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<SEC-DOCUMENT>0000950134-05-005180.txt : 20050316
<SEC-HEADER>0000950134-05-005180.hdr.sgml : 20050316
<ACCEPTANCE-DATETIME>20050316112520
ACCESSION NUMBER:		0000950134-05-005180
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20041231
FILED AS OF DATE:		20050316
DATE AS OF CHANGE:		20050316

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SABINE ROYALTY TRUST
		CENTRAL INDEX KEY:			0000710752
		STANDARD INDUSTRIAL CLASSIFICATION:	OIL ROYALTY TRADERS [6792]
		IRS NUMBER:				756297143
		STATE OF INCORPORATION:			TX
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-08424
		FILM NUMBER:		05683904

	BUSINESS ADDRESS:	
		STREET 1:		PO BOX 830650
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75283-0650
		BUSINESS PHONE:		2145082400

	MAIL ADDRESS:	
		STREET 1:		PO BOX 830650
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75283-0650
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>d22692e10vk.htm
<DESCRIPTION>FORM 10-K
<TEXT>
<HTML>
<HEAD>
<TITLE>e10vk</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
 <HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="center">
UNITED STATES

<DIV align="center">
SECURITIES AND EXCHANGE COMMISSION
</DIV>

<DIV align="center">
<FONT size="2">Washington, D.C. 20549
</FONT>
</DIV>

<P align="center">
<B><FONT size="5">Form 10-K</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="13%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="84%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">(Mark One)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2"><FONT face="wingdings">&#120;</FONT>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <B><FONT size="2">ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <B><FONT size="2">For the fiscal year ended December&nbsp;31,
    2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT size="2"><FONT face="wingdings">&#111;</FONT></FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <B><FONT size="2">TRANSITION REPORT PURSUANT TO SECTION 13 OR
    15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <B><FONT size="2">For the transition period
    from &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to</FONT></B></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">
<B><FONT size="2">Commission File Number: 1-8424</FONT></B>

<P align="center">
<B><FONT size="5">Sabine Royalty Trust</FONT></B>

<DIV align="center">
<FONT size="2">(Exact name of registrant as specified in its
charter)
</FONT>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="40%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <B><FONT size="2">Texas</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <B><FONT size="2">75-6297143</FONT></B></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <FONT size="2">(State or other jurisdiction<BR>
    of incorporation or organization)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">(I.R.S. Employer<BR>
    Identification No.)
    </FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <B><FONT size="2">Trust Division<BR>
    Bank of America, N.A.<BR>
    Bank of America Plaza<BR>
    17th Floor<BR>
    901 Main Street<BR>
    Dallas, Texas<BR>
     </FONT></B><FONT size="2">(Address of principal executive
    offices)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <B><FONT size="2">75202<BR>
     </FONT></B><FONT size="2">(Zip Code)
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">Registrant&#146;s telephone number, including
area code: <B>(214)&nbsp;209-2400</B>
</FONT>

<P align="left">
<FONT size="2">Securities registered pursuant to Section 12(b)
of the Act:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="56%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="41%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Name of Each Exchange</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Title of Each Class</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">on Which Registered</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Units of Beneficial Interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">New York Stock Exchange
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<FONT size="2">Securities registered pursuant to
Section&nbsp;12(g) of the Act: <B>None</B>
</FONT>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check
mark whether the registrant (1)&nbsp;has filed all reports
required to be filed by Section&nbsp;13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding
12&nbsp;months (or for such shorter period that the registrant
was required to file such reports), and (2)&nbsp;has been
subject to such filing requirements for the past
90&nbsp;days.&nbsp;Yes&nbsp;<FONT face="wingdings">&#120;</FONT>&nbsp;&nbsp;&nbsp;No&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check
mark if disclosure of delinquent filers pursuant to
Item&nbsp;405 of Regulation&nbsp;S-K is not contained herein,
and will not be contained, to the best of registrant&#146;s
knowledge, in definitive proxy or information statements
incorporated by reference in Part&nbsp;III of this
Form&nbsp;10-K or any amendment to this
Form&nbsp;10-K.&nbsp;<FONT face="wingdings">&#120;</FONT>
</FONT>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check
mark whether the registrant is an accelerated filer (as defined
in Rule&nbsp;12b-2 of the Securities and Exchange Act of
1934).&nbsp;Yes&nbsp;<FONT face="wingdings">&#120;</FONT>&nbsp;&nbsp;&nbsp;No&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate
market value of units of beneficial interest of the registrant
(based on the closing sale price on the New York Stock Exchange
as of the last business day of its most recently completed
second fiscal quarter) held by non-affiliates of the registrant
was approximately $498&nbsp;million.
</FONT>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At March&nbsp;4,
2005, there were 14,579,345 units of beneficial interest
outstanding.
</FONT>

<P align="center">
<B><FONT size="2">DOCUMENTS INCORPORATED BY REFERENCE</FONT></B>

<DIV align="center">
<FONT size="2">None
</FONT>
</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<P align="center">
<B><FONT size="2">TABLE OF CONTENTS</FONT></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="17%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="72%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="7" align="center" valign="top">
    <B><FONT size="2">&nbsp;<A HREF='#137'>PART I</A></FONT></B></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&nbsp;<A HREF='#101'>Item&nbsp;1.</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#101'>Business</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#102'>Description of the Trust</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&nbsp;<A HREF='#103'>Assets of the
    Trust</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&nbsp;<A HREF='#104'>Liabilities of
    the Trust</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&nbsp;<A HREF='#105'>Duties and
    Limited Powers of Trustee</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&nbsp;<A HREF='#106'>Liabilities of
    Trustee</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&nbsp;<A HREF='#107'>Duration of
    Trust</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&nbsp;<A HREF='#108'>Voting Rights of
    Unit Holders</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#109'>Description of Units</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&nbsp;<A HREF='#110'>Distributions of
    Net Income</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&nbsp;<A HREF='#111'>Transfer</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&nbsp;<A HREF='#112'>Reports to Unit
    Holders</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&nbsp;<A HREF='#113'>Liability of
    Unit Holders</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&nbsp;<A HREF='#114'>Possible
    Divestiture of Units</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#115'>Federal Taxation</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#116'>State Tax Considerations</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#117'>Regulation and Prices</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&nbsp;<A HREF='#118'>Regulation</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&nbsp;<A HREF='#119'>Prices</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&nbsp;<A HREF='#120'>Item&nbsp;2.</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#120'>Properties</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&nbsp;<A HREF='#121'>Title</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&nbsp;<A HREF='#122'>Reserves</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&nbsp;<A HREF='#123'>Item&nbsp;3.</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#123'>Legal Proceedings</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&nbsp;<A HREF='#124'>Item&nbsp;4.</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#124'>Submission of Matters to a
    Vote of Security Holders</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7" align="center" valign="top">
    <B><FONT size="2">&nbsp;<A HREF='#138'>PART&nbsp;II</A></FONT></B></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&nbsp;<A HREF='#125'>Item&nbsp;5.</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#125'>Market for Registrant&#146;s
    Common Equity and Related Stockholder Matters and Issuer
    Purchases of Equity Securities</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&nbsp;<A HREF='#126'>Item&nbsp;6.</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#126'>Selected Financial Data</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&nbsp;<A HREF='#127'>Item&nbsp;7.</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#127'>Trustee&#146;s Discussion
    and Analysis of Financial Condition and Results of Operations</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&nbsp;<A HREF='#128'>Item&nbsp;7A.</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#128'>Quantitative and Qualitative
    Disclosures About Market Risk</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&nbsp;<A HREF='#129'>Item&nbsp;8.</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#129'>Financial Statements and
    Supplementary Data</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&nbsp;<A HREF='#130'>Item&nbsp;9.</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#130'>Changes in and Disagreements
    with Accountants on Accounting and Financial Disclosure</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&nbsp;<A HREF='#141'>Item&nbsp;9A.</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#141'>Controls and Procedures</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&nbsp;<A HREF='#142'>Item&nbsp;9B.</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#142'>Other Information</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7" align="center" valign="top">
    <B><FONT size="2">&nbsp;<A HREF='#139'>PART&nbsp;III</A></FONT></B></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&nbsp;<A HREF='#131'>Item&nbsp;10.</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#131'>Directors and Executive
    Officers of the Registrant</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&nbsp;<A HREF='#132'>Item&nbsp;11.</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#132'>Executive Compensation</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&nbsp;<A HREF='#133'>Item&nbsp;12.</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#133'>Security Ownership of
    Certain Beneficial Owners and Management</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&nbsp;<A HREF='#134'>Item&nbsp;13.</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#134'>Certain Relationships and
    Related Transactions</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&nbsp;<A HREF='#135'>Item&nbsp;14.</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#135'>Principal Accounting Fees
    and Services</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7" align="center" valign="top">
    <B><FONT size="2">&nbsp;<A HREF='#140'>PART IV</A></FONT></B></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&nbsp;<A HREF='#136'>Item&nbsp;15.</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&nbsp;<A HREF='#136'>Exhibits, Financial
    Statement Schedules</A>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="d22692exv23.txt">Consent of DeGolyer and MacNaughton</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="d22692exv31.txt">Rule 13a-14(a)(15d-14(a)) Certification</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="d22692exv32.txt">Certification Pursuant to Section 906</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="d22692exv99.txt">Report dated February 10, 2005</A></FONT></TD></TR>
</TABLE>
</CENTER>

