##### 



San Juan Basin Royalty Trust
2006 ANNUAL REPORT
& and Form 10  K &




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No 1




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The Trust
   Units
of Beneficial interest
  DISTRIBUTIONSHIGH
    
    
    LOW
    
    
    PAID2006First Quarter
    
    $
    45.9900
    
    
    $
    36.0000
    
    
    $
    1.083276Second Quarter
    
    
    43.7500
    
    
    
    33.0000
    
    
    
    .599299Third Quarter
    
    
    41.2500
    
    
    
    32.8200
    
    
    
    .666989Fourth Quarter
    
    
    39.0000
    
    
    
    32.6200
    
    
    
    .565491TOTAL FOR 2006
    
    
    
    
    
    
    
    
    
    $
    2.9150552005First Quarter
    
    $
    37.4000
    
    
    $
    27.7000
    
    
    $
    .831092Second Quarter
    
    
    44.2000
    
    
    
    34.1000
    
    
    
    .740612Third Quarter
    
    
    51.4300
    
    
    
    39.0000
    
    
    
    .692829Fourth Quarter
    
    
    49.2500
    
    
    
    38.3000
    
    
    
    .987214TOTAL FOR
2005
    
    
    
    
    
    
    
    
    
    $
    3.251747
  NUMBER OFtype of unit holders
    
    UNIT HOLDERS
    
    UNITS HELDIndividuals, Joint Holders and Minors
    
    
    1,504
    
    
    
    1,888,965Fiduciaries
    
    
    162
    
    
    
    495,464Government Bodies
    
    
    1
    
    
    
    30Clubs, Associations or Societies
    
    
    7
    
    
    
    13,120Depositary (for all beneficial holders)
    
    
    1
    
    
    
    43,864,558Corporations
    
    
    34
    
    
    
    346,659TOTAL
    
    
    1,709
    
    
    
    46,608,796
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To Unit Holders
 WE
ARE PLEASED TO PRESENT THE 2006 ANNUAL REPORT
 
 Compass Bank, TrusteeBy:
    

Lee
Ann AndersonVice President and Senior Trust Officer
    
    (LA ANDERSON LOGO)
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No 4




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Description of the Properties
 The
principal asset
 vice versa.
   Form 10-K.
 Trustees
Discussion and Analysis
  Gas
and Oil Production
  2006
    
    2005
    
    2004
    
    2003
    
    2002Gas  Mcf
    
    
    40,900,570
    
    
    
    42,867,162
    
    
    
    44,015,816
    
    
    
    45,202,576
    
    
    
    46,206,297Mcf per Day
    
    
    112,056
    
    
    
    117,444
    
    
    
    120,262
    
    
    
    123,843
    
    
    
    126,593Oil  Bbls
    
    
    74,438
    
    
    
    69,558
    
    
    
    77,341
    
    
    
    74,727
    
    
    
    93,659Bbls per Day
    
    
    204
    
    
    
    191
    
    
    
    211
    
    
    
    205
    
    
    
    257
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Trustees
Discussion and Analysis
  Gas
and Oil Production cont.
  2006
    
    2005
    
    2004
    
    2003
    
    2002Gas  Mcf
    
    
    22,475,405
    
    
    
    26,600,644
    
    
    
    25,324,435
    
    
    
    25,922,650
    
    
    
    19,584,056Average Price (per Mcf)
    
    $
    6.55
    
    
    $
    6.27
    
    
    $
    4.68
    
    
    $
    3.93
    
    
    $
    2.32Oil  Bbls
    
    
    40,702
    
    
    
    43,142
    
    
    
    44,832
    
    
    
    43,123
    
    
    
    40,215Average Price (per Bbl)
    
    $
    61.30
    
    
    $
    49.62
    
    
    $
    34.81
    
    
    $
    26.11
    
    
    $
    20.90
     o




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Trustees
Discussion and Analysis
 
 Royalty
Income
  2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Gross Proceeds
from the Underlying
PropertiesGas
    
    $
    264,428,021
    
    
    $
    267,895,460
    
    
    $
    204,682,365
    
    
    $
    175,653,183
    
    
    $
    103,349,299Oil
    
    
    4,561,342
    
    
    
    3,451,115
    
    
    
    2,670,763
    
    
    
    1,938,972
    
    
    
