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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 September 30, 2005
 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.)
 TexasBank, Trust Department2525 Ridgmar Boulevard, Suite 100Fort Worth, Texas 76116(Address of principal executive offices)(Zip Code)
 
 
 þ o
 þ o
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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 ProceedingsItem 6. ExhibitsSIGNATURESINDEX TO EXHIBITSCertification Required by Rule 13a-14(a) - Vice President and Trust OfficerCertification Required by Rule 13a-14(b) - Vice President and Trust Officer    Table of Contents  SAN JUAN BASIN ROYALTY TRUST
 
 PART I
 FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
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SAN JUAN BASIN ROYALTY TRUST
 CONDENSED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS
 September 30,
    
    
    December 31,2005
    
    
    2004(Unaudited)ASSETSCash and short-term investments
    
    $
    9,260,904
    
    
    $
    10,140,045Net overriding royalty interest in producing
oil and gas properties (net of accumulated
amortization of $108,717,540 and $106,600,707
at September 30, 2005 and December 31, 2004, respectively)
    
    
    24,557,988
    
    
    
    26,674,821$
    33,818,892
    
    
    $
    36,814,866LIABILITIES AND TRUST CORPUSDistribution payable to Unit Holders
    
    $
    9,146,046
    
    
    $
    10,025,187Cash reserves
    
    
    114,858
    
    
    
    114,858Trust corpus  46,608,796 Units of beneficial
interest authorized and outstanding
    
    
    24,557,988
    
    
    
    26,674,821$
    33,818,892
    
    
    $
    36,814,866
 CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Royalty income
    
    $
    32,832,885
    
    
    $
    34,673,819
    
    
    $
    107,370,970
    
    
    $
    81,379,357Interest income
    
    
    44,893
    
    
    
    18,478
    
    
    
    110,249
    
    
    
    38,99232,877,778
    
    
    
    34,692,297
    
    
    
    107,481,219
    
    
    
    81,418,349General and
administrative
expenditures
    
    
    585,828
    
    
    
    290,676
    
    
    
    1,933,994
    
    
    
    1,333,044Distributable income
    
    $
    32,291,950
    
    
    $
    34,401,621
    
    
    $
    105,547,225
    
    
    $
    80,085,305Distributable
income per Unit
(46,608,796 Units)
    
    $
    .692829
    
    
    $
    .738093
    
    
    $
    2.264533
    
    
    $
    1.718245
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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 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Trust corpus, beginning of period
    
    $
    25,197,903
    
    
    $
    28,338,910
    
    
    $
    26,674,821
    
    
    $
    29,822,820Amortization of net overriding
royalty interest
    
    
    (639,915
    )
    
    
    (850,220
    )
    
    
    (2,116,833
    )
    
    
    (2,334,130
    )Distributable income
    
    
    32,291,950
    
    
    
    34,401,621
    
    
    
    105,547,225
    
    
    
    80,085,305Distributions declared
    
    
    (32,291,950
    )
    
    
    (34,401,621
    )
    
    
    (105,547,225
    )
    
    
    (80,085,305
    )Trust corpus, end of period
    
    $
    24,557,988
    
    
    $
    27,488,690
    
    
    $
    24,557,988
    
    
    $
    27,488,690
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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
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Item 2. Trustees Discussion and Analysis of Financial Condition and Results of Operations.
 Forward-Looking Information
  Principal Trust Risk Factors
  Oil and gas prices fluctuate due to a number of factors, and lower prices will reduce net
proceeds to the Trust and distributions to Unit Holders.
  
    
    political conditions worldwide, in particular political disruption, war or other
armed conflicts in oil producing regions;
    
    worldwide economic conditions;
    
    weather conditions;
    
    the supply and price of foreign oil and gas;
    
    the level of consumer demand;
    
    the price and availability of alternative fuels;
    
    the proximity to, and capacity of, transportation facilities; and
    
    the effect of worldwide energy conservation measures.
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Increased costs of production and development will result in decreased Trust distributions.
   Trust reserve estimates depend on many assumptions that may prove to be inaccurate, which
could cause both estimated reserves and estimated future revenues to be too high.
  
    
    historical production from the area compared with production rates from similar
producing areas;
    
    the assumed effect of governmental regulation; and
    
    assumptions about future commodity prices, production and development costs,
severance and excise taxes, and capital expenditures.
  The operators of the Underlying Properties are subject to extensive governmental regulation.
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Operating risks for BROG and other operators of the Underlying Properties can adversely affect
Trust distributions.
  None of the Trustee, the Trust nor the Unit Holders control the operation or development of
the Underlying Properties.
  The Royalty can be sold and the Trust can be terminated in certain circumstances.
  Mineral properties, such as the Underlying Properties, are depleting assets and, if BROG or
other operators of the Underlying Properties do not perform additional development projects, the
Royalty may deplete faster than expected.
  Unit Holders have limited voting rights.
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Business Overview
     Three Months Ended September 30, 2005 and 2004
  July
    
    $
    .279524August
    
    
    .217075September
    
    
    .196230Quarter Total
    
    $
    .692829
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Three Months EndedSeptember 30,2005
    
    2004Gas:Total sales (Mcf)
    
    
    10,466,804
    
    
    
    10,859,313Mcf per day
    
    
    113,770
    
    
    
    118,036Average price (per Mcf)
    
    $
    5.85
    
    
    $
    5.25Oil:Total sales (Bbls)
    
    
    17,020
    
    
    
    21,091Bbls per day
    
    
    185
    
    
    
    229Average price (per Bbl)
    
    $
    49.70
    
    
    $
    35.53
  Three Months EndedSeptember 30,2005
    
    2004Gas sales (Mcf)
    
    
    6,163,750
    
    
    
    6,859,527Oil sales
(Bbls)
    
    
    10,017
    
    
    
    13,296
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Nine Months Ended September 30, 2005 and 2004
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Nine Months EndedSeptember 30,2005
    
    2004Gas:Total sales (Mcf)
    
    
    32,618,591
    
    
    
    32,720,033Mcf per day
    
    
    119,482
    
    
    
    119,416Average price (per Mcf)
    
    $
    5.77
    
    
    $
    4.60Oil:Total Sales (Bbls)
    
    
    53,081
    
    
    
    59,655Bbls per day
    
    
    194
    
    
    
    218Average price (per Bbl)
    
    $
    46.68
    
    
    $
    32.16
  Nine Months EndedSeptember 30,2005
    
    2004Gas sales (Mcf)
    
    
    20,084,548
    
    
    
    18,758,186Oil sales (Bbls)
    
    
    32,713
    
    
    
    34,609
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Calculation of Royalty Income
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Gross proceeds of sales from the
Underlying Properties:Gas proceeds
    
    $
    61,276,528
    
    
    $
    56,977,514
    
    
    $
    188,240,413
    
    
    $
    150,416,797Oil proceeds
    
    
    845,878
    
    
    
    749,444
    
    
    
    2,478,003
    
    
    
    1,918,288Other
    
    
    
    
    
    
    2,447,333
    (1)
    
    
    2,405,486
    (2)(3)
    
    
    2,447,333
    (1)Total
    
    
    62,122,406
    
    
    
    60,174,291
    
    
    
    193,123,902
    
    
    
    154,782,418Less production costs:Severance tax  gas
    
    
    6,296,781
    
    
    
    5,571,441
    
    
    
    18,964,311
    
    
    
    14,838,895Severance tax  oil
    
    
    87,509
    
    
    
    75,507
    
    
    
    254,395
    
    
    
    196,443Lease operating expense and property tax
    
    
    6,299,573
    
    
    
    4,839,967
    
    
    
    16,308,566
    (2)(3)
    
    
    13,703,408Other
    
    
    
    
    
    
    
    
    
    
    42,505
    
    
    
    42,763Capital expenditures
    
    
    5,661,363
    
    
    
    3,455,618
    (4)
    
    
    14,392,832
    
    
    
    17,495,100
    (4)Total
    
    
    18,345,226
    
    
    
    13,942,533
    
    
    
    49,962,609
    
    
    
    46,276,609Less excess production costs and
interest from prior year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net profits
    
    
    43,777,180
    
    
    
    46,231,758
    
    
    
    143,161,293
    
    
    
    108,505,809Net overriding royalty interest
    
    
    75
    %
    
    
    75
    %
    
    
    75
    %
    
    
    75
    %Royalty income
    
    $
    32,832,885
    
    
    $
    34,673,819
    
    
    $
    107,370,970
    
    
    $
    81,379,357
 
 (1)
    
    In July 2004, an aggregate of $1,835,500 (the Trusts 75% interest in the total
$2,447,333 settlement) was included by BROG in calculating the Trusts Royalty payment in
connection with the settlement of certain joint interest audit issues.(2)
    
    In March 2005, as part of the ongoing negotiations between the Trust and BROG concerning a
number of revenue and expense audit issues, $833,851 was included in calculating net proceeds
paid to the Trust by BROG in settlement of claims for interest on late payments of net
proceeds and in settlement of certain other audit issues. Of that amount, $822,077 was
included in settlement of claims for additional revenue and $11,774 was included in settlement
of claims concerning disputed lease operating expenses.(3)
    
    In May 2005, as part of the ongoing negotiations between the Trust and BROG concerning a
number of revenue and expense audit issues, $988,392 was included in calculating net proceeds
paid to the Trust by BROG in settlement of certain of those audit issues. Of that amount, $982,038 was included in
net proceeds paid to the Trust by BROG in settlement of claims for additional revenue and $6,354
was included in net proceeds in settlement of claims concerning disputed lease operating
expenses. 16




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(4)
    
    In July 2004, BROG reduced the capital expenditures accrued for the Underlying
Properties for the month of July by approximately $1 million, resulting in a corresponding
increase in the Royalty income received by the Trust in July 2004. Contractual Obligations
  Effects of Securities Regulation
  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.
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
    
    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.
  
 Item 4. Controls and Procedures.
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PART II
 OTHER INFORMATION
 
 Item 1. Legal Proceedings.
   
 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, 1980, 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
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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 8, 2005, by Lee Ann
Anderson, Vice President and Trust Officer of TexasBank, the Trustee of the Trust.**32
    
    Certification required by Rule 13a-14(b), dated November 8, 2005, by Lee Ann
Anderson, Vice President and Trust Officer of TexasBank, on behalf of TexasBank, 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, TexasBank, 2525 Ridgmar Boulevard, Suite 100, Fort Worth, Texas 76116.**
    
    Filed herewith.***
    
    Furnished herewith. 20




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SIGNATURES
  TEXASBANK, AS TRUSTEE FOR
THE SAN JUAN BASIN ROYALTY TRUSTBy:
    /s/ Lee Ann AndersonLee Ann AndersonVice President and Trust Officer




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INDEX TO EXHIBITS
 ExhibitNumber
    
    Description4(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, 1980, 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 8, 2005,
by Lee Ann Anderson, Vice President and Trust Officer of
TexasBank, the Trustee of the Trust.**32
    
    Certification required by Rule 13a-14(b), dated November 8, 2005,
by Lee Ann Anderson, Vice President and Trust Officer of
TexasBank, on behalf of TexasBank, 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, TexasBank, 2525 Ridgmar Boulevard, Suite 100, Fort Worth, Texas 76116.**
    
    Filed herewith.***
    
    Furnished herewith.