<DIV align="left">
<!-- /TOC -->
</DIV>

<P align="center"><FONT size="2">i
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='137'></A>
</DIV>

<!-- link1 "PART I" -->

<P align="center">
<B><FONT size="2">PART I</FONT></B>

<P align="left">
<A name='101'></A>

<!-- link1 "Item 1. Business." -->

<DIV align="left">
<B><FONT size="2">Item&nbsp;1.&nbsp;<I>Business.</I></FONT></B>
</DIV>

<P align="left">
<A name='102'></A>

<!-- link1 "DESCRIPTION OF THE TRUST" -->

<DIV align="center">
<B><FONT size="2">DESCRIPTION OF THE TRUST</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Sabine Royalty Trust (the &#147;Trust&#148;) is
an express trust formed under the laws of the State of Texas by
the Sabine Corporation Royalty Trust Agreement (the &#147;Trust
Agreement&#148;) made and entered into effective as of
December&nbsp;31, 1982, between Sabine Corporation, as trustor,
and InterFirst Bank Dallas, N.A. (&#147;InterFirst&#148;), as
trustee. The current trustee of the Trust is Bank of America,
N.A. (as successor to NationsBank, N.A.) (&#147;Bank of
America&#148;). In accordance with the successor trustee
provisions of the Trust Agreement, Bank of America, as trustee
of the Trust (the &#147;Trustee&#148;), is subject to all the
terms and conditions of the Trust Agreement. The principal
office of the Trust (sometimes referred to herein as the
&#147;Registrant&#148;) is located at Bank of America Plaza,
17th&nbsp;Floor, 901&nbsp;Main Street, Dallas, Texas 75202. The
telephone number of the Trust is (214)&nbsp;209-2400.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Trust maintains an Internet website, and as a
result, reports such as its annual reports on Form&nbsp;10-K,
quarterly reports on Form&nbsp;10-Q, current reports on
Form&nbsp;8-K, and amendments to such reports filed or furnished
pursuant to Section&nbsp;13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended will now be made available at
http://www.sbr-sabineroyalty.com as soon as reasonably
practicable after such information is electronically filed with
or furnished to the SEC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;12, 1982, the shareholders of
Sabine Corporation approved and authorized Sabine
Corporation&#146;s transfer of royalty and mineral interests,
including landowner&#146;s royalties, overriding royalty
interests, minerals (other than executive rights, bonuses and
delay rentals), production payments and any other similar,
nonparticipatory interests, in certain producing and proved
undeveloped oil and gas properties located in Florida,
Louisiana, Mississippi, New&nbsp;Mexico, Oklahoma and Texas (the
&#147;Royalty Properties&#148;) to the Trust. The conveyances of
the Royalty Properties to the Trust were effective with respect
to production as of 7:00&nbsp;a.m. (local time) on
January&nbsp;1, 1983.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to avoid uncertainty under Louisiana law
as to the legality of the Trustee&#146;s holding record title to
the Royalty Properties located in that state, title to such
properties has historically been held by a separate trust formed
under the laws of Louisiana, the sole beneficiary of which was
the Trust. Sabine Louisiana Royalty Trust was a passive entity,
with the trustee thereof, Hibernia National Bank in
New&nbsp;Orleans, having only such powers as were necessary for
the collection of and distribution of revenues from and the
protection of the Royalty Properties located in Louisiana and
the payment of liabilities of Sabine Louisiana Royalty Trust. On
December&nbsp;31, 2001, Bank of America, N.A. assumed the duties
as Trustee of the Sabine Louisiana Royalty Trust, since
Louisiana law now permits an out-of-state bank to act in this
capacity. A separate trust also was established to hold record
title to the Royalty Properties located in Florida. Legislation
was adopted in Florida in 1992 that eliminated the provision of
Florida law that prohibited the Trustee from holding record
title to the Royalty Properties located in that state. In
November&nbsp;1993, record title to the Royalty Properties held
by the trustee of Sabine Florida Land Trust was transferred to
the Trustee. As used herein, the term &#147;Royalty
Properties&#148; includes the Royalty Properties held directly
by the Trust and the Royalty Properties located in Louisiana and
Florida that were held indirectly through the Trust&#146;s
ownership of 100&nbsp;percent beneficial interest of Sabine
Louisiana Royalty Trust and Sabine Florida Land Trust. In
discussing the Trust, this report disregards the technical
ownership formalities described in this paragraph, which have no
effect on the tax or accounting treatment of the Royalty
Properties, since the observance thereof would significantly
complicate the information presented herein without any
corresponding benefit to Unit holders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certificates evidencing units of beneficial
interest (the &#147;Units&#148;) in the Trust were mailed on
December&nbsp;31, 1982 to the shareholders of Sabine Corporation
of record on December&nbsp;23, 1982, on the basis of one Unit
for each outstanding share of common stock of Sabine
Corporation. The Units are listed and traded on the
New&nbsp;York Stock Exchange under the symbol &#147;SBR.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May 1988, Sabine Corporation was acquired by
Pacific Enterprises, a California corporation. Through a series
of mergers, Sabine Corporation was merged into Pacific
Enterprises Oil Company (USA)
</FONT>

<P align="center"><FONT size="2">1
</FONT>

<!-- PAGEBREAK -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">(&#147;Pacific (USA)&#148;), a California
corporation and a wholly owned subsidiary of Pacific
Enterprises, effective January&nbsp;1, 1990. This acquisition
and the subsequent mergers had no effect on the Units. Pacific
(USA), as successor to Sabine Corporation, assumed by operation
of law all of Sabine Corporation&#146;s rights and obligations
with respect to the Trust. References herein to Pacific
(USA)&nbsp;shall be deemed to include Sabine Corporation where
appropriate.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the transfer of the Royalty
Properties to the Trust upon its formation, Sabine Corporation
had reserved to itself all executive rights, including rights to
execute leases and to receive bonuses and delay rentals. In
January 1993, Pacific (USA)&nbsp;completed the sale of
substantially all of Pacific (USA)&#146;s producing oil and gas
assets to Hunt Oil Company. The sale did not include the
executive rights relating to the Royalty Properties, and Pacific
(USA)&#146;s ownership of such rights was not affected by the
sale.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following summaries of certain provisions of
the Trust Agreement are qualified in their entirety by reference
to the Trust Agreement itself, which is an exhibit to the
Form&nbsp;10-K and available upon request from the Trustee. The
definitions, formulas, accounting procedures and other terms
governing the Trust are complex and extensive and no attempt has
been made below to describe all such provisions. Capitalized
terms not otherwise defined herein are used with the meanings
ascribed to them in the Trust Agreement.
</FONT>

