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| |  |                                                                                                                                                          
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| |  | Production from conventional gas wells is primarily
from the Pictured Cliffs, Mesaverde and Dakota
formations, ranging in depth from 1,500 to 8,000 feet.

DESCRIPTION OF PROPERTIES



The principal asset of the Trust is a 75% net overriding royalty interest (the Royalty). The Royalty
is similar to a net profits interest and it burdens certain of Southlands oil and gas leasehold interests (the Underlying Properties) in properties located in the San Juan Basin of northwestern New Mexico. References below to
gross wells and acres are to the interests of all persons owning interests therein, while references to net are to the interests of Burlington (from which the Royalty was carved) in such wells and acres. The Underlying Properties consist of working interests, royalty interests, overriding royalty interests and other contractual rights in 151,900 gross (119,000
net) producing acres in San Juan, Rio Arriba and Sandoval Counties of northwestern New Mexico and 4,007 gross (1,156.70 net) wells, calculated on a well bore basis and not including multiple completions as separate wells. Of those wells, 7 gross (5
net) are oil wells and the balance are gas wells. Burlington reports that approximately 852 gross (325.19 net) of the wells are multiple completion wells resulting in a total of 4,859 gross (1,481.89 net) completions. Production from conventional gas wells is primarily from the Pictured Cliffs, Mesaverde and Dakota formations, ranging in depth from 1,500 to 8,000 feet.
During 1988, Southland began development of coal seam reserves in the Fruitland Coal formation. In 2011, Burlington drilled a conventional well, which was completed not only to the Mesaverde and the Dakota formations, but also to the Mancos Shale


formation, which lies between the two. In 2012 and 2013 Burlington drilled two horizontal wells in the Mancos Shale formation, one of which was completed on lands burdened by the Royalty. While
Burlington will continue to assess its program of horizontal drilling, it expects no new horizontal or vertical drilling activity in the San Juan Basin in 2014. The characteristics of the Pictured Cliffs, the Mesaverde and the Dakota reservoirs result in the wells having very long productive lives. A production index
for oil and gas properties is derived by dividing remaining reserves by current production. Based upon the reserve report prepared by the Trusts independent petroleum engineers as of December 31, 2013, the production index for the
Underlying Properties is estimated to be approximately 10.32 years. The production index is subject to change from year to year based on reserve revisions and production levels and is not presented as an estimate of the life expectancy of the Trust.
Among the factors considered by engineers in estimating remaining reserves of natural gas is the applicable sales price for gas. As the sales price increases, the producer can justify expending higher lifting costs and therefore reasonably expect to
recover more of the known reserves. Accordingly, as gas prices rise, the production index increases and vice versa. In addition to gas from conventional
wells, the Underlying Properties also produce gas from coal seam wells completed to the Fruitland Coal formation. The process of removing coal seam gas is often






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referred to as degasification or desorption. Millions of years ago, natural gas was generated in the process of
coal formation and absorbed into the coal. Water later filled the natural fracture system. When the water is removed from the natural fracture system, reservoir pressure is lowered and the gas desorbs from the coal. The desorbed gas then flows
through the fracture system and is produced at the well bore. The volume of formation water production typically declines with time and the gas production may increase for a period of time before starting to decline. In order to dispose of the
formation water, surface facilities including pumping units are required. The price of coal seam gas is typically lower than the price of conventional gas. This is because the heating value of coal seam gas is much lower than that of conventional
gas due to (a) ever increasing percentages of carbon dioxide in coal seam gas (carbon dioxide has no heating value), and (b) the absence of heavier hydrocarbons such as ethanes, propanes, and butanes, which are present in conventional gas.
Furthermore, the processing fees for coal seam gas are typically higher than the processing fees for conventional gas due to the cost of extracting the carbon dioxide. In February 2002, Burlington informed the Trust that the New Mexico Oil Conservation Division (the OCD) had approved plans for 80-acre infill
drilling of the Dakota formation in the San Juan Basin. In July 2003, the OCD approved 160-acre spacing in the Fruitland Coal formation. Eighty-acre spacing has been permitted in the Mesaverde formation since