    1,863,827Other
    
    
    1,384,848
    1
    
    
    2,405,486
    2
    
    
    3,314,808
    3
    
    
    (1,202,368
    )4
    
    
    (5,110,589
    )5TOTAL
    
    $
    270,374,211
    
    
    $
    273,752,061
    
    
    $
    210,667,936
    
    
    $
    176,389,787
    
    
    $
    100,102,537Less
Production CostsCapital Expenditures
    
    $
    39,195,168
    
    
    $
    19,127,698
    
    
    $
    22,338,684
    
    
    $
    20,590,704
    
    
    $
    21,470,777Severance Tax  Gas
    
    
    25,652,907
    
    
    
    26,717,315
    
    
    
    19,766,231
    
    
    
    17,281,986
    
    
    
    9,752,508Severance Tax  Oil
    
    
    460,702
    
    
    
    362,023
    
    
    
    253,022
    
    
    
    174,750
    
    
    
    151,594Other
    
    
    42,968
    
    
    
    273,766
    
    
    
    42,763
    
    
    
    41,850
    
    
    
    18,037Lease Operating
Expenses and Property Taxes
    
    
    23,273,276
    
    
    
    22,126,907
    
    
    
    20,210,213
    
    
    
    15,637,481
    
    
    
    15,701,740TOTAL
    
    $
    88,625,021
    
    
    $
    68,607,709
    
    
    $
    62,610,913
    
    
    $
    53,726,771
    
    
    $
    47,094,656Excess Production CostsInterest on Excess
    
    
    -0-
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    (2,259,628
    )6Production Costs
    
    
    -0-
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    (10,545
    )6Net Profits
    
    $
    181,749,190
    
    
    $
    205,144,352
    
    
    $
    148,057,023
    
    
    $
    122,663,016
    
    
    $
    50,737,708Net OverridingRoyalty
Interest
    
    
    75
    %
    
    
    75
    %
    
    
    75
    %
    
    
    75
    %
    
    
    75
    %Royalty Income
    
    $
    136,311,892
    
    
    $
    153,858,264
    
    
    $
    111,042,767
    
    
    $
    91,997,262
    
    
    $
    38,053,281
 
 (1)
    
    Represents funds allocated to the Trust as part of the ongoing negotiation of
joint interest audit exceptions, and a portion of the arbitration
award issued November 11, 2005 in favor of the Trust.(2)
    
    Represents funds allocated to the Trust as part of the ongoing negotiation of
joint interest audit exceptions.(3)
    
    Represents funds allocated to the Trust as part
of the ongoing negotiation of joint interest audit exceptions, interest received for resolved audit
exceptions, and insurance proceeds for a bus ness interruption claim.(4)
    
    Represents a settlement between BROG and the Mineral Management Service of the
United States Department of the Interior (the MMS).(5)
    
    Represents deductions by BROG from the net proceeds otherwise payable to
the Trust in connection with the portion of various settlement agreements with the MMS.(6)
    
    RePresents excess production costs incurred in December 2001 and recovered
by BROG in 2002, plus interest. Distributable
Income
    No  7




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Trustees
Discussion and Analysis
 
    Operating
Expenses
  Settlements
   Capital
Expenditures
    No  8




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Trustees
Discussion and Analysis
 
      Contractual
Obligations
  Effects
of Securities Regulation
  No  9




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Trustees
Discussion and Analysis
 
  Critical
Accounting Policies
  
    
    Royalty Income recorded for a month is the amount
computed and paid by BROG to the Trustee for the
Trust. Royalty Income consists of the proceeds
received by BROG from the sale of production from
the Underlying Properties less accrued production
costs, development and drilling costs, applicable
taxes, operating charges, and other costs and deductions,
multiplied by 75%.The calculation of net proceeds
by BROG for any month includes adjustments to
proceeds and costs for prior months and impacts the
Royalty Income paid to the Trust and the distribution
to Unit holders for that month.
    
    Trust expenses recorded are based on liabilities paid
and cash reserves established from Royalty Income
for liabilities and contingencies.
    
    Distributions to Unit holders are recorded when
declared by the Trustee.
    
    The conveyance which transferred the Royalty to the
Trust provides that any excess of production costs
applicable to the Underlying Properties over gross
proceeds from such properties must be recovered from
future net profits before Royalty Income is again paid
to the Trust.
  