<DIV align="left">
<A name='103'></A>
</DIV>

<!-- link1 "Assets of the Trust" -->

<P align="left">
<B><FONT size="2">Assets of the Trust</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Royalty Properties are the only assets of the
Trust, other than cash being held for the payment of expenses
and liabilities and for distribution to the Unit holders.
Pending such payment of expenses and distribution to Unit
holders, cash may be invested by the Trustee only in
certificates of deposit, United States government securities or
repurchase agreements secured by United States government
securities. See &#147;Duties and Limited Powers of Trustee&#148;
below.
</FONT>

<DIV align="left">
<A name='104'></A>
</DIV>

<!-- link1 "Liabilities of the Trust" -->

<P align="left">
<B><FONT size="2">Liabilities of the Trust</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Because of the passive nature of the Trust&#146;s
assets and the restrictions on the power of the Trustee to incur
obligations, it is anticipated that the only liabilities the
Trust will incur are those for routine administrative expenses,
such as insurance and trustee&#146;s fees, and accounting,
engineering, legal and other professional fees. The total
general and administrative expenses of the Trust for 2004 were
$1,801,824 of which, pursuant to the terms of the Trust
Agreement, $291,480 was paid to Bank of America, as Trustee, and
$874,438 was paid to Bank of America, as escrow agent.
</FONT>

<DIV align="left">
<A name='105'></A>
</DIV>

<!-- link1 "Duties and Limited Powers of Trustee" -->

<P align="left">
<B><FONT size="2">Duties and Limited Powers of Trustee</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The duties of the Trustee are specified in the
Trust Agreement and by the laws of the State of Texas. The basic
function of the Trustee is to collect income from the Trust
properties, to pay out of the Trust&#146;s income and assets all
expenses, charges and obligations, and to pay available income
to Unit holders. Since Pacific (USA) has retained the executive
rights with respect to the minerals included in the Royalty
Properties and the right to receive any future bonus payments or
delay rentals resulting from leases with respect to such
minerals, the Trustee is not required to make any investment or
operating decision with respect to the Royalty Properties.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Trust has no employees. Administrative
functions of the Trust are performed by the Trustee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Trustee has the discretion to establish a
cash reserve for the payment of any liability that is contingent
or uncertain in amount or that otherwise is not currently due
and payable. The Trustee has the power to borrow funds required
to pay liabilities of the Trust as they become due and pledge or
otherwise encumber the Trust&#146;s properties if it determines
that the cash on hand is insufficient to pay such liabilities.
Borrowings must be repaid in full before any further
distributions are made to Unit holders. All distributable income
of the Trust is distributed on a monthly basis. The Trustee is
required to invest any cash being held by it for distribution on
the next Distribution Date or as a reserve for liabilities in
certificates of deposit, United States government securities or
repurchase agreements secured by United States government
securities. The Trustee furnishes Unit holders with periodic
reports. See &#147;Item&nbsp;1&nbsp;&#151; Description of
Units&nbsp;&#151; Reports to Unit Holders.&#148;
</FONT>

<P align="center"><FONT size="2">2
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Trust Agreement grants the Trustee only such
rights and powers as are necessary to achieve the purposes of
the Trust. The Trust Agreement prohibits the Trustee from
engaging in any business, commercial or, with certain
exceptions, investment activity of any kind and from using any
portion of the assets of the Trust to acquire any oil and gas
lease, royalty or other mineral interest other than the Royalty
Properties. The Trustee may sell Trust properties only as
authorized by a vote of the Unit holders, or when necessary to
provide for the payment of specific liabilities of the Trust
then due or upon termination of the Trust. Pledges or other
encumbrances to secure borrowings are permitted without the
authorization of Unit holders if the Trustee determines such
action is advisable. Any sale of Trust properties must be for
cash unless otherwise authorized by the Unit holders or unless
the properties are being sold to provide for the payment of
specific liabilities of the Trust then due, and the Trustee is
obligated to distribute the available net proceeds of any such
sale to the Unit holders.
</FONT>

<DIV align="left">
<A name='106'></A>
</DIV>

<!-- link1 "Liabilities of Trustee" -->

<P align="left">
<B><FONT size="2">Liabilities of Trustee</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Trustee is to be indemnified out of the
assets of the Trust for any liability, expense, claim, damage or
other loss incurred by it in the performance of its duties
unless such loss results from its negligence, bad faith or fraud
or from its expenses in carrying out such duties exceeding the
compensation and reimbursement it is entitled to under the Trust
Agreement. The Trustee can be reimbursed out of the Trust assets
for any liability imposed upon the Trustee for its failure to
ensure that the Trust&#146;s liabilities are satisfiable only
out of Trust assets. In no event will the Trustee be deemed to
have acted negligently, fraudulently or in bad faith if it takes
or suffers action in good faith in reliance upon and in
accordance with the advice of parties considered to be qualified
as experts on the matters submitted to them. The Trustee is not
entitled to indemnification from Unit holders except in certain
limited circumstances related to the replacement of mutilated,
destroyed, lost or stolen certificates. See
&#147;Item&nbsp;1&nbsp;&#151; Description of Units&nbsp;&#151;
Liability of Unit Holders.&#148;
</FONT>

<DIV align="left">
<A name='107'></A>
</DIV>

<!-- link1 "Duration of Trust" -->

<P align="left">
<B><FONT size="2">Duration of Trust</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Trust is irrevocable and Pacific (USA) has no
power to terminate the Trust or, except with respect to certain
corrective amendments, to alter or amend the terms of the Trust
Agreement. The Trust will exist until it is terminated by
(i)&nbsp;two successive fiscal years in which the Trust&#146;s
gross revenues from the Royalty Properties are less than
$2,000,000&nbsp;per year, (ii)&nbsp;a vote of Unit holders as
described below under &#147;Voting Rights of Unit Holders&#148;
or (iii)&nbsp;operation of provisions of the Trust Agreement
intended to permit compliance by the Trust with the &#147;rule
against perpetuities.&#148; Legislation that was introduced in
the 2003 Texas legislature to repeal the &#147;rule against
perpetuities&#148; failed to pass. The Texas legislature meets
again for its regular session in 2005, and it is not known
whether a proposal to repeal the &#147;rule against
perpetuities&#148; will be introduced during this legislative
session.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon the termination of the Trust, the Trustee
will continue to act in such capacity until all the assets of
the Trust are distributed. The Trustee will sell all Trust
properties for cash (unless the Unit holders authorize the sale
for a specified non-cash consideration, in which event the
Trustee may, but is not obligated to, consummate such non-cash
sale) in one or more sales and, after satisfying all existing
liabilities and establishing adequate reserves for the payment
of contingent liabilities, will distribute all available
proceeds to the Unit holders.
</FONT>

<DIV align="left">
<A name='108'></A>
</DIV>

<!-- link1 "Voting Rights of Unit Holders" -->

<P align="left">
<B><FONT size="2">Voting Rights of Unit Holders</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Although Unit holders possess certain voting
rights, their voting rights are not comparable to those of
shareholders of a corporation. For example, there is no
requirement for annual meetings of Unit holders or for annual or
other periodic re-election of the Trustee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Trust Agreement may be amended by the
affirmative vote of a majority of the outstanding Units at any
duly called meeting of Unit holders. However, no such amendment
may alter the relative rights of Unit holders unless approved by
the affirmative vote of 100&nbsp;percent of the Unit holders and
by the Trustee. In addition, certain special voting requirements
can be amended only if such amendment is approved by the holders
of at least 80&nbsp;percent of the outstanding Units and by the
Trustee.
</FONT>

<P align="center"><FONT size="2">3
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Removal of the Trustee requires the affirmative
vote of the holders of a majority of the Units represented at a
duly called meeting of Unit holders. In the event of a vacancy
in the position of Trustee or if the Trustee has given notice of
its intention to resign, a successor trustee of the Trust may be
appointed by similar voting approval of the Unit holders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The sale of all or any part of the assets of the
Trust must be authorized by the affirmative vote of the holders
of a majority of the outstanding Units. However, the Trustee
may, without a vote of the Unit holders, sell all or any part of
the Trust assets upon termination of the Trust or otherwise if
necessary to provide for the payment of specific liabilities of
the Trust then due. The Trust can be terminated by the Unit
holders only if the termination is approved by the holders of a
majority of the outstanding Units.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Meetings of Unit holders may be called by the
Trustee at any time at its discretion and must be called by the
Trustee at the written request of holders of not less than
10&nbsp;percent of the then outstanding Units. The presence of a
majority of the outstanding Units is necessary to constitute a
quorum and Unit holders may vote in person or by proxy.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Notice of any meeting of Unit holders must be
given not more than 60 nor less than 20&nbsp;days prior to the
date of such meeting. The notice must state the purposes of the
meeting and no other matter may be presented or acted upon at
the meeting.
</FONT>