1997. The OCD has approved 320-acre spacing units for wells completed to the Mancos Shale within the Basin Mancos Gas Pool. For wells drilled horizontally, multiple units may be combined along
the well bore so long as that well bore is perforated in each such unit. In light of the challenged price environment for natural gas and natural gas
liquids, Burlington plans to continue the temporary suspension of its drilling program in the San Juan Basin, indicating that it currently plans to have no drilling rigs operating in the Basin during 2014. However, Burlington reported that it
continually monitors natural gas prices and plans to restart the program at some point in the future, dependent upon such gas prices. Existing wells will continue to be operated. The Federal Energy Regulatory Commission is primarily responsible for federal regulation of natural gas. For a further discussion of gas pricing, gas
purchasers, gas production and regulatory matters affecting gas production see Item 2, Properties, in the accompanying Form 10-K.






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The Form 10-K contains important information

concerning the Underlying Properties, as defined below,

including the oil and gas reserves attributable to the

75% net overriding royalty interest owned by the Trust.

TO OUR UNIT HOLDERS



We are pleased to present the 2013 Annual Report of the San Juan Basin Royalty Trust. The report includes a copy
of the Trusts Annual Report on Form 10-K filed with the Securities and Exchange Commission (the Commission) for the year ended December 31, 2013, without exhibits. The Form 10-K contains important information concerning the
Underlying Properties, as defined below, including the oil and gas reserves attributable to the 75% net overriding royalty interest owned by the Trust. Production figures provided in this letter and in the Trustees Discussion and Analysis are
based on information provided by Burlington Resources Oil & Gas Company LP (Burlington), the current owner of the Underlying Properties and the successor, through a series of assignments and mergers, to Southland Royalty Company
(Southland). The Trust was established in November 1980 by Southland. Pursuant to the Indenture that governs the operations of the Trust, Southland conveyed to the Trust a 75% net overriding royalty interest (similar to a net profits
interest) (the Royalty), carved out of Southlands oil and gas leasehold interests (the Underlying Properties) in properties in the San Juan Basin of northwestern New Mexico. The Royalty constitutes the principal asset of the Trust. Under the Indenture governing the Trust, the function of Compass Bank, as Trustee, is to collect the
net proceeds attributable to the Royalty (Royalty Income), to pay all expenses and charges of the Trust, and then distribute the remaining available income to the Unit Holders. Income distributed to Unit Holders in 2013 was $36,492,592
or $0.782955 per Unit.


Distributable income for 2013 consisted of Royalty Income of $38,042,603 plus interest income of $3,413, less
administrative expenses of $1,523,906 and an increase in cash reserves of $29,518. Information about the Trusts estimated proved reserves of gas, including coal seam gas, and of oil as well as the present value of net revenues discounted at
10% can be found in Item 2, Properties, in the accompanying Form 10-K. Certain Royalty Income is generally considered portfolio income
under the passive loss rules of the Internal Revenue Code of 1986, as amended. Therefore, Unit Holders should generally not consider the taxable income from the Trust to be passive income in determining net passive income or loss. Unit Holders
should consult their tax advisors for further information. Unit Holders of record will receive an annual individualized tax information letter and Forms 1099 for the year ending December 31, 2013. Unit Holders owning Units in nominee name may
obtain monthly tax information from the Trusts Web site or from the Trustee upon request. For the readers convenience, a glossary of definitions used in this report can be found on the inside back cover. Please visit our Web site at
www.sjbrt.com to access news releases, reports, Commission filings and tax information. Compass Bank, Trustee  LOGO BY: LEE ANN ANDERSON Vice
President and Senior Trust Officer






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UNITS OF BENEFICIAL INTEREST