 
 No  10




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Trustees
Discussion and Analysis
 
 Results
of the 4TH Ruarters
of 2006 & 2005
   2006
    
    2005Underlying PropertiesGas  Mcf
    
    
    9,782,562
    
    
    
    10,248,571Mcf per Day
    
    
    106,332
    
    
    
    111,398Average Price (per Mcf)
    
    $
    5.49
    
    
    $
    7.77Oil  Bbls
    
    
    14,992
    
    
    
    16,477Bbls per Day
    
    
    163
    
    
    
    179Average Price (per Bbl)
    
    $
    60.72
    
    
    $
    59.06Attributable
to the RoyaltyGas  Mcf
    
    
    5,156,724
    
    
    
    6,516,096Oil  Bbls
    
    
    7,794
    
    
    
    10,429
    2006
    
    
    2005October
    
    $
    .257200
    
    
    $
    .243762November
    
    
    .210820
    
    
    
    .334553December
    
    
    .097471
    
    
    
    .408899QUARTER TOTAL
    
    $
    .565491
    
    
    $
    .987214
 No  11




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San
Juan Basin Royalty Trust
 Statements
of Assets,
Liabilities and
Trust
Corpus
 December 31, 2006 and 2005
 2006
    
    
    2005AssetsCash and Short-Term
Investments
    
    $
    4,657,886
    
    
    $
    19,173,162Net
Overriding Royalty Interests in Producing Oil and gas Properties
 Net
    
    
    21,823,390
    
    
    
    23,881,494TOTAL
    
    $
    26,481,276
    
    
    $
    43,054,656
 2006
    
    
    2005Liabilities
and Trust CorpusDistribution Payable to Unit holders
    
    $
    4,543,028
    
    
    $
    19,058,304Cash Reserves
    
    
    114,858
    
    
    
    114,858Trust Corpus - 46,608,796 Units of Beneficial Interest Authorized and Outstanding
    
    
    21,823,390
    
    
    
    23,881,494TOTAL
    
    $
    26,481,276
    
    
    $
    43,054,656
 Statements
of Distributable
Income
 For the three years ended December 31, 2006
 2006
    
    
    2005
    
    
    2004Royalty Income
    
    $
    136,311,892
    
    
    $
    153,858,264
    
    
    $
    111,042,767Interest Income
    
    
    1,207,360
    
    
    
    167,367
    
    
    
    58,885137,519,252
    
    
    
    154,025,631
    
    
    
    111,101,652Expenditures  General and Administrative
    
    
    1,651,927
    
    
    
    2,465,550
    
    
    
    1,710,917Distributable Income
    
    $
    135,867,325
    
    
    $
    151,560,081
    
    
    $
    109,390,735Distributable Income per Unit (46,608,796 Units)
    
    $
    2.915055
    
    
    $
    3.251747
    
    
    $
    2.346998
 Statements
of Changes in
Trust
Corpus
 For the three years ended December 31 ,2006
 2006
    
    
    2005
    
    
    2004Trust Corpus, Beginning of Period
    
    $
    23,881,494
    
    
    $
    26,674,821
    
    
    $
    29,822,820Amortization of Net Overriding Royalty Interest
    
    
    (2,058,104
    )
    
    
    (2,793,327
    )
    
    
    (3,147,999
    )Distributable Income
    
    
    135,867,325
    
    
    
    151,560,081
    
    
    
    109,390,735Distributions Declared
    
    
    (135,867,325
    )
    
    
    (151,560,081
    )
    
    
    (109,390,735
    )Trust Corpus, End of Period
    
    $
    21,823,390
    
    
    $
    23,881,494
    
    
    $
    26,674,821
 These financial statements should be read in conjunction with the accompanying Notes to
Financial Statements included herein.
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Notes to Financial Statements
 1. Trust
Organization
And
Provisions
    
    
    The Trust shall not engage in any business or commercial
activity of any kind or acquire any assets other than
those initially conveyed to the Trust;
    
    The Trustee may not sell all or any part of the
Royalty unless approved by holders of 75% of all Units
outstanding in which case the sale must be for cash
and the proceeds promptly distributed;
    
    The Trustee may establish a cash reserve for the payment
of any liability which is contingent or uncertain in
amount;
    
    The Trustee is authorized to borrow funds to pay liabilities
of the Trust; and
    
    The Trustee will make monthly cash distributions to
Unit holders (see Note 2).
 2. Net Overriding Royalty Interest And Distribution To
Unit
Holders
    3.
Basis
Of
Accounting
  
    
    Royalty Income (as defined in the Glossary of Terms)
recorded for a month is the amount computed and
paid by the owner of the Underlying Properties,
Burlington Resources Oil & Gas Company LP
(BROG), the present owner of the Underlying
Properties, to the Trustee for the Trust. Royalty
Income consists of the proceeds received by BROG
from the sale of production less accrued production
costs, development and drilling costs, applicable
taxes, operating charges, and other costs and deductions,
multiplied by 75%. The calculation of net proceeds
by BROG for any month includes adjustments to
proceeds and costs for prior months and impacts the
Royalty Income paid to the Trust and the distribution
to Unit holders for that month.
 
    
    Trust expenses recorded are based on liabilities paid
and cash reserves established from Royalty Income for
liabilities and contingencies.
    
    Distributions to Unit holders are recorded when
declared by the Trustee.
    
    The conveyance which transferred the Royalty to the
Trust provides that any excess of production costs
applicable to the Underlying Properties over gross
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Notes to financial Statements
   4.
Federal
Income
Taxes
     5.
Certain
Contracts
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Notes to financial Statements
 March 31, 2008.
  6.
Significant
Customers
  7.
Settlements and
Litigation
    San Juan Basin Royalty Trust vs. Burlington Resources Oil Gas
Company LP Burlington Resources Oil Gas
Company LP vs. San Juan Basin Royalty Trust,
 8.
Proved Oil and Gas Reserves
(unaudited)
  o




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9. Quarterly Schedule Of Distributable Income (unaudited)
  DISTRIBUTABLEROYALTY
    
    
    DISTRIBUTABLE
    
    
    INCOME ANDINCOME
    
    
    INCOME
    
    
    DISTRIBUTION PER UNIT2006First Quarter
    
    $
    50,481
    
    
    $
    50,490
    
    
    $
    1.083276Second Quarter
    
    
    28,532
    
    
    
    27,933
    
    
    
    .599299Third Quarter
    
    
    30,780
    
    
    
    31,087
    
    
    
    .666989Fourth Quarter
    
    
    26,519
    
    
    
    26,357
    
    
    
    .565491TOTAL
    
    $
    136,312
    
    
    $
    135,867
    
    
    $
    2.9150552005First Quarter
    
    $
    39,242
    
    
    $
    38,736
    
    
    $
    .831092Second Quarter
    
    
    35,296
    
    
    
    34,519
    
    
    
    .740612Third Quarter
    
    
    32,833
    
    
    
    32,292
    
    
    
    .692829Fourth Quarter
    
    
    46,487
    
    
    
    46,013
    
    
    
    .987214TOTAL
    
    $
    153,858
    
    
    $
    151,560
    
    
    $
    3.251747
 Report of Independent Registered Public Accounting Firm
 WE HAVE AUDITED THE ACCOMPANYING STATEMENTS
    Internal Control  Integrated Framework
 Weaver and Tidwell,L.L.P.Fort Worth, TexasFebruary 28, 2007
    
    (WEAVER AND TIDWELL, L.L.P.)
 No 17




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Glossary of Terms
 Aggregate Monthly Distribution:
 BBL :
 BCF:
 BROG:
 BTU:
 Coal Seam Well:
 Commingled Well:
 Conventional Well:
 Depletion:
 Distributable Income:
 Dual Completion:
 Estimated Future Net Revenues:
 Grantor Trust:
 Gross Acres or Wells:
 Gross Proceeds:
 Infill Drilling:
 Lease Operating Expenses:
 MCF:
 MMBTU:
 Multiple Completion Well:
 Net Acres or Wells:
 Net Overriding Royalty Interest:
 Net Proceeds:
 Payadd:
 Present Value Of Estimated Future Net Revenues:
 Production Costs:
 Proved Developed Reserves:
 Proved Reserves:
 Proved Undeveloped Reserves:
 Recavitated Well:
 Recompleted Well:
 Royalty:
 Royalty Income:
 Section 45K tax credit:
 Spot Price:
 Underlying Properties:
 Units of Beneficial Interest:
 Working Interest:




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san juan royalty trust Campass Bank, Trustee 2525 Ridgmar Boulevard, Suite 100 ~S.CONT
Fort Worth, Texas 76116
Toll-free telephone: 966.809.4553
www.sjbrt.com
sjt@compassbank.com auditors
Weaver and Tidwell, L.L.P.
Dallas, Texas transfer Agent
Computershare Investor Services
P.O. Box 43078
Providence, RI 02940-43078
www.computershare.com for question about distribution checks, address
change, and transfer providers call 312-360-5154