##### Table of Contents



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 1934For the Quarterly Period Ended
    September 30, 2010oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File
    No. 1-8032
  SAN JUAN BASIN ROYALTY
    TRUST
 (Exact name of registrant as
    specified in the Amended and Restated San Juan Basin
    Royalty Trust Indenture)
   Texas

75-6279898(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)  Compass Bank
 2525 Ridgmar Boulevard, Suite 100
 Fort Worth, Texas 76116
 (Address of principal executive
    offices)
 (Zip Code)
  (866) 809-4553
 (Registrants telephone
    number, including area code)
  N/A
 (Former name, former address and
    former fiscal year, if changed since last report)
  þ o
  Regulation S-T o o
  12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ




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TABLE OF CONTENTS  Item 1. Financial Statements.SAN JUAN BASIN ROYALTY TRUST CONDENSED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUSSAN JUAN BASIN ROYALTY TRUST CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)SAN JUAN BASIN ROYALTY TRUST CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)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 6. Exhibits.SIGNATURESEX-31EX-32    Table of Contents   SAN JUAN
    BASIN ROYALTY TRUST
  PART I
 FINANCIAL
    INFORMATION
 
  Item 1.
    Financial
    Statements.  Form 10-K
 2




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SAN JUAN
    BASIN ROYALTY TRUST
  CONDENSED
    STATEMENTS OF ASSETS, LIABILITIES AND
    TRUST CORPUS
  September 30,


December 31,2010


2009(Unaudited)ASSETSCash and short-term investments

$
7,880,992


$
5,341,482Net overriding royalty interest in producing oil and gas
    properties (net of accumulated amortization of $118,014,152 and
    $116,431,797 at September 30, 2010 and December 31,
    2009, respectively)


15,261,376



16,843,731$
23,142,368


$
22,185,213LIABILITIES AND TRUST CORPUSDistribution payable to Unit Holders

$
7,725,203


$
5,185,693Cash reserves


155,789



155,789Trust corpus  46,608,796 Units of beneficial interest
    authorized and outstanding


15,261,376



16,843,731$
23,142,368


$
22,185,213    3




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SAN JUAN
    BASIN ROYALTY TRUST
  CONDENSED
    STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)
  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2010


2009


2010


2009Royalty income

$
19,033,188


$
7,232,890


$
63,485,843


$
19,257,575Interest income


3,646



194,481



216,735



197,892Total revenue


19,036,834



7,427,371



63,702,578



19,455,467General and administrative expenditures


198,836



435,690



1,654,681



1,706,123Distributable income

$
18,837,998


$
6,991,681


$
62,047,897


$
17,749,344Distributable income per Unit (46,608,796 Units)

$
0.404173


$
0.150007


$
1.331249


$
0.380814    4




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SAN JUAN
    BASIN ROYALTY TRUST
  CONDENSED
    STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)
  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2010


2009


2010


2009Trust corpus, beginning of period

$
15,801,981


$
17,572,134


$
16,843,731


$
17,927,498Amortization of net overriding royalty interest


(540,605
)


(293,925
)


(1,582,355
)


(649,289
)Distributable income


18,837,998



6,991,681



62,047,897



17,749,344Distributions declared


(18,837,998
)


( 6,991,681
)


(62,047,897
)


(17,749,344
)Trust corpus, end of period

$
15,261,376


$
17,278,209


$
15,261,376


$
17,278,209    5




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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.  unit-of-production
  2.
    FEDERAL
    INCOME TAXES         6




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SAN JUAN
    BASIN ROYALTY TRUST
  NOTES TO
    CONDENSED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
      3.
    CONTINGENCIES    4.
    SETTLEMENTS
    AND LITIGATION  United States of America ex rel. Harrold E.
    (Gene) Wright v. AGIP Petroleum Co.
    et al.
  San Juan Basin Royalty Trust vs.
    Burlington Resources Oil & Gas Company, L.P. No. D1329-CV-08-751,
 7




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Item 2.
    Trustees
    Discussion and Analysis of Financial Condition and Results of
    Operations.  Forward-Looking
    Information
  Form 10-Q
  Business
    Overview
           8




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Three
    Months Ended September 30, 2010 and 2009
  per-Unit
  July

$
.137865August


.100562September


.165746Quarter Total

$
.404173              9




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Three Months EndedSeptember 30,2010

2009Gas:Total sales (Mcf)


8,357,488



8,916,522Mcf per day


90,842



96,919Average price (per Mcf)

$
4.72


$
2.98Oil:Total sales (Bbls)


17,524



17,414Bbls per day


190



189Average price (per Bbl)

$
63.48


$
56.08     year-to-year
      inter alia month-to-month
 10




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Nine
    Months Ended September 30, 2010 and 2009
            Nine Months EndedSeptember 30,2010

2009Gas:Total sales (Mcf)


24,597,234



25,986,144Mcf per day


90,100



95,187Average price (per Mcf)

$
5.00


$
3.28Oil:Total Sales (Bbls)


45,385



43,689Bbls per day


166



160Average price (per Bbl)

$
67.31


$
45.34  11




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Calculation
    of Royalty Income
    CALCULATION
    OF ROYALTY INCOME
  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2010


2009


2010


2009Gross proceeds of sales from the Underlying Properties:Gas proceeds

$
39,469,691


$
26,539,822
(1)

$
126,416,015
(2)

$
85,149,264Oil proceeds


1,112,462



976,542



3,054,682



1,980,659Total


40,582,153



27,516,364



129,470,697



87,129,923Less production costs:Severance tax  gas


3,634,900



2,381,417



11,285,302



7,685,851Severance tax  oil


111,545



94,969



291,433



193,945Other














1,020
(3)Lease operating expense and property tax


8,396,991



7,970,231



24,522,938



25,266,377Capital expenditures


3,061,133



7,425,894



8,723,233



28,305,963Total


15,204,569



17,872,511



44,822,906



61,453,156Net profits


25,377,584



9,643,853



84,647,791



25,676,767Net overriding royalty interest


75
%


75
%


75
%


75
%Royalty Income

$
19,033,188


$
7,232,890


$
63,485,843


$
19,257,575     (1)
    
    In August 2009, gas proceeds included $540,069 resulting from
    granted audit exceptions.(2)
    
    In May 2010, gas proceeds included $2,600,000 received in
    settlement of litigation described in Part II, Item 1.(3)
    
    Reflects the fee for BROG volume exchanges during the production
    month of April 2009.  Contractual
    Obligations
  1 30
  Effects
    of Securities Regulation
   12




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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.  unit-of-production
 
  Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk.   
  Item 4.
    Controls
    and Procedures.  Form 10-Q
 13




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Form 10-Q
   
  PART II
    OTHER INFORMATION
 
  Item 1.
    Legal
    Proceedings.  Form 10-Q
  United States of America ex rel. Harrold E.
    (Gene) Wright v. AGIP Petroleum Co.
    et al.
  San Juan Basin Royalty Trust vs.
    Burlington Resources Oil & Gas Company, L.P. No. D1329-CV-08-751,
 14




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##### Table of Contents



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 November 5, 2010, 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 November 5, 2010, 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. 15




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SIGNATURES
    
  By:
    /s/  Lee
    Ann Anderson       (The Trust
    has no directors or executive officers.)
 16




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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 November 5, 2010, 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 November 5, 2010, 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.