The Units of beneficial interest of the Trust (the Units) are traded on the New York Stock Exchange under the symbol SJT. At
February 20, 2014 the closing price of a Unit was $17.96. From January 1, 2012, to December 31, 2013, the quarterly high and low sales prices and the aggregate amount of monthly distributions per Unit paid each quarter were as
follows:



|               |  |      |         |  |     |   |         |                   |  |   |         | 
|-------------- |  | ---- | ------- |  | --- | - | ------- | ----------------- |  | - | ------- | 
|2013           |  | High |         |  | Low |   |         | DistributionsPaid | 
|First Quarter  |  | $    | 17.9500 |  |     | $ | 13.5400 |                   |  | $ | .072868 | 
|Second Quarter |  |      | 16.3000 |  |     |   | 14.0100 |                   |  |   | .118790 | 
|Third Quarter  |  |      | 17.4800 |  |     |   | 15.5100 |                   |  |   | .288708 | 
|Fourth Quarter |  |      | 18.2200 |  |     |   | 15.5000 |                   |  |   | .302589 | 
|               |  |      |         |  |     |   |         |                   |  |   |         | 
|Total for 2013 |  |      |         |  |     |   |         |                   |  | $ | .782955 | 
|               |  |      |         |  |     |   |         |                   |  |   |         | 
|               |  |      |        
|2012           |  | High |         |  | Low |   |         | DistributionsPaid | 
|First Quarter  |  | $    | 23.1570 |  |     | $ | 17.4200 |                   |  | $ | .313776 | 
|Second Quarter |  |      | 19.4899 |  |     |   | 12.0600 |                   |  |   | .222678 | 
|Third Quarter  |  |      | 16.9000 |  |     |   | 12.9800 |                   |  |   | .099066 | 
|Fourth Quarter |  |      | 15.0000 |  |     |   | 12.3400 |                   |  |   | .082838 | 
|               |  |      |         |  |     |   |         |                   |  |   |         | 
|Total for 2012 |  |      |         |  |     |   |         |                   |  | $ | .718358 | 
|               |  |      |         |  |     |   |         |                   |  |   |         | 

At February 20, 2014, there were 46,608,796 Units outstanding held by 1,191 Unit Holders of record. The following table
presents information relating to the distribution of record ownership of Units:



|                                        |  |                        |       |  |            |  |            | 
|--------------------------------------- |  | ---------------------- | ----- |  | ---------- |  | ---------- | 
|Type of Unit Holders                    |  | Number of Unit Holders |       |  | Units Held | 
|Individuals, Joint Holders and Minors   |  |                        | 1,048 |  |            |  | 1,191,158  | 
|Fiduciaries                             |  |                        | 111   |  |            |  | 692,723    | 
|Clubs, Associations or Societies        |  |                        | 4     |  |            |  | 3,107      | 
|Depositary (for all beneficial Holders) |  |                        | 1     |  |            |  | 44,203,211 | 
|Corporations                            |  |                        | 27    |  |            |  | 518,597    | 
|                                        |  |                        |       |  |            |  |            | 
|Total                                   |  |                        | 1,191 |  |            |  | 46,608,796 | 
|                                        |  |                        |       |  |            |  |            | 



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GLOSSARY OF TERMS



Aggregate Monthly Distribution: An amount paid to Unit Holders equal to the Royalty Income received by
the Trustee during a calendar month plus interest, less the general and administrative expenses of the Trust, adjusted by any changes in cash reserves. BBL: Barrel, generally 42 U.S. gallons measured at 60°F. BCF: Billion cubic feet. BTU: British thermal
unit; the amount of heat necessary to raise the temperature of one pound of water one degree Fahrenheit. Coal Seam Well: A well completed to a
coal deposit found to contain and emit natural gas. Commingled Well: A well which produces from two or more formations through a common well
casing and a single tubing string. Conventional Well: A well completed to a formation historically found to contain deposits of oil or gas (for
example, in the San Juan Basin, the Pictured Cliffs, Dakota and Mesaverde formations) and operated in the conventional manner. Depletion: The
exhaustion of a petroleum reservoir; the reduction in value of a wasting asset by removing minerals; for tax purposes, the removal and sale of minerals from a mineral deposit. Distributable Income: An amount paid to Unit Holders equal to the Royalty Income received by the Trustee during a given period plus interest, less the
general and administrative expenses of the Trust, adjusted by any changes in cash reserves. Dual Completion: The completion of a well into two
separate producing formations at different depths, generally through one string of pipe producing from one of the formations, inside of which is a smaller string of pipe producing from the other formation. Grantor Trust: A trust (or portion thereof) with respect to which the grantor or an assignee of the grantor, rather than the trust, is treated as the
owner of the trust properties and is taxed directly on the trust income for Federal income tax purposes under Sections 671 through 679 of the Internal Revenue Code of 1986, as amended. Gross Acres or Wells: The interests of all persons owning interests in such acres or wells. Gross Proceeds: The amount received by Burlington (or any subsequent owner of the Underlying Properties) from the sale of the production attributable
to such interests. Horizontal Well: A well that begins as a vertical or inclined linear bore, which extends from the surface to a subsurface
location just above the target oil or gas reservoir, then bears off to intersect the reservoir and, thereafter, continues at a near-horizontal attitude to substantially or entirely remain within the reservoir until the desired bottom hole location
is reached. Indenture: The Amended and Restated Royalty Trust Indenture, dated December 12, 2007 (the original Royalty Trust Indenture, dated
November 1, 1980 having been entered into between Southland Royalty Company and The Fort Worth National Bank, as Trustee, and previously amended and restated effective September 30, 2002).


Infill Drilling: The drilling of wells intended to be completed to proven reservoirs or formations,
sometimes occurring in conjunction with regulatory approval for increased density in the spacing of wells. Lease Operating Expenses: Expenses
incurred in the operation of a producing property as apportioned among the several parties in interest. MCF: 1,000 cubic feet; the standard unit
for measuring the volume of natural gas. MMBTU: One million British thermal units. Multiple Completion Well: A well which produces simultaneously, with or without separate tubing strings, from two or more producing horizons or
alternatively from each. Net Acres or Wells: The interests of Burlington in such acres or wells. Net Overriding Royalty Interest: A share of gross production from a property, measured by net profits from operation of the property and carved out of
the working interest, i.e., a net profits interest. Net Proceeds: The excess of Gross Proceeds received by Burlington during a particular period
over Production Costs for such period. Payadd: Completion in an existing well of additional productive zone(s) within a producing formation. Production Costs: Costs incurred on an accrual basis by Burlington in operating the Underlying Properties, including both capital and non-capital costs
and including, for example, development drilling, production and processing costs, applicable taxes and operating charges. Recavitated Well: A
coal seam well, the production from which has been enhanced or extended by the enlargement of the cavity within the coal deposit to which the well has been completed. Recompleted Well: A well completed by drilling a separate well bore from an existing casing in order to reach the same reservoir, or re-drilling the
same well bore to reach a new reservoir. Royalty: The principal asset of the Trust; the 75% net overriding royalty interest conveyed to the Trust
on November 3, 1980, by Southland Royalty Company, the predecessor to Burlington, which was carved out of the Underlying Properties. Royalty
Income: The monthly Net Proceeds attributable to the Royalty. Spot Price: The price paid for gas, oil or oil products sold under contracts for
the purchase and sale of such minerals on a short-term basis. Underlying Properties: The working, royalty and other interests owned by Southland
Royalty Company, the predecessor to Burlington, in properties located in the San Juan Basin of northwestern New Mexico, out of which the Royalty was carved. Units of Beneficial Interest: The units of ownership of the Trust, equal to the number of shares of common stock of Southland Royalty Company
outstanding at the close of business on November 3, 1980. Working Interest: The operating interest under an oil and gas lease.






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