<DIV align="left">
<A name='109'></A>
</DIV>

<!-- link1 "DESCRIPTION OF UNITS" -->

<P align="center">
<B><FONT size="2">DESCRIPTION OF UNITS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each Unit represents an equal undivided share of
beneficial interest in the Trust and is evidenced by a
transferable certificate issued by the Trustee. Each Unit
entitles its holder to the same rights as the holder of any
other Unit, and the Trust has no other authorized or outstanding
class of equity security. At March&nbsp;4, 2005, there were
14,579,345 Units outstanding.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Trust may not issue additional Units unless
such issuance is approved by the holders of at least
80&nbsp;percent of the outstanding Units and by the Trustee.
Under limited circumstances, Units may be redeemed by the Trust
and canceled. See &#147;Possible Divestiture of Units&#148;
below.
</FONT>

<DIV align="left">
<A name='110'></A>
</DIV>

<!-- link1 "Distributions of Net Income" -->

<P align="left">
<B><FONT size="2">Distributions of Net Income</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The identity of Unit holders entitled to receive
distributions of Trust income and the amounts thereof are
determined as of each Monthly Record Date. Unit holders of
record as of the Monthly Record Date (the 15th&nbsp;day of each
calendar month except in limited circumstances) are entitled to
have distributed to them the calculated Monthly Income Amount
for the related Monthly Period no later than 10 business days
after the Monthly Record Date. The Monthly Income Amount is the
excess of (i)&nbsp;revenues from the Trust properties plus any
decrease in cash reserves previously established for contingent
liabilities and any other cash receipts of the Trust over
(ii)&nbsp;the expenses and payments of liabilities of the Trust
plus any increase in cash reserves for contingent liabilities.
</FONT>

<DIV align="left">
<A name='111'></A>
</DIV>

<!-- link1 "Transfer" -->

<P align="left">
<B><FONT size="2">Transfer</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Units are transferable on the records of the
Trustee upon surrender of any certificate in proper form for
transfer and compliance with such reasonable regulations as the
Trustee may prescribe. No service charge is made to the
transferor or transferee for any transfer of a Unit, but the
Trustee may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in relation to such
transfer. Until any such transfer, the Trustee may conclusively
treat the holder of a Unit shown by its records as the owner of
that Unit for all purposes. Any such transfer of a Unit will, as
to the Trustee, vest in the transferee all rights of the
transferor at the date of transfer, except that the transfer of
a Unit after the Monthly Record Date for a distribution will not
transfer the right of the transferor to such distribution.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The transfer of Units by gift and the transfer of
Units held by a decedent&#146;s estate, and distributions from
the Trust in respect thereof, may be restricted under applicable
state law. See &#147;Item&nbsp;1&nbsp;&#151; State Law and Tax
Considerations.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mellon Investor Services&nbsp;LLC serves as
transfer agent and registrar for the Units.
</FONT>

<P align="center"><FONT size="2">4
</FONT>

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<DIV align="left">
<A name='112'></A>
</DIV>

<!-- link1 "Reports to Unit Holders" -->

<P align="left">
<B><FONT size="2">Reports to Unit Holders</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As promptly as practicable following the end of
each fiscal year, the Trustee mails to each person who was a
Unit holder on any Monthly Record Date during such fiscal year,
a report showing in reasonable detail on a cash basis the
receipts and disbursements and income and expenses of the Trust
for federal and state tax purposes for each Monthly Period
during such fiscal year and containing sufficient information to
enable Unit holders to make all calculations necessary for
federal and state tax purposes. As promptly as practicable
following the end of each of the first three fiscal quarters of
each year, the Trustee mails a report for such fiscal quarter
showing in reasonable detail on a cash basis the assets and
liabilities, receipts and disbursements, and income and expenses
of the Trust for such fiscal quarter to Unit holders of record
on the last Monthly Record Date immediately preceding the
mailing thereof. Within 120&nbsp;days following the end of each
fiscal year, or such shorter period as may be required by the
New&nbsp;York Stock Exchange, the Trustee mails to Unit holders
of record on the last Monthly Record Date immediately preceding
the mailing thereof, an annual report containing audited
financial statements of the Trust and an audited statement of
fees and expenses paid by the Trust to Bank of America, as
Trustee and escrow agent. See &#147;Federal Taxation&#148; below.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each Unit holder and his or her duly authorized
agent has the right, during reasonable business hours at his or
her own expense, to examine and make audits of the Trust and the
records of the Trustee, including lists of Unit holders, for any
proper purpose in reference thereto.
</FONT>

<DIV align="left">
<A name='113'></A>
</DIV>

<!-- link1 "Liability of Unit Holders" -->

<P align="left">
<B><FONT size="2">Liability of Unit Holders</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As regards the Unit holders, the Trustee, in
engaging in any activity or transaction that results or could
result in any kind of liability, will be fully liable if the
Trustee fails to take reasonable steps necessary to ensure that
such liability is satisfiable only out of the Trust assets (even
if the assets are inadequate to satisfy the liability) and in no
event out of amounts distributed to, or other assets owned by,
Unit holders. However, the Trust might be held to constitute a
&#147;joint stock company&#148; under Texas law, which is
unsettled on this point, and therefore a Unit holder may be
jointly and severally liable for any liability of the Trust if
the satisfaction of such liability was not contractually limited
to the assets of the Trust and the assets of both the Trust and
the Trustee are not adequate to satisfy such liability. In view
of the substantial value and passive nature of the Trust assets,
the restrictions on the power of the Trustee to incur
liabilities and the required financial net worth of any trustee
of the Trust, the imposition of any liability on a Unit holder
is believed to be extremely unlikely.
</FONT>

<DIV align="left">
<A name='114'></A>
</DIV>

<!-- link1 "Possible Divestiture of Units" -->

<P align="left">
<B><FONT size="2">Possible Divestiture of Units</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Trust Agreement imposes no restrictions based
on nationality or other status of the persons or entities which
are eligible to hold Units. However, the Trust Agreement
provides that if at any time the Trust or the Trustee is named a
party in any judicial or administrative proceeding seeking the
cancellation or forfeiture of any property in which the Trust
has an interest because of the nationality, or any other status,
of any one or more Unit holders, the following procedure will be
applicable:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">1.&nbsp;The Trustee will give written notice to
    each holder whose nationality or other status is an issue in the
    proceeding of the existence of such controversy. The notice will
    contain a reasonable summary of such controversy and will
    constitute a demand to each such holder that he or she dispose
    of his or her Units within 30&nbsp;days to a party not of the
    nationality or other status at issue in the proceeding described
    in the notice.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">2.&nbsp;If any holder fails to dispose of his or
    her Units in accordance with such notice, the Trustee shall have
    the preemptive right to redeem and shall redeem, at any time
    during the 90-day period following the termination of the 30-day
    period specified in the notice, any Unit not so transferred for
    a cash price equal to the closing price of the Units on the
    stock exchange on which the Units are then listed or, in the
    absence of any such listing, the mean between the closing bid
    and asked prices for the Units in the over-the-counter market,
    as of the last business day prior to the expiration of the
    30-day period stated in the notice.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">5
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">3.&nbsp;The Trustee shall cancel any Unit
    acquired in accordance with the foregoing procedures.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">4.&nbsp;The Trustee may, in its sole discretion,
    cause the Trust to borrow any amount required to redeem Units.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<A name='115'></A>
</DIV>

<!-- link1 "FEDERAL TAXATION" -->

<P align="center">
<B><FONT size="2">FEDERAL TAXATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">THE TAX CONSEQUENCES TO A UNIT HOLDER OF THE
OWNERSHIP AND SALE OF UNITS WILL DEPEND IN PART ON THE UNIT
HOLDER&#146;S TAX CIRCUMSTANCES. EACH UNIT HOLDER SHOULD
THEREFORE CONSULT THE UNIT HOLDER&#146;S TAX ADVISOR ABOUT THE
FEDERAL, STATE AND LOCAL TAX CONSEQUENCES TO THE UNIT HOLDER OF
THE OWNERSHIP OF UNITS.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May 1983, the Internal Revenue Service (the
&#147;Service&#148;) ruled that the Trust would be classified as
a grantor trust for federal income tax purposes and not as an
association taxable as a corporation. Accordingly, the income
and deductions of the Trust are reportable directly by Unit
holders for federal income tax purposes. The Service also ruled
that Unit holders would be entitled to deduct cost depletion
with respect to their investment in the Trust and that the
transfer of a Unit in the Trust would be considered to be a
transfer of a proportionate part of the properties held by the
Trust.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Transferees of Units transferred after
October&nbsp;11, 1990, may be eligible to use the percentage
depletion deduction on oil and gas income thereafter
attributable to such Units, if the percentage depletion
deduction would exceed cost depletion. A Unit holder generally
would not have claimed percentage depletion deductions for 1990
or any subsequent year because cost depletion generally has
exceeded percentage depletion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If a taxpayer disposes of any
&#147;section&nbsp;1254 property&#148; (certain oil, gas,
geothermal or other mineral property), and if the adjusted basis
of such property includes adjustments for deductions for
depletion under section 611 of the Internal Revenue Code (the
&#147;Code&#148;) (discussed above), the taxpayer generally must
recapture the amount deducted for depletion in ordinary income
(to the extent of gain realized on the disposition of the
property). This depletion recapture rule applies to any
disposition of property that was placed in service by the
taxpayer after December&nbsp;31, 1986. Detailed rules set forth
in Sections&nbsp;1.1254-1 through&nbsp;1.1254-6 of the United
States Treasury regulations govern dispositions of property
after March&nbsp;13, 1995. The Service will likely take the
position that a Unit holder who purchases a Unit subsequent to
December&nbsp;31, 1986, must recapture depletion upon the
disposition of that Unit.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to facilitate creation of the Trust and
to avoid the administrative expense and inconvenience of daily
reporting to Unit holders by the Trustee, the conveyances by
Sabine Corporation of the Royalty Properties located in five of
the six states (Florida, Mississippi, New Mexico, Oklahoma, and
Texas) provided for the execution of an escrow agreement by
Sabine Corporation and InterFirst (the initial trustee of the
Trust), in its capacities as trustee of the Trust and as escrow
agent. The conveyances by Sabine Corporation of the Royalty
Properties located in Louisiana provided for the execution of a
substantially identical escrow agreement by Sabine Corporation
and Hibernia National Bank in New Orleans, in the capacities of
escrow agent and of trustee of Sabine Louisiana Royalty Trust.
The Trust now only has one escrow agent, which is the Trustee,
and a single escrow agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the terms of the escrow agreement and
the conveyances of the Royalty Properties, the proceeds of
production from the Royalty Properties for each calendar month,
and interest thereon, are collected by the escrow agent and are
paid to and received by the Trust only on the next Monthly
Record Date. The escrow agent has agreed to endeavor to assure
that it incurs and pays expenses and fees for each calendar
month only on the next Monthly Record Date. The Trust Agreement
also provides that the Trustee is to endeavor to assure that
income of the Trust will be accrued and received and expenses of
the Trust will be incurred and paid only on each Monthly Record
Date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Assuming that the escrow arrangement is
recognized for federal income tax purposes and that the Trustee,
as escrow agent, is able to control the timing of income and
expenses, as stated above, cash and accrual basis Unit holders
should be treated as realizing income only on each Monthly
Record Date. The
</FONT>

<P align="center"><FONT size="2">6
</FONT>

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<DIV align="left">
<FONT size="2">Trustee, as escrow agent, may not be able to
cause third party expenses to be incurred on each Monthly Record
Date in all instances. Cash basis Unit holders, however, should
be treated as having paid all expenses and fees only when such
expenses and fees are actually paid. Even if the escrow
arrangement is recognized for federal income tax purposes,
however, accrual basis Unit holders might be considered to have
accrued expenses when such expenses are incurred rather than on
each Monthly Record Date when paid.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No ruling was requested from the Service with
respect to the effect of the escrow arrangements when
established. Due to the absence of direct authority and the
factual nature of the characterization of the relationship among
the escrow agents, Pacific (USA) and the Trust, no opinion was
expressed by legal counsel with respect to the tax consequences
of the escrow arrangement. If the escrow arrangement is
recognized, the income from the Royalty Properties for a
calendar month and interest income thereon will be taxed to the
holder of the Unit on the next Monthly Record Date without
regard to the ownership of the Unit prior to that date. The
Trustee is treating the escrow arrangement as effective for tax
purposes and furnishes tax information to Unit holders on that
basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Service might take the position that the
escrow arrangement should be ignored for federal tax purposes.
In such case, the Trustee could be required to report the
proceeds from production and interest income thereon to the Unit
holders on a daily basis, in accordance with their method of
accounting, as the proceeds from production and interest thereon
were received or accrued by the escrow agent. Such reporting
could impact who is taxed on the production and interest income
and result in a substantial increase in the administrative
expenses of the Trust. In the event of a transfer of a Unit, the
income and the depletion deduction attributable to the Royalty
Properties for the period up to the date of transfer would be
allocated to the transferor, and the income and depletion
deduction attributable to the Royalty Properties on and after
the date of transfer would be allocated to the transferee. Such
allocation would be required even though the transferee was the
holder of the Unit on the next Monthly Record Date and,
therefore, would be entitled to the monthly income distribution.
Thus, if the escrow arrangement is not recognized, a mismatching
of the monthly income distribution and the Unit holder&#146;s
taxable income and deductions could occur between a transferor
and a transferee upon the transfer of a Unit.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unit holders of record on each Monthly Record
Date are entitled to receive monthly distributions. See
&#147;Description of Units&nbsp;&#151; Distributions of Net
Income&#148; above. The terms of the escrow agreement and the
Trust Agreement, as described above, seek to assure that taxable
income attributable to such distributions will be reported by
the Unit holder who receives such distributions, assuming that
such holder is the holder of record on the Monthly Record Date.
In certain circumstances, however, a Unit holder may be required
to report taxable income attributable to his or her Units but
the Unit holder will not receive the distribution attributable
to such income. For example, if the Trustee establishes a
reserve or borrows money to satisfy debts and liabilities of the
Trust, income used to establish such reserve or to repay such
loan will be reported by the Unit holder, even though such
income is not distributed to the Unit holder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest and royalty income attributable to
ownership of Units and any gain on the sale thereof are
considered portfolio income, and not income from a &#147;passive
activity,&#148; to the extent a Unit holder acquires and holds
Units as an investment and did not acquire them in the ordinary
course of a trade or business. Therefore, interest and royalty
income attributable to ownership of Units generally may not be
offset by losses from any passive activities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Individuals may deduct &#147;miscellaneous
itemized deductions&#148; (including, in general, investment
expenses) only to the extent that such expenses exceed
2&nbsp;percent of the individual&#146;s adjusted gross income.
Although there are exceptions to the 2&nbsp;percent limitation,
authority suggests that no exceptions apply to expenses passed
through from a grantor trust, like the Trust.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The foregoing summary is not exhaustive and does
not purport to be complete. Many other provisions of the federal
tax laws may affect individual Unit holders. Each Unit holder
should consult his or her personal tax adviser with respect to
the effects of his or her ownership of Units on his or her
personal tax situation.
</FONT>

<P align="center"><FONT size="2">7
</FONT>

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<DIV align="left">
<A name='116'></A>
</DIV>

