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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 the 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 (Do not check if a smaller reporting company) 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 August 2, 2010:
14,579,345




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TABLE OF CONTENTS  PART I  FINANCIAL INFORMATIONItem 1. Financial Statements
2Item 2. Trustees Discussion and Analysis of Financial Condition and Results of
Operations
13Item 3. Quantitative and Qualitative Disclosures About Market Risk
18Item 4. Controls and Procedures
18PART II  OTHER INFORMATIONItem 1. Legal Proceedings
19Item 1A. Risk Factors
19Item 6. Exhibits
19SIGNATURES
20EX-31EX-32




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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, 2009 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 June 30, 2010, the distributable income for the
three-month and six-month periods ended June 30, 2010 and 2009 and the changes in trust
corpus for the six-month periods ended June 30, 2010 and 2009, 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 June 30, 2010 and for the
three-month and six-month periods ended June 30, 2010 and 2009, 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  June 30,
    
    
    December 31,Note
    
    
    2010
    
    
    2009AssetsCash and short-term investments
    
    
    
    
    
    $
    5,586,216
    
    
    $
    4,873,961Royalty interests in oil and gas properties
(less accumulated amortization of $21,790,921
and $21,745,488 at June 30, 2010 and
December 31, 2009)
    
    
    
    
    
    
    604,264
    
    
    
    649,697TOTAL
    
    
    
    
    
    $
    6,190,480
    
    
    $
    5,523,658Liabilities and Trust CorpusTrust expenses payable
    
    
    
    
    
    $
    159,042
    
    
    $
    147,048Other payables
    
    
    4
    
    
    
    201,354
    
    
    
    180,093360,396
    
    
    
    327,141Contingencies
    
    
    6Trust corpus  14,579,345 units of beneficial
interest authorized and outstanding
    
    
    
    
    
    
    5,830,084
    
    
    
    5,196,517TOTAL
    
    
    
    
    
    $
    6,190,480
    
    
    $
    5,523,658
 The accompanying notes are an integral part of these condensed financial
statements. 4




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SABINE ROYALITY TRUST  Three Months EndedJune 30,Notes
    
    
    2010
    
    
    2009Royalty Income
    
    
    
    
    
    $
    14,030,965
    
    
    $
    10,638,257Interest Income
    
    
    
    
    
    
    1,034
    
    
    
    1,463Total
    
    
    
    
    
    
    14,031,999
    
    
    
    10,639,720General and administrative expenses
    
    
    
    
    
    
    (610,902
    )
    
    
    (690,610
    )Distributable Income
    
    
    
    
    
    $
    13,421,097
    
    
    $
    9,949,110Distributable Income per unit
(14,579,345 units)
    
    
    1,3,5
    
    
    $
    .92
    
    
    $
    .68
 The accompanying notes are an integral part of these condensed financial
statements. 5




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SABINE ROYALITY TRUST  Six Months EndedJune 30,Notes
    
    
    2010
    
    
    2009Royalty Income
    
    
    
    
    
    $
    28,406,558
    
    
    $
    21,515,176Interest Income
    
    
    
    
    
    
    1,321
    
    
    
    20,618Total
    
    
    
    
    
    
    28,407,879
    
    
    
    21,535,794General and administrative expenses
    
    
    
    
    
    
    (1,178,578
    )
    
    
    (1,310,168
    )Distributable Income
    
    
    
    
    
    $
    27,229,301
    
    
    $
    20,225,626Distributable Income per unit
(14,579,345 units)
    
    
    1,3,5
    
    
    $
    1.87
    
    
    $
    1.39
 The accompanying notes are an integral part of these condensed financial
statements. 6




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SABINE ROYALITY TRUST  Six Months EndedJune 30,Note
    
    
    2010
    
    
    2009Trust corpus, beginning of period
    
    
    
    
    
    $
    5,196,517
    
    
    $
    6,735,265Amortization of royalty interests
    
    
    
    
    
    
    (45,433
    )
    
    
    (43,510
    )Distributable income
    
    
    
    
    
    
    27,229,301
    
    
    
    20,225,626Distributions
    
    
    3
    
    
    
    (26,550,301
    )
    
    
    (22,044,957
    )Trust corpus, end of period
    
    
    
    
    
    $
    5,830,084
    
    
    $
    4,872,424Distributions per unit (14,579,345 units)
    
    
    3
    
    
    $
    1.82
    
    
    $
    1.51
 The accompanying notes are an integral part of these condensed financial
statements. 7




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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). 8




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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 Federal income 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. 9




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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. 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 June 30, 2010, no impairment is
required. 10




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New
Accounting Standards  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.


11



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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 Federal income 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 non-mortgage  widely held fixed investment trust
(WHFIT) for U.S. Federal income tax purposes. U.S. Trust,
Bank of America Private Wealth Management, EIN: 56-0906609, 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. 12




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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 June 30, 2010, the Trust declared the following
distributions: MonthlyNotification
    
    Record
    
    Payment
    
    DistributionDate

    Date
    
Date
    
    
    per UnitJuly 2
    
    July 15
    
    July 29
    
    $
    .36179
 Subsequent
events have been evaluated through the date of issuance of the
condensed financial statements. 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 June 30, 2010. *   *   *   *   * 
 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   13




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The following tables illustrate average prices received for the periods
discussed above and the related oil and gas production volumes: Quarter EndedJune 30,
    
    June 30,
    
    March 31,2010
    
    2009
    
    2010ProductionOil (Bbls)
    
    
    96,717
    
    
    
    118,258
    
    
    
    109,903Gas (Mcfs)
    
    
    1,634,717
    
    
    
    1,385,889
    
    
    
    1,635,759Average PriceOil (per Bbl)
    
    $
    74.45
    
    
    $
    41.36
    
    
    $
    70.76Gas (per Mcf)
    
    $
    4.79
    
    
    $
    3.87
    
    
    $
    4.74
 Six-Months EndedJune 30, 2010
    
    June 30, 2009ProductionOil (Bbls)
    
    
    206,620
    
    
    
    222,429Gas (Mcfs)
    
    
    3,270,476
    
    
    
    2,958,254Average PriceOil (per Bbl)
    
    $
    72.49
    
    
    $
    40.31Gas (per Mcf)
    
    $
    4.76
    
    
    $
    4.47
    14




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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. 15




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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 and from oil produced for the twelve-month period ended October 31st in the same calendar year. Reserve Disclosure  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 June 30, 2010. 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. 16




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17




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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. 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 recording, processing, summarizing and reporting, on a timely basis, information required to be
disclosed by the Trust in the reports that it files or submits under the Securities Exchange Act of
1934 and are effective in ensuring that information required to be disclosed by the Trust in the
reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and
communicated to the Trustee to allow timely decisions regarding required disclosure.
 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. 18




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PART II  OTHER INFORMATION 
 Item 1. Legal Proceedings. Not
applicable. 
 Item 1A. Risk Factors. 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, 2009.
 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. 19




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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: August 2, 2010 (The Trust has no directors or executive officers.) 20