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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, 2007
 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
(State or other jurisdiction 
of incorporation or organization)
    
    75-6279898
(I.R.S. Employer
Identification No.)
 
 
 
 þ o
  þ o o
  o þ




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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 Operations.Item 3. Quantitative and Qualitative Disclosures About Market Risk.Item 4. Controls and Procedures.PART II OTHER INFORMATIONItem 1. Legal Proceedings.Item 2. Exhibits.SIGNATURESINDEX TO EXHIBITSCertification Required by Rule 13a-14(a)Certification Required by Rule 13a-14(b)    Table of Contents  SAN JUAN BASIN ROYALTY TRUST
 
 PART I
FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
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SAN JUAN ROYALTY TRUST
 CONDENSED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUSJune 30,
    
    
    December 31,2007
    
    
    2006(Unaudited)ASSETSCash and short-term investments
    
    $
    9,687,726
    
    
    $
    4,657,886Net overriding royalty interest in
producing oil and gas properties
(net of accumulated amortization of
$112,271,408 and $111,452,138 at
June 30, 2007 and December 31,
2006, respectively)
    
    
    21,004,120
    
    
    
    21,823,390$
    30,691,846
    
    
    $
    26,481,276LIABILITIES AND TRUST CORPUSDistribution payable to Unit Holders
    
    $
    9,572,868
    
    
    $
    4,543,028Cash reserves
    
    
    114,858
    
    
    
    114,858Trust corpus  46,608,796 Units of
beneficial interest authorized and
outstanding
    
    
    21,004,120
    
    
    
    21,823,390$
    30,691,846
    
    
    $
    26,481,276
 CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Royalty income
    
    $
    26,288,314
    
    
    $
    28,532,236
    
    
    $
    50,237,063
    
    
    $
    79,013,322Interest income
    
    
    89,032
    
    
    
    43,023
    
    
    
    713,813
    
    
    
    534,683Total Revenue
    
    
    26,377,346
    
    
    
    28,575,259
    
    
    
    50,950,876
    
    
    
    79,548,005General and
administrative
expenditures
    
    
    581,795
    
    
    
    642,612
    
    
    
    1,147,442
    
    
    
    1,125,162Distributable income
    
    $
    25,795,551
    
    
    $
    27,932,647
    
    
    $
    49,803,434
    
    
    $
    78,422,843Distributable
income per Unit
(46,608,796 Units)
    
    $
    .553449
    
    
    $
    .599299
    
    
    $
    1.068543
    
    
    $
    1.682576
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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 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Trust corpus, beginning of period
    
    $
    21,448,676
    
    
    $
    23,277,937
    
    
    $
    21,823,390
    
    
    $
    23,881,494Amortization of net overriding
royalty interest
    
    
    (444,556
    )
    
    
    (474,450
    )
    
    
    (819,270
    )
    
    
    (1,078,007
    )Distributable income
    
    
    25,795,551
    
    
    
    27,932,647
    
    
    
    49,803,434
    
    
    
    78,422,843Distributions declared
    
    
    (25,795,551
    )
    
    
    (27,932,647
    )
    
    
    (49,803,434
    )
    
    
    (78,422,843
    )Trust corpus, end of period
    
    $
    21,004,120
    
    
    $
    22,803,487
    
    
    $
    21,004,120
    
    
    $
    22,803,487
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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 net 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 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 LP Burlington Resources Oil & Gas Company LP vs. San Juan Basin Royalty Trust,
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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, 2007 and 2006
  April
    
    $
    .150565May
    
    
    .197496June
    
    
    .205388Quarter Total
    
    $
    .553449
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Three Months EndedJune 30,2007
    
    2006Gas:Total sales (Mcf)
    
    
    8,636,056
    
    
    
    9,972,654Mcf per day
    
    
    97,034
    
    
    
    112,052Average price (per Mcf)
    
    $
    6.38
    
    
    $
    5.97Oil:Total sales (Bbls)
    
    
    15,854
    
    
    
    20,213Bbls per day
    
    
    178
    
    
    
    227Average price (per Bbl)
    
    $
    57.98
    
    
    $
    60.57
  Three Months EndedJune 30,2007
    
    2006Gas sales (Mcf)
    
    
    4,490,936
    
    
    
    5,200,329Oil sales (Bbls)
    
    
    7,787
    
    
    
    10,549
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Six Months Ended June 30, 2007 and 2006
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Six Months EndedJune 30,2007
    
    2006Gas:Total sales (Mcf)
    
    
    17,579,640
    
    
    
    20,803,166Mcf per day
    
    
    97,125
    
    
    
    114,935Average price (per Mcf)
    
    $
    6.20
    
    
    $
    7.26Oil:Total Sales (Bbls)
    
    
    34,236
    
    
    
    38,811Bbls per day
    
    
    189
    
    
    
    214Average price (per Bbl)
    
    $
    56.25
    
    
    $
    58.64
  Six Months EndedJune 30,2007
    
    2006Gas sales (Mcf)
    
    
    8,769,841
    
    
    
    11,732,815Oil sales (Bbls)
    
    
    16,695
    
    
    
    21,702
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Calculation of Royalty Income
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Gross proceeds of sales from the
Underlying Properties:Gas proceeds
    
    $
    55,057,162
    
    
    $
    59,545,094
    
    
    $
    109,033,964
    
    
    $
    151,000,672Oil proceeds
    
    
    919,136
    
    
    
    1,224,315
    
    
    
    1,925,649
    
    
    
    2,275,810Other
    
    
    45,066
    (1)
    
    
    
    
    
    
    45,066
    (1)
    
    
    Total
    
    
    56,021,364
    
    
    
    60,769,409
    
    
    
    111,004,679
    
    
    
    153,276,482Less production costs:Severance tax  gas
    
    
    5,241,940
    
    
    
    5,751,215
    
    
    
    10,530,079
    
    
    
    14,529,443Severance tax  oil
    
    
    89,897
    
    
    
    121,625
    
    
    
    181,398
    
    
    
    226,546Lease operating expense and
property tax
    
    
    7,426,600
    
    
    
    5,857,482
    
    
    
    14,163,676
    
    
    
    11,015,004Other
    
    
    
    
    
    
    42,968
    
    
    
    
    
    
    
    42,968Capital expenditures
    
    
    8,211,842
    
    
    
    10,953,138
    
    
    
    19,146,776
    
    
    
    22,111,424Total
    
    
    20,970,279
    
    
    
    22,726,428
    
    
    
    44,021,929
    
    
    
    47,925,385Less excess production costs and
interest from prior year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net profits
    
    
    35,051,085
    
    
    
    38,042,981
    
    
    
    66,982,750
    
    
    
    105,351,097Net overriding royalty interest
    
    
    75
    %
    
    
    75
    %
    
    
    75
    %
    
    
    75
    %Royalty income
    
    $
    26,288,314
    
    
    $
    28,532,236
    
    
    $
    50,237,063
    
    
    $
    79,013,322
 
 (1)
    
    In May, 2007, as part of the ongoing negotiations between the Trust and BROG concerning a
number of revenue and expense audit issues, $45,006 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 by BROG to the
Trustee for the Trust. Royalty income consists of the net 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.
   
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
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Item 4. Controls and Procedures.
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PART II
OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  San Juan Basin Royalty Trust vs. Burlington Resources
Oil & Gas Company LP Burlington
Resources Oil & Gas Company LP vs. San Juan Basin Royalty Trust,
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Item 2. 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 of 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, 2006, 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 9, 2007, 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 9, 2007, 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. 17




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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 of 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, 2006, 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 9, 2007, 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 9, 2007, 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.