<!-- link1 "STATE TAX CONSIDERATIONS" -->

<P align="center">
<B><FONT size="2">STATE TAX CONSIDERATIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">THE FOLLOWING IS INTENDED AS A BRIEF SUMMARY
OF CERTAIN INFORMATION REGARDING STATE INCOME TAXES AND OTHER
STATE TAX MATTERS AFFECTING THE TRUST AND THE UNIT HOLDERS. UNIT
HOLDERS SHOULD CONSULT THE UNIT HOLDER&#146;S TAX ADVISOR
REGARDING STATE INCOME TAX FILING AND COMPLIANCE
MATTERS.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Texas. </FONT></I><FONT size="2">Texas does
not impose an income tax. Therefore, no part of the income
produced by the Trust is subject to an income tax in Texas.
However, corporations and limited liability companies doing
business in Texas are subject to the Texas franchise tax, which
includes a calculation based upon the company&#146;s taxable
income for federal income tax purposes (or comparable amounts,
in the case of limited liability companies). It is unlikely that
the ownership of Units would be sufficient to subject a
corporate Unit holder to the franchise tax who is not otherwise
doing business in Texas and who does not have control over the
Trust or the Trustee of the Trust. Under certain circumstances,
Texas inheritance tax may be applicable to property in Texas
(including intangible personal property such as the Units) of
both resident and nonresident decedents.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Louisiana. </FONT></I><FONT size="2">The
Trustee is required to file with Louisiana a return reflecting
the income of the Trust attributable to mineral interests
located in Louisiana. Both Louisiana resident and non-resident
Unit holders may be subject to the Louisiana personal, corporate
and/or franchise tax as certain income and expenses from the
Trust are from sources within Louisiana. Units held by residents
of Louisiana, to the extent that they represent a proportionate
share of mineral royalties from mineral interests located in
Louisiana, are subject to Louisiana inheritance and other taxes
and probate, community property, forced heirship and other
rules. For deaths occurring after June&nbsp;30, 2004, no
Louisiana inheritance tax is due and no inheritance tax return
is required if certain requirements are met. Special rules apply
for deaths occurring between July&nbsp;1, 2004, and
January&nbsp;1, 2005. Units held of record by a person who was
not domiciled in Louisiana at the date of death generally are
not subject to Louisiana inheritance taxes or probate, community
property or forced heirship rules, and Units transferred inter
vivos by non-domiciliaries of Louisiana generally are not
subject to Louisiana gift tax.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Florida, Mississippi, New Mexico and Oklahoma.
</FONT></I><FONT size="2">Florida does not have a personal
income tax. Florida imposes an income tax on resident and
nonresident corporations (except for S&nbsp;corporations not
subject to the built-in gains tax or passive investment income
tax), which will be applicable to royalty income allocable to a
corporate Unit holder from properties located within Florida.
Mississippi, New Mexico and Oklahoma each impose an income tax
applicable to both resident and nonresident individuals and
corporations (subject to certain exceptions for
S&nbsp;corporations), which will be applicable to royalty income
allocable to a Unit holder from properties located within these
states. Although the Trust may be required to file information
returns with taxing authorities in those states and provide
copies of such returns to the Unit holders, the Trust should be
considered a grantor trust for state income tax purposes and the
Royalty Properties that are located in such states should be
considered economic interests in minerals for state income tax
purposes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Generally, the state income tax due by
nonresidents in all of the aforementioned states is computed as
a percentage of taxable income attributable to the particular
state. By contrast, residents are taxed on their taxable income
from all sources, wherever earned. Furthermore, even though
state laws vary, taxable income for state purposes is often
computed in a manner similar to the computation of taxable
income for federal income tax purposes. Some of these states
give credit for taxes paid to other states by their residents on
income from sources in those other states. In certain of these
states, a Unit holder is required to file a state income tax
return if income is attributable to the Unit holder even though
no tax is owed.
</FONT>

<P align="center"><FONT size="2">8
</FONT>

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<DIV align="left">
<A name='117'></A>
</DIV>

<!-- link1 "REGULATION AND PRICES" -->

<P align="center">
<B><FONT size="2">REGULATION AND PRICES</FONT></B>

<DIV align="left">
<A name='118'></A>
</DIV>

<!-- link1 "Regulation" -->

<P align="left">
<B><FONT size="2">Regulation</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;</FONT></B><I><FONT size="2">General</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Exploration for and production and sale of oil
and gas are extensively regulated at the national, state and
local levels. Oil and gas development and production activities
are subject to state law, regulation and orders of regulatory
bodies pursuant thereto. These laws may govern a wide variety of
matters, including allowable rates of production,
transportation, marketing, pricing, prevention of waste, and
pollution and protection of the environment. These laws,
regulations and orders have in the past and may again restrict
the rate of oil and gas production below the rate that would
otherwise exist in the absence of such laws, regulations and
orders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Laws affecting the oil and gas industry and the
distribution of its products are under constant review for
amendment or expansion, frequently increasing the regulatory
burden. Numerous governmental departments and agencies are
authorized by statute to issue and have issued rules and
regulations binding on the oil and gas industry which often are
difficult and costly to comply with and which carry substantial
penalties for the failure to comply.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;</FONT></B><I><FONT size="2">Natural
Gas</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prices for the sale of natural gas, like the sale
of other commodities, are governed by the marketplace and the
provisions of applicable gas sales contracts. The Federal Energy
Regulatory Commission (&#147;FERC&#148;), which principally is
responsible for regulating interstate transportation and the
sale of natural gas, has taken significant steps in the
implementation of a policy to restructure the natural gas
pipeline industry to promote full competition in the sales of
natural gas, so that all natural gas suppliers, including
pipelines, can compete equally for sales customers. This policy
has been implemented largely through restructuring proceedings
and is subject to continuing refinement. The effects of this
policy are now presumably fully reflected in the natural gas
markets. The current policy of FERC continues to promote
increased competition among gas industry participants.
Accordingly, Order&nbsp;636 and various other orders have been
proposed and implemented to encourage nondiscriminatory
open-access transportation by interstate pipelines and to
provide for the unbundling of pipeline services so that such
services may also be furnished by nonpipeline suppliers on a
competitive basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There are many other statutes, rules, regulations
and orders that affect the pricing or transportation of natural
gas. Some of the provisions are and will be subject to court or
administrative review. Consequently, uncertainty as to the
ultimate impact of these regulatory provisions on the prices and
production of natural gas from the Royalty Properties is
expected to continue for the foreseeable future.
</FONT>

<DIV align="left">
<A name='119'></A>
</DIV>

<!-- link1 "Prices" -->

<P align="left">
<B><FONT size="2">Prices</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;</FONT></B><I><FONT size="2">Oil</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Trust&#146;s average per barrel oil price
increased from $26.17 in 2003 to $33.78 in 2004. The Trustee
believes that the international instability coupled with a more
favorable economic outlook led to the increase in the price of
oil. The price of domestic oil in major part is set by OPEC.
Consequently, crude oil market prices are not predictable or
completely subject to normal free market forces.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;</FONT></B><I><FONT size="2">Natural
Gas</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Natural gas prices, which once were determined
largely by governmental regulations, are now being governed by
the marketplace. Substantial competition in the natural gas
marketplace continues. In addition, competition with alternative
fuels persists. The average price received by the Trust in 2004
on natural gas volumes sold of $4.80&nbsp;per Mcf represented an
increase from the $4.39&nbsp;per Mcf received in 2003, due
largely to international instability and cooler weather in the
fall and early winter.
</FONT>

<P align="center"><FONT size="2">9
</FONT>

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<P align="left">
<B><FONT size="2">&nbsp;&nbsp;</FONT></B><I><FONT size="2">Environmental
Regulation</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">General. </FONT></I><FONT size="2">Activities
on the Royalty Properties are subject to existing federal, state
and local laws (including case law), rules and regulations
governing health, safety, environmental quality and pollution
control. It is anticipated that, absent the occurrence of an
extraordinary event, compliance with existing federal, state and
local laws, rules and regulations regulating health, safety, the
release of materials into the environment or otherwise relating
to the protection of the environment will not have a material
adverse effect upon the Trust or Unit holders. The Trustee
cannot predict what effect additional regulation or legislation,
enforcement policies thereunder, and claims for damages to
property, employees, other persons and the environment resulting
from operations on the Royalty Properties could have on the
Trust or Unit holders. Even if the Trust were not directly
liable for costs or expenses related to these matters, increased
costs of compliance could result in wells being plugged and
abandoned earlier in their productive lives, with a resulting
loss of reserves and revenues to the Trust.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Superfund. </FONT></I><FONT size="2">The
Comprehensive Environmental Response, Compensation and Liability
Act (&#147;CERCLA&#148;), also known as the
&#147;superfund&#148; law, imposes liability, regardless of
fault or the legality of the original conduct, on certain
classes of persons that contributed to the release of a
&#147;hazardous substance&#148; into the environment. These
persons include the current or previous owner and operator of a
site and companies that disposed, or arranged for the disposal,
of the hazardous substance found at a site. CERCLA also
authorizes the Environmental Protection Agency and, in some
cases, private parties to take actions in response to threats to
the public health or the environment and to seek recovery from
such responsible classes of persons of the costs of such action.
In the course of operations, the working interest owner and/or
the operator of Royalty Properties may have generated and may
generate wastes that may fall within CERCLA&#146;s definition of
&#147;hazardous substances&#148;. The operator of the Royalty
Properties or the working interest owners may be responsible
under CERCLA for all or part of the costs to clean up sites at
which such substances have been disposed. Although the Trust is
not the operator of any Royalty Properties, or the owner of any
working interest, its ownership of royalty interests could cause
it to be responsible for all or part of such costs to the extent
CERCLA imposes responsibility on parties as &#147;owners.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Solid and Hazardous Waste.
</FONT></I><FONT size="2">The Royalty Properties have produced
oil and/or gas for many years, and, although the Trust has no
knowledge of the procedures followed by the operators of the
Royalty Properties in this regard, hydrocarbons or other solid
or hazardous wastes may have been disposed or released on or
under the Royalty Properties by the current or previous
operators. Federal, state and local laws applicable to oil- and
gas-related wastes and properties have become increasingly more
stringent. Under these laws, removal or remediation of
previously disposed wastes or property contamination could be
required.
</FONT>

<DIV align="left">
<A name='120'></A>
</DIV>

<!-- link1 "Item 2. Properties." -->

<P align="left">
<B><FONT size="2">Item&nbsp;2.&nbsp;<I>Properties.</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The assets of the Registrant consist principally
of the Royalty Properties, which constitute interests
in&nbsp;gross production of oil, gas and other minerals free of
the costs of production. The Royalty Properties consist of
royalty and mineral interests, including landowner&#146;s
royalties, overriding royalty interests, minerals
(other&nbsp;than executive rights, bonuses and delay rentals),
production payments and any other similar, nonparticipatory
interest, in certain producing and proved undeveloped oil and
gas properties located in Florida, Louisiana, Mississippi, New
Mexico, Oklahoma and Texas. These properties are represented by
approximately 5,400&nbsp;tracts of land. Approximately 2,950 of
the tracts are in Oklahoma, 1,750 in Texas, 330 in Louisiana,
200 in New Mexico, 150 in Mississippi and 12 in Florida.
</FONT>

<P align="center"><FONT size="2">10
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table summarizes total developed
and proved undeveloped acreage represented by the Royalty
Properties at December&nbsp;31, 2004.
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Mineral and Royalty</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="left" nowrap><B><FONT size="1">State</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Gross Acres</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Net Acres</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Florida
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,448</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">697</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Louisiana
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">244,391</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,682</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Mississippi
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75,489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,713</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">New Mexico
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">112,294</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,141</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Oklahoma
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">381,538</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">67,558</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Texas
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,273,132</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">105,760</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,092,292</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">216,551</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Detailed information concerning the number of
wells on royalty properties is not generally available to the
owner of royalty interests. Consequently, the Registrant does
not have information that would be disclosed by a company with
oil and gas operations, such as an accurate count of the number
of wells located on the Royalty Properties, the number of
exploratory or development wells drilled on the Royalty
Properties during the periods presented by this report, or the
number of wells in process or other present activities on the
Royalty Properties, and the Registrant cannot readily obtain
such information.
</FONT>

<DIV align="left">
<A name='121'></A>
</DIV>

<!-- link1 "Title" -->

<P align="left">
<B><FONT size="2">Title</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The conveyances of the Royalty Properties to the
Trust covered the royalty and mineral properties located in the
six states that were vested in Sabine Corporation on the
effective date of the conveyances and that were subject to
existing oil, gas and other mineral leases other than properties
specifically excluded in the conveyances. Since Sabine
Corporation may not have had available to it as a royalty owner
information as to whether specific lands in which it owned a
royalty interest were subject to an existing lease, minimal
amounts of nonproducing royalty properties may also have been
conveyed to the Trust. Sabine Corporation did not warrant title
to the Royalty Properties either expressly or by implication.
</FONT>

<DIV align="left">
<A name='122'></A>
</DIV>

<!-- link1 "Reserves" -->

<P align="left">
<B><FONT size="2">Reserves</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Registrant has obtained from DeGolyer and
MacNaughton, independent petroleum engineering consultants, a
study of the proved oil and gas reserves attributable as of
January&nbsp;1, 2005 to the Royalty Properties. The following
letter report summarizes such reserve study and sets forth
information as to the assumptions, qualifications, procedures
and other matters relating to such reserve study. Because the
only assets of the Trust are the Royalty Properties, the Trustee
believes the reserve study provides useful information for Unit
holders. There are many uncertainties inherent in estimating
quantities and values of proved reserves and in projecting
future rates of production. The reserve data set forth herein,
although prepared by independent petroleum engineers in a manner
customary in the industry, are estimates only, and actual
quantities and values of oil and gas are likely to differ from
the estimated amounts set forth herein. In addition, the reserve
estimates for the Royalty Properties will be affected by future
changes in sales prices for oil and gas produced. See
Note&nbsp;8 of the Notes to Financial Statements in Item&nbsp;8
hereof for additional information regarding the proved oil and
gas reserves of the Trust. Other than those filed with the SEC,
our estimated reserves have not been filed with or included in
any reports to any federal agency.
</FONT>

<P align="center"><FONT size="2">11
</FONT>
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<P align="center">
<B>DEGOLYER AND MACNAUGHTON</B>

<DIV align="center">
<B><FONT size="2">4925 GREENVILLE AVENUE, SUITE 400</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">ONE ENERGY SQUARE</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">DALLAS, TEXAS 75206</FONT></B>
</DIV>

<P align="center">
<FONT size="2">March&nbsp;2, 2005
</FONT>

<P align="left">
<FONT size="2">Bank of America, N.A.
</FONT>

<DIV align="left">
<FONT size="2">P. O. Box 830650
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Dallas, Texas 75283-0650
</FONT>
</DIV>

<P align="left">
<FONT size="2">Gentlemen:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to your request, we have prepared
estimates of the extent and value of the proved crude oil,
condensate, natural gas liquids (NGL), and natural gas reserves,
as of January&nbsp;1, 2005, of certain royalty interests owned
by Sabine Royalty Trust (the Trust). The properties appraised
consist of royalties located in Florida, Louisiana, Mississippi,
New Mexico, Oklahoma, and Texas. Bank of America, N.A. (Bank of
America) acts as trustee of the Trust.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Information used in the preparation of this
report was obtained from Bank of America, from records on file
with the appropriate regulatory agencies, and from public
sources. Additionally, this information includes data supplied
by Petroleum Information/ Dwights LLC; Copyright 2004 Petroleum
Information/ Dwights LLC. During this investigation, we
consulted freely with officers and employees of Bank of America
and were given access to such accounts, records, geological and
engineering reports, and other data as were desired for
examination. In the preparation of this report we have relied,
without independent verification, upon information furnished by
Bank of America with respect to property interests owned by the
Trust, production from such properties, current prices for
production, agreements relating to current and future operations
and sale of production, and various other information and data
that were accepted as represented. It was not considered
necessary to make a field examination of the physical condition
and operation of the properties in which the Trust owns
interests.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our reserves estimates are based on a detailed
study of the properties and were prepared by the use of standard
geological and engineering methods generally accepted by the
petroleum industry. The method or combination of methods used in
the analysis of each reservoir was tempered by experience with
similar reservoirs, consideration of the stage of development,
and the quality and completeness of basic data. The Trust owns
several thousand royalty interests. In view of the limited
information available to a royalty owner and the small reserves
volumes attributable to many of these interests, certain of the
reserves representing approximately 44&nbsp;percent of the total
reserves of the properties included herein were summarized by
state or field and estimated in the aggregate rather than on a
property-by-property basis. Historical records of net production
and revenue and experience with similar properties were used in
evaluating these properties.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Reserves estimated in this report are expressed
as gross and net reserves. Gross reserves are defined as the
total estimated petroleum to be produced from these properties
after December&nbsp;31, 2004. Net reserves are defined as that
portion of the gross reserves attributable to the interests
owned by the Trust after deducting royalties and other interests
held by others. Gas volumes shown herein are sales gas volumes
and are expressed at a temperature base of 60 degrees Fahrenheit
and at the legal pressure base of the state in which the
interest is located. Sales gas is defined as the total gas to be
produced from the reservoirs, measured at the point of delivery,
after reduction for fuel usage, flare, and shrinkage resulting
from field separation and processing. Condensate reserves
estimated herein are those to be recovered by normal field
separation. NGL reserves are those attributed to the leasehold
interests according to processing agreements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Petroleum reserves included in this report are
classified by degree of proof as proved and are judged to be
economically producible in future years from known reservoirs
under existing economic and operating conditions and assuming
continuation of current regulatory practices using conventional
production methods and equipment. In the analyses of
production-decline curves, reserves were estimated only to the
</FONT>

<P align="center"><FONT size="2">12
</FONT>

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<DIV align="left">
<FONT size="2">limit of economic rates of production under
existing economic and operating conditions using prices and
expenses as of the date the estimate is made, including
consideration of changes in existing prices provided only by
contractual arrangements but not including escalations based
upon future conditions. Proved reserves classifications used in
this report are in accordance with the reserves definitions of
Rules&nbsp;4&#150;10(a) (1)&#150;(13) of
Regulation&nbsp;S&#150;X of the Securities and Exchange
Commission (SEC)&nbsp;of the United States. The petroleum
reserves are classified as follows:
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I><FONT size="2">Proved oil and gas
    reserves</FONT></I><FONT size="2">&nbsp;&#151; Proved oil and
    gas reserves are the estimated quantities of crude oil, natural
    gas, and natural gas liquids which geological and engineering
    data demonstrate with reasonable certainty to be recoverable in
    future years from known reservoirs under existing economic and
    operating conditions, i.e., prices and expenses as of the date
    the estimate is made. Prices include consideration of changes in
    existing prices provided only by contractual arrangements, but
    not on escalations based upon future conditions.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;Reservoirs are considered proved if
    economic producibility is supported by either actual production
    or conclusive formation test. The area of a reservoir considered
    proved includes (A)&nbsp;that portion delineated by drilling and
    defined by gas-oil and/or oil-water contacts, if any; and
    (B)&nbsp;the immediately adjoining portions not yet drilled, but
    which can be reasonably judged as economically productive on the
    basis of available geological and engineering data. In the
    absence of information on fluid contacts, the lowest known
    structural occurrence of hydrocarbons controls the lower proved
    limit of the reservoir.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ii)&nbsp;Reserves which can be produced
    economically through application of improved recovery techniques
    (such as fluid injection) are included in the &#147;proved&#148;
    classification when successful testing by a pilot project, or
    the operation of an installed program in the reservoir, provides
    support for the engineering analysis on which the project or
    program was based.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iii)&nbsp;Estimates of proved reserves do not
    include the following: (A)&nbsp;oil that may become available
    from known reservoirs but is classified separately as
    &#147;indicated additional reserves&#148;; (B)&nbsp;crude oil,
    natural gas, and natural gas liquids, the recovery of which is
    subject to reasonable doubt because of uncertainty as to
    geology, reservoir characteristics, or economic factors;
    (C)&nbsp;crude oil, natural gas, and natural gas liquids, that
    may occur in undrilled prospects; and (D)&nbsp;crude oil,
    natural gas, and natural gas liquids, that may be recovered from
    oil shales, coal, gilsonite, and other such sources.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I><FONT size="2">Proved developed oil and gas
    reserves</FONT></I><FONT size="2">&nbsp;&#151; Proved developed
    oil and gas reserves are reserves that can be expected to be
    recovered through existing wells with existing equipment and
    operating methods. Additional oil and gas expected to be
    obtained through the application of fluid injection or other
    improved recovery techniques for supplementing the natural
    forces and mechanisms of primary recovery should be included as
    &#147;proved developed reserves&#148; only after testing by a
    pilot project or after the operation of an installed program has
    confirmed through production response that increased recovery
    will be achieved.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I><FONT size="2">Proved undeveloped
    reserves</FONT></I><FONT size="2">&nbsp;&#151; Proved
    undeveloped oil and gas reserves are reserves that are expected
    to be recovered from new wells on undrilled acreage, or from
    existing wells where a relatively major expenditure is required
    for recompletion. Reserves on undrilled acreage shall be limited
    to those drilling units offsetting productive units that are
    reasonably certain of production when drilled. Proved reserves
    for other undrilled units can be claimed only where it can be
    demonstrated with certainty that there is continuity of
    production from the existing productive formation. Under no
    circumstances should estimates for proved undeveloped reserves
    be attributable to any acreage for which an application of fluid
    injection or other improved recovery technique is contemplated,
    unless such techniques have been proved effective by actual
    tests in the area and in the same reservoir.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The development status shown herein represents
the status applicable on January&nbsp;1, 2005. In the
preparation of this study, data available from wells drilled on
the appraised properties through October&nbsp;31, 2004, were
used in estimating gross ultimate recovery. When applicable,
gross production estimated to
</FONT>

<P align="center"><FONT size="2">13
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">January&nbsp;1, 2005, was deducted from gross
ultimate recovery to arrive at the estimates of gross reserves
as of January&nbsp;1, 2005. In some fields, this required that
the production rates be estimated for up to 4&nbsp;months, since
production data were available only through August 2004.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Estimated net proved reserves, as of
January&nbsp;1, 2005, attributable to the Trust from the
properties appraised are summarized in thousands of barrels
(Mbbl) or millions of cubic feet (MMcf) as follows:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="38%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Proved Developed Reserves</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Proved Undeveloped Reserves</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Oil, Condensate,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Oil, Condensate,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">and NGL</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Sales Gas</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">and NGL</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Sales Gas</FONT></B></TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT size="1">State</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Mbbl)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(MMcf)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Mbbl)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(MMcf)</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Florida
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">166</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Louisiana
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">640</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Mississippi
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">111</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,575</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">New Mexico
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">431</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,129</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Oklahoma
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">447</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,151</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Texas
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,421</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,034</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT size="2">Total</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT size="2">5,642</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT size="2">37,550</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT size="2">43</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT size="2">59</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Revenue values in this report are expressed in
terms of estimated future net revenue and present worth of
future net revenue. These values are based on the continuation
of prices in effect on January&nbsp;1, 2005. Future gross
revenue is defined as that revenue to be realized from the
production and sale of the estimated net reserves. Future net
revenue is calculated by deducting estimated severance and ad
valorem taxes from the future gross revenue. Present worth of
future net revenue is calculated by discounting the future net
revenue at the arbitrary rate of 10&nbsp;percent per year
compounded monthly over the expected period of realization.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Revenue values in this report were estimated
using the initial prices and expenses provided by Bank of
America. Future prices were estimated using guidelines
established by the SEC and the Financial Accounting Standards
Board (FASB). The initial and future prices used in this report
are adjusted to prices on January&nbsp;1, 2005, based on
receipts by the Trust in December 2004. The assumptions used for
estimating future prices and expenses are as follows:
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Oil,
Condensate, Natural Gas Liquids, and Natural Gas
Prices</FONT></I>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">Oil, condensate, natural gas liquids, and natural
    gas prices, based on receipