Some Trust Units are held by  middlemen, as such term is broadly defined
in U.S. Treasury Regulations (and includes custodians, nominees, certain joint owners,
and brokers holding an interest for a custodian in street name, referred to herein collectively as middlemen).  Therefore, the Trustee
considers the Trust to be a widely held fixed investment trust
(WHFIT) for U.S. Federal income tax purposes. U.S. Trust,
Bank of America Private Wealth Management, 901 Main Street, 17th Floor, Dallas, Texas, 75202, telephone number (214) 209-2400, is
the representative of the Trust that will provide tax information



in accordance with
applicable U.S. Treasury Regulations governing the information reporting requirements
of the Trust as a WHFIT. Tax information is also posted by the Trustee at www.sbr-sabineroyalty.com. Notwithstanding the
foregoing, the middlemen holding Trust Units on behalf of Unit holders, and not the Trustee of the
Trust, are solely responsible for complying with the information
reporting requirements under the U.S.
Treasury Regulations with respect to such Trust Units, including the issuance of IRS Forms 1099 and
certain written tax statements. Unit holders whose Trust Units are held by middlemen should
consult with such middlemen regarding the information that will be reported to them by the
middlemen with respect to the Trust Units. Each Unit holder should consult his tax advisor regarding Trust tax
compliance matters.      3. DISTRIBUTION TO UNIT
HOLDERS The amount to be distributed to Unit holders (Monthly Income Amount) is
determined on a monthly basis. The Monthly Income Amount is an amount equal to
the sum of cash received by the Trust during a monthly period (the period
commencing on the day after a monthly record date and continuing through and
including the next succeeding monthly record date) attributable to the
Royalties, any reduction in cash reserves and any other cash receipts of the
Trust, including interest, reduced by the sum of liabilities paid and any
increase in cash reserves. Unit holders of record as of the monthly record date
(the 15th day of each calendar month except in limited circumstances) are
entitled to have distributed to them the calculated Monthly Income Amount for
such month on or before 10 business days after the monthly record date. The
Monthly Income Amount per Unit is declared by the Trust no later than 10 days
prior to the monthly record date. The cash received by the Trust from purchasers of the Trusts oil and gas
production consists of gross sales of production less applicable severance
taxes. 11




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4. PAYABLES Other payables consist primarily of royalty receipts suspended pending
verification of ownership interest or title. The Trustee believes that these other payables represent an ordinary
operating condition of the Trust and that such payables will be paid or released
in the normal course of business. 5. SUBSEQUENT EVENTS Subsequent
to March 31, 2009, the Trust declared the following
distributions: MonthlyNotification
    
    Record
    
    Payment
    
    DistributionDate

    Date
    
Date
    
    
    per UnitApril 3
    
    April 15
    
    April 29
    
    $
    .23787
 6. CONTINGENCIES Contingencies related to the royalty properties that are unfavorably
resolved would generally be reflected by the Trust as reductions to future
royalty income payments to the Trust with corresponding reductions to cash
distributions to Unit holders. The Trustee is not aware of any such
items as of March 31, 2009. Item 2.
Trustees Discussion and Analysis of Financial Condition and
Results of Operations. Liquidity and Capital
Resources The Trust makes monthly distributions to the holders of Units of the excess
of the preceding months revenues received over expenses incurred. Upon receipt,
royalty income is invested in short-term investments until its subsequent
distribution. In accordance with the Trust Agreement, the Trusts only long-term
assets consist of royalty interests in producing and proved undeveloped oil and
gas properties. Although the Trust is permitted to borrow funds if necessary to
continue its operations, borrowings are not anticipated in the foreseeable
future. Results of Operations Distributable income
consists of royalty income plus interest income plus any decrease in cash reserves established by
the Trustee less general and administrative expenses of the Trust less any increase in cash
reserves established by the Trustee.  Distributable income for the
three months ended March 31,
2009 was $10,276,516, or $0.70 per unit.  Royalty income for the three months ended March 31,
2009 amounted to $10,876,919 while interest income was $19,155.  General and administrative
expenses totaled $619,558 for the three months ended March 31, 2009. Distributions
during the period were $.41550, $.25441, and $.21205 per Unit
payable to Unit holders of record on January 15, February 17, and
March 16, 2009,
respectively. 12




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Royalty income for the
quarter ended March 31, 2009 decreased approximately $7,979,000 or 42%
compared with the first quarter of 2008.  This decrease was caused by decreases in
the production of both
oil and natural gas as well as decreases in the price of both oil and natural gas.
Compared to the preceding
quarter ended December 31, 2008, royalty income decreased approximately $9,677,000, or 47%,
due to
decreases in the production of both oil and natural gas as well as decreases in the prices
of both oil and natural gas. The following tables illustrate average prices received for the periods
discussed above and the related oil and gas production volumes: Quarter EndedMarch 31,
    
    
    March 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2008ProductionOil (Bbls)
    
    
    104,171
    
    
    
    110,302
    
    
    
    123,499Gas (Mcfs)
    
    
    1,572,366
    
    
    
    1,651,669
    
    
    
    1,613,790Average PriceOil (per Bbl)
    
    $
    39.13
    
    
    $
    85.89
    
    
    $
    86.95Gas (per Mcf)
    
    $
    5.00
    
    
    $
    6.60
    
    
    $
    8.12
 Gas revenues received for the three months ended March 31, 2009, related primarily to production for October 2008
through December 2008.  The average price of gas as reported by the Henry Hub for the same time period was
$5.77 per Mcf.  The average price of gas for the Henry Hub was $4.50 per Mcf for January 2009 through March 2009.
Oil revenues for the three months ended March 31, 2009 related primarily to production for November 2008 through
January 2009.  The average price of oil as reported by Nymex for that time period was $46.98 per barrel.  The average
price of oil was $43.22 per barrel for January 2009 through March 2009.  As of April 22, 2009, the average price of
gas for the Henry Hub was $3.16   per Mcf and the average price of oil reported by Nymex was
$46.51     per barrel.
It is difficult to accurately estimate future prices of oil and gas, and any assumptions concerning future
prices may prove to be incorrect. Interest income for the
quarter ended March 31, 2009 decreased approximately $62,200
compared with the first quarter of 2008.  Compared to the preceding quarter ended
December 31, 2008, interest income decreased approximately $50,200.  Changes in interest income
are the result of changes in interest rates and funds available for investment. General and administrative expenses for the quarter ended March 31, 2009 increased by approximately $63,500
compared to the same quarter of 2008 primarily due to increases in professional fees, printing expenses and unitholder
information services fees of approximately $12,400, $27,700 and $25,400, respectively.  Offsetting the increases was a
decrease in escrow agent/trustee fees of approximately $3,600.  Compared to the previous quarter ended December 31,
2008, general and administrative expenses increased approximately $152,500.  This increase was primarily due to the
timing of annual payments in the first quarter such as the annual New York Stock Exchange listing fee and expenses
related to the printing and mailing of annual tax information of approximately $38,000 and $61,000, respectively; along with
increases in the timing of invoices for auditing fees of approximately $43,000.  Escrow agent/trustee fees also increased
approximately $27,600.  Offsetting these increases somewhat was a decrease in the timing of the receipt of fees for
ad valorem tax rendition services of approximately $19,000. 13




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Critical Accounting Policies and Estimates The Trusts financial statements reflect the selection and application of
accounting policies that require the Trust to make significant estimates and
assumptions. The following are some of the more critical judgement areas in the
application of accounting policies that currently affect the Trusts financial
condition and results of operations. Basis of Accounting The financial statements of the Trust are prepared on the following basis
and are not intended to present financial position and results of operations in
conformity with accounting principles generally accepted in the United States
of America:  
    
    Royalty income, net of severance and ad valorem taxes, and interest
income are recognized in the month in which amounts are received by
the Trust.
    
    Trust expenses, consisting principally of routine general and
administrative costs, include payments made during the accounting
period. Expenses are accrued to the extent of amounts that become
payable on the next monthly record date following the end of the
accounting period. Reserves for liabilities that are contingent or
uncertain in amount may also be established if considered necessary.
    
    Royalties that are producing properties are amortized using the
unit-of-production method. This amortization is shown as a reduction
of Trust corpus.
    
    Distributions to Unit holders are recognized when declared by the
Trustee. 14




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The financial statements of the Trust differ from financial statements
prepared in conformity with accounting principles generally accepted in the
United States of America because of the following:  
    
    Royalty income is recognized in the month received rather than in the
month of production.
    
    Expenses other than those expected to be paid on the following
monthly record date are not accrued.
    
    Amortization of the Royalties is shown as a reduction to Trust corpus
and not as a charge to operating results.
    
    Reserves may be established for contingencies that would not be
recorded under accounting principles generally accepted in the United
States of America. This comprehensive basis of accounting other than GAAP corresponds to the
accounting permitted for royalty trusts by the U.S. Securities and Exchange
Commission, as specified by Staff Accounting Bulletin Topic 12:E, Financial
Statements of Royalty Trusts. Revenue Recognition Revenues from royalty interests are recognized in the period in which
amounts are received by the Trust. Royalty income received by the Trust in a
given calendar year will generally reflect the proceeds, on an entitlements
basis, from natural gas produced for the twelve-month period ended September
30th in that calendar year. Reserve Disclosure Independent petroleum engineers estimate the net proved reserves
attributable to the royalty interests. In accordance with Statement of Financial
Standards No. 69, Disclosures About Oil and Gas Producing Activities,
estimates of future net revenues from proved reserves have been prepared using
year-end contractual gas prices and related costs. Numerous uncertainties are
inherent in estimating volumes and the value of proved reserves and in
projecting future production rates and the timing of development of
non-producing reserves. Such reserve estimates are subject to change as
additional information becomes available. The reserves actually recovered and
the timing of production may be substantially different from the reserve
estimates. Other than those filed with the SEC, our estimated
reserves have not been filed with or included in any reports to any
Federal agency. Contingencies Contingencies related to the royalty properties that are unfavorably
resolved would generally be reflected by the Trust as reductions to future
royalty income payments to the Trust with corresponding reductions to cash
distributions to Unit holders. The Trustee is not aware of any such
items as of March 31, 2009. Use of Estimates The preparation of financial statements in conformity with the basis of
accounting described above requires management to make estimates and assumptions
that affect reported amounts of certain assets, liabilities, revenues and
expenses as of and for the reporting periods. Actual results may differ from
such estimates. Impairment The Trustee routinely reviews the Trusts royalty interests in oil and gas
properties for impairment whenever events or circumstances indicate that the
carrying amount of an asset may not be recoverable. If an impairment event
occurs and it is determined that the carrying value of the Trusts royalty
interests may not be recoverable, an impairment will be recognized as measured
by the amount by which the carrying amount of the royalty interests exceeds the
fair value of these assets, which would likely be measured by discounting
projected cash flows.  Modernization of Oil and Gas Reporting.
 15




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New
Accounting Standards In July 2006, the FASB
issued FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, which
clarifies the accounting for uncertainty in income taxes recognized in the financial statements in
accordance with SFAS No. 109, Accounting for Income Taxes. FIN 48 is effective for fiscal years
beginning after December 15, 2006. The adoption of this statement did not have an effect on the
Trusts financial statements. In September 2006, the FASB
issued SFAS No. 157, Fair Value Measurements. This statement defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles (GAAP), and expands
disclosures about fair value measurements. This statement is effective for financial statements
issued for fiscal years beginning after November 15, 2007.  The adoption of this statement did not
have an effect on the Trusts financial statements. In February 2007, the FASB
issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities-Including
an amendment of FASB Statement No. 115. This statement permits entities to choose to measure many
financial instruments and certain other items at fair value. This statement is effective as of the
beginning of an entitys first fiscal year that begins after November 15, 2007.  The adoption of
this statement did not have an effect on the Trusts financial statements. In December 2007 the FASB
issued SFAS No. 141(R), Business Combinations. This statement requires the acquiring entity in a
business combination to recognize the full fair value of assets acquired and liabilities assumed
in the transaction (whether a full or partial acquisition); establishes the acquisition-date fair
value as the measurement objective for all assets acquired and liabilities assumed; requires
expensing of most transaction and restructuring costs; and requires the acquirer to disclose to
investors and other users all of the information needed to evaluate and understand the nature and
financial effect of the business combination. This statement applies prospectively to business
combinations for which the acquisition date is on or after January 1,
2009. The adoption of this statement did not have an effect on the
Trusts financial statements. In December 2007, the FASB
issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements - an amendment
of Accounting Research Bulletin No. 51. This statement requires reporting entities to present
noncontrolling (minority) interests as equity (as opposed to as a liability or mezzanine equity)
and provides guidance on the accounting for transactions between an entity and noncontrolling
interests. This statement applies prospectively as of January 1, 2009, except for the presentation
and disclosure requirements which will be applied retrospectively for
all periods presented. The adoption of this statement did not have an effect on the
Trusts financial statements. In March 2008, the FASB
issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities,
an amendment of FASB Statement No. 133 (SFAS No. 161), effective for fiscal years and interim
periods beginning after November 15, 2008, with early adoption allowed. SFAS No. 161 amends and
expands the disclosure requirements of SFAS No. 133 with the intent to provide users of financial
statements with an enhanced understanding of an entitys use of derivative instruments and the
effect of those derivative instruments on an entitys financial
statements.  The adoption of this statement did not have an effect on the
Trusts financial statements. In May 2008, the FASB
issued Statement No. 162, The Hierarchy of Generally Accepted
Accounting Principles.  This statement identifies the sources of accounting principles and the
framework for selecting the principles used in the preparation of financial statements in conformity
with GAAP, and is effective 60 days following the SECs approval of the Public Company
Accounting Oversight Board Auditing amendments to AU section 411,
The Meaning of Present
Fairly in Conformity with Generally Accepted Accounting Principles.  The Trustee does not
believe that the adoption of this statement will have a material effect on the Trusts financial
statements. In April 2009, the FASB issued FSP FAS115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments. This FASB Staff Position amends the other-than-temporary
impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to
improve the presentation and disclosure of other-than-temporary impairments on debt and equity
securities in the financial statements. This FSP does not amend existing recognition and
measurement guidance related to other-than-temporary impairments of equity securities. This
statement is effective for interim and annual reporting periods ending after June 15, 2009, with
early adoption permitted for periods ending after March 15,
2009. The adoption of these statements did not have an effect on the
Trusts financial statements. 16




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Other Forward Looking Statements This Report includes forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, which are intended to be
covered by the safe harbor created thereby. All statements other than statements
of historical fact included in this Report are forward-looking statements.
Although the Trustee believes that the expectations reflected in such
forward-looking statements are reasonable, such expectations are
subject to numerous
risks and uncertainties and the Trustee can give no assurance that they will
prove correct. There are many factors, none of which is within the Trustees
control, that may cause such expectations not to be realized, including, among
other things, factors identified in the Trusts most recent Annual Report on
Form 10-K affecting oil and gas prices and the recoverability of reserves,
general economic conditions, actions and policies of petroleum-producing nations
and other changes in the domestic and international energy markets. The Trust has an Internet website and has made available its annual reports
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and
amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d)
of the Exchange Act at http://www.sbr-sabineroyalty.com as soon as reasonably
practicable after such information is electronically filed with or furnished to
the SEC. 
 Item 3. Quantitative
and Qualitative Disclosures About Market Risk. The Trust invests in no derivative financial instruments, and has no
foreign operations or long-term debt instruments. Other than the Trusts ability
to periodically borrow money as necessary to pay expenses, liabilities and
obligations of the Trust that cannot be paid out of cash held by the Trust, the
Trust is prohibited from engaging in borrowing transactions. The amount of any
such borrowings is unlikely to be material to the Trust. The Trust periodically
holds short-term investments acquired with funds held by the Trust pending
distribution to Unit holders and funds held in reserve for the payment of Trust
expenses and liabilities. Because of the short-term nature of these borrowings
and investments and certain limitations upon the types of such investments which
may be held by the Trust, the Trustee believes that the Trust is not subject to
any material interest rate risk. Currently, such funds are invested in Bank of America certificates of deposit which are backed by
the good faith and credit of Bank of America, N.A., but are only insured by the Federal Deposit
Insurance Corporation up to $250,000. Each Unit holder should independently assess the
creditworthiness of Bank of America, N.A. For more information about the credit rating of Bank of
America, N.A., please refer to its periodic filings with the SEC. See Item1A  Risk Factors 
Cash held by the trustee is not fully insured by the Federal Deposit Insurance Corporation, and
future royalty income may be subject to risks relating to the creditworthiness of third parties.




 The Trust does not engage in transactions in
foreign currencies which could expose the Trust or Unit holders to any foreign
currency related market risk. 
 Item 4. Controls and
Procedures. As of the end of the period covered by this report, the Trustee carried
out an evaluation of the effectiveness of the design and operation of the
Trusts disclosure controls and procedures pursuant to Exchange Act Rules 13a-15
and 15d-15. Based upon that evaluation, the Trustee concluded that the Trusts
disclosure controls and procedures are effective in timely alerting the Trustee
to material information relating to the Trust required to be included in the
Trusts periodic filings with the Securities and Exchange Commission. There has
not been any change in the Trusts internal control over financial reporting
during the period covered by this report that has materially affected, or is
reasonably likely to materially affect, the Trusts internal control over
financial reporting. 17




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PART II  OTHER INFORMATION 
 Item 1. Legal Proceedings. Not
applicable. 
 
 Item 1A. Risk Factors. Except as set forth below, there
have been no material changes in the risk factors disclosed under
Part I, Item 1A of the Trusts Annual Report on
Form 10-K for the year ended December 31, 2008.
 Cash held by the trustee is not fully insured by the Federal Deposit Insurance Corporation, and
future royalty income may be subject to risks relating to the creditworthiness of third parties.
  Items 2-5 not
applicable. 
 Item 6. Exhibits. Exhibit Number
and Description4(a)*
    
    Sabine Corporation  Royalty Trust Agreement effective as of December
31, 1982, by and between Sabine Corporation and InterFirst Bank Dallas, N.A., as trustee.(b)*
    
    Sabine Corporation Louisiana Royalty Trust Agreement effective as of December
31, 1982, by and between Sabine Corporation and Hibernia National Bank in New Orleans, as
trustee, and joined by InterFirst Bank Dallas, N.A., as trustee.(31) Trustee Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(32) Trustee Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 *
    
    Exhibits 4(a) and 4(b) are incorporated herein by reference to Exhibits 4(a) and
4(b), respectively, of the Registrants Annual Report on
Form 10-K for the year ended
December 31, 1993. 18




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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. SABINE ROYALTY TRUSTBy:
    Bank of America, N.A.TrusteeBy:
    /s/ Ron E. HooperRon E. HooperSenior Vice President and
Trust Administrator Date: May 1, 2009 (The Trust has no directors or executive officers.) 19