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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Quarterly Period Ended June 30, 2008
 or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission File No. 1-8032
 SAN JUAN BASIN ROYALTY TRUST
   Texas
    
    75-6279898(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)
 
 
 
 þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company o
 o þ




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TABLE OF CONTENTS  PART IItem 1. Financial StatementsItem 2. Trustees Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPART IIItem 1. Legal ProceedingsSIGNATURESINDEX TO EXHIBITSCertification Required by Rule 13a-14(a) by Lee Ann Anderson, Vice President and Senior Trust OfficerCertification Required by Rule 13a-14(b) by Lee Ann Anderson, Vice President and Senior Trust Officer    Table of Contents  SAN JUAN BASIN ROYALTY TRUST
 
 PART I
FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
  2




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SAN JUAN BASIN ROYALTY TRUST
 CONDENSED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS
 June 30,
    
    
    December 31,2008
    
    
    2007(Unaudited)ASSETSCash and short-term investments
    
    $
    14,069,428
    
    
    $
    9,042,528Net overriding royalty interest in
producing oil and gas properties
(net of accumulated amortization of
$114,299,607 and $113,394,640 at
June 30, 2008 and December 31,
2007, respectively)
    
    
    18,975,921
    
    
    
    19,880,888$
    33,045,349
    
    
    $
    28,923,416LIABILITIES AND TRUST CORPUSDistribution payable to Unit Holders
    
    $
    13,954,570
    
    
    $
    8,927,670Cash reserves
    
    
    114,858
    
    
    
    114,858Trust corpus  46,608,796 Units of
beneficial interest authorized and
outstanding
    
    
    18,975,921
    
    
    
    19,880,888$
    33,045,349
    
    
    $
    28,923,416
 CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Royalty income
    
    $
    35,612,146
    
    
    $
    26,288,314
    
    
    $
    61,188,564
    
    
    $
    50,237,063Interest income
    
    
    19,733
    
    
    
    89,032
    
    
    
    184,112
    
    
    
    713,813Total Revenue
    
    
    35,631,879
    
    
    
    26,377,346
    
    
    
    61,372,676
    
    
    
    50,950,876General and
administrative
expenditures
    
    
    592,778
    
    
    
    581,795
    
    
    
    1,202,852
    
    
    
    1,147,442Distributable income
    
    $
    35,039,101
    
    
    $
    25,795,551
    
    
    $
    60,169,824
    
    
    $
    49,803,434Distributable
income per Unit
(46,608,796 Units)
    
    $
    .751770
    
    
    $
    .553449
    
    
    $
    1.290954
    
    
    $
    1.068543
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SAN JUAN BASIN ROYALTY TRUST
 CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Trust corpus, beginning of period
    
    $
    19,438,062
    
    
    $
    21,448,676
    
    
    $
    19,880,888
    
    
    $
    21,823,390Amortization of net overriding
royalty interest
    
    
    (462,141
    )
    
    
    (444,556
    )
    
    
    (904,967
    )
    
    
    (819,270
    )Distributable income
    
    
    35,039,101
    
    
    
    25,795,551
    
    
    
    60,169,824
    
    
    
    49,803,434Distributions declared
    
    
    (35,039,101
    )
    
    
    (25,795,551
    )
    
    
    (60,169,824
    )
    
    
    (49,803,434
    )Trust corpus, end of period
    
    $
    18,975,921
    
    
    $
    21,004,120
    
    
    $
    18,975,921
    
    
    $
    21,004,120
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SAN JUAN BASIN ROYALTY TRUST
 NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
 1. BASIS OF ACCOUNTING
  
    
    Royalty income recorded for a month is the amount computed and paid with respect to
the Trusts 75% net overriding royalty interest (the Royalty) in certain oil and gas
leasehold and royalty interests (the Underlying Properties) by 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 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 development and production costs applicable to the Underlying Properties over gross
proceeds from such properties must be recovered from future net proceeds before Royalty
income is again paid to the Trust.
  2. FEDERAL INCOME TAXES
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3. CONTINGENCIES
  4. SETTLEMENTS AND LITIGATION
   San Juan Basin Royalty Trust vs. Burlington Resources Oil & Gas Company, L.P.
 6




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San Juan Basin Royalty Trust v.
Burlington Resources Oil & Gas Company LP
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Item 2. Trustees Discussion and Analysis of Financial Condition and Results of Operations.
 Forward-Looking Information
  Business Overview
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Three Months Ended June 30, 2008 and 2007
  April
    
    $
    .180658May
    
    
    .271714June
    
    
    .299398Quarter Total
    
    $
    .751770
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Three Months EndedJune 30,2008
    
    2007Gas:Total sales (Mcf)
    
    
    7,837,532
    
    
    
    8,636,056Mcf per day
    
    
    87,084
    
    
    
    97,034Average price (per Mcf)
    
    $
    8.51
    
    
    $
    6.38Oil:Total sales (Bbls)
    
    
    10,677
    
    
    
    15,854Bbls per day
    
    
    119
    
    
    
    178Average price (per Bbl)
    
    $
    94.81
    
    
    $
    57.98
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Three Months EndedJune 30,2008
    
    2007Gas sales (Mcf)
    
    
    4,529,496
    
    
    
    4,490,936Oil sales (Bbls)
    
    
    6,141
    
    
    
    7,787
     Six Months Ended June 30, 2008 and 2007
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Six Months EndedJune 30,2008
    
    
    2007Gas:Total sales (Mcf)
    
    
    16,396,649
    
    
    
    17,579,640Mcf per day
    
    
    90,091
    
    
    
    97,125Average price (per Mcf)
    
    $
    7.71
    
    
    $
    6.20Oil:Total Sales (Bbls)
    
    
    23,375
    
    
    
    34,236Bbls per day
    
    
    128
    
    
    
    189Average price (per Bbl)
    
    $
    91.43
    
    
    $
    56.25
  Six Months EndedJune 30,2008
    
    2007Gas sales (Mcf)
    
    
    9,253,319
    
    
    
    8,769,841Oil sales (Bbls)
    
    
    13,063
    
    
    
    16,695
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United States of
America ex rel. Harrold E. (Gene) Wright v. AGIP Petroleum Co. et al.
  13




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Calculation of Royalty Income
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Gross proceeds of sales from
the Underlying Properties:Gas proceeds
    
    $
    66,685,312
    
    
    $
    55,057,162
    
    
    $
    119,793,526
    (1)
    
    $
    109,033,964Oil proceeds
    
    
    1,012,317
    
    
    
    919,136
    
    
    
    2,137,110
    
    
    
    1,925,649Other
    
    
    0
    
    
    
    45,066
    (1)
    
    
    0
    
    
    
    45,066
    (2)Total
    
    
    67,697,629
    
    
    
    56,021,364
    
    
    
    121,930,636
    
    
    
    111,004,679Less production costs:Severance tax  gas
    
    
    6,028,156
    
    
    
    5,241,940
    
    
    
    11,464,632
    
    
    
    10,530,079Severance tax  oil
    
    
    99,567
    
    
    
    89,897
    
    
    
    217,479
    
    
    
    181,398Lease operating expense and
property tax
    
    
    8,012,834
    
    
    
    7,426,600
    
    
    
    16,342,118
    
    
    
    14,163,676Capital expenditures
    
    
    6,074,210
    
    
    
    8,211,842
    
    
    
    12,321,655
    
    
    
    19,146,776Total
    
    
    20,214,767
    
    
    
    20,970,279
    
    
    
    40,345,884
    
    
    
    44,021,929Net profits
    
    
    47,482,862
    
    
    
    35,051,085
    
    
    
    81,584,752
    
    
    
    66,982,750Net overriding royalty interest
    
    
    75
    %
    
    
    75
    %
    
    
    75
    %
    
    
    75
    %Royalty income
    
    $
    35,612,146
    
    
    $
    26,288,314
    
    
    $
    61,188,564
    
    
    $
    50,237,063
 
 (1)
    
    In March, 2008, gas proceeds were reduced by $6,562,104 as the amount BROG determined to be
the Trusts portion of BROGs settlement of a legal matter with the MMS and the Bureau of Indian
Affairs.(2)
    
    In May, 2007, as part of the ongoing negotiations between the Trust and BROG concerning a
number of revenue and expense audit issues, $45,066 was allocated to the Trust as additional
revenue.  Contractual Obligations
  Effects of Securities Regulation
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Critical Accounting Policies
  
    
    Royalty income recorded for a month is the amount computed and paid pursuant to
the Conveyance 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 development and production costs applicable to the Underlying Properties
over gross proceeds from such properties must be recovered from future net proceeds
before Royalty income is again paid to the Trust.
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  15




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Item 4. Controls and Procedures.
     16




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PART II
OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  San
Juan Basin Royalty Trust vs. Burlington Resources Oil & Gas Company, L.P.
 San Juan Basin Royalty Trust v. Burlington
Resources Oil & Gas Company LP
  17




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Jicarilla
Apache Nation v. Department of Interior
  Item 6. Exhibits.
 (4)(a)
    
    Amended and Restated Royalty Trust Indenture, dated September 30, 2002 (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), heretofore
filed as Exhibit 99.2 to the Trusts Current Report on Form 8-K filed with the
Commission on October 1, 2002, is incorporated herein by reference.*(4)(b)
    
    Net Overriding Royalty Conveyance from Southland Royalty Company to the Fort Worth
National Bank, as Trustee, dated November 3, 1980 (without Schedules), heretofore filed
as Exhibit 4(b) to the Trusts Annual Report on Form 10-K filed with the Commission for
the fiscal year ended December 31, 2007, is incorporated herein by reference.*(4)(c)
    
    Assignment of Net Overriding Interest (San Juan Basin Royalty Trust), dated
September 30, 2002, between Bank One, N.A. and TexasBank, heretofore filed as Exhibit
4(c) to the Trusts Quarterly Report on Form 10-Q filed with the Commission for the
quarter ended September 30, 2002, is incorporated herein by reference.*31
    
    Certification required by Rule 13a-14(a), dated August 11, 2008, by Lee Ann
Anderson, Vice President and Senior Trust Officer of Compass Bank, the Trustee of the
Trust.**32
    
    Certification required by Rule 13a-14(b), dated August 11, 2008, by Lee Ann
Anderson, Vice President and Senior Trust Officer of Compass Bank, on behalf of Compass
Bank, the Trustee of the Trust.***
 
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*
    
    A copy of this exhibit is available to any Unit Holder (free of charge) upon written request
to the Trustee, Compass Bank, 2525 Ridgmar Boulevard, Suite 100, Fort Worth, Texas 76116.**
    
    Filed herewith.***
    
    Furnished herewith. 19




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SIGNATURES
  COMPASS BANK, AS TRUSTEE OF THE
SAN JUAN BASIN ROYALTY TRUSTBy:
    /s/ Lee Ann AndersonLee Ann AndersonVice President and Senior Trust Officer




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INDEX TO EXHIBITS
 ExhibitNumber
    
    Description(4
    )(a)
    
    Amended and Restated Royalty Trust Indenture, dated September 30,
2002 (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), heretofore filed as
Exhibit 99.2 to the Trusts Current Report on Form 8-K filed with
the Commission on October 1, 2002, is incorporated herein by
reference.*(4
    )(b)
    
    Net Overriding Royalty Conveyance from Southland Royalty Company
to the Fort Worth National Bank, as Trustee, dated November 3,
1980 (without Schedules), heretofore filed as Exhibit 4(b) to the
Trusts Annual Report on Form 10-K filed with the Commission for
the fiscal year ended December 31, 2007, is incorporated herein by
reference.*(4
    )(c)
    
    Assignment of Net Overriding Interest (San Juan Basin Royalty
Trust), dated September 30, 2002, between Bank One, N.A. and
TexasBank, heretofore filed as Exhibit 4(c) to the Trusts
Quarterly Report on Form 10-Q with the Commission for the quarter
ended September 30, 2002, is incorporated herein by reference.*31
    
    
    Certification required by Rule 13a-14(a), dated August 11, 2008,
by Lee Ann Anderson, Vice President and Senior Trust Officer of
Compass Bank, the Trustee of the Trust.**32
    
    
    Certification required by Rule 13a-14(b), dated August 11, 2008,
by Lee Ann Anderson, Vice President and Senior Trust Officer of
Compass Bank, on behalf of Compass Bank, the Trustee of the
Trust.***
 
 *
    
    A copy of this exhibit is available to any Unit Holder (free of charge) upon written request
to the Trustee, Compass Bank, 2525 Ridgmar Boulevard, Suite 100, Fort Worth, Texas 76116.**
    
    Filed herewith.***
    
    Furnished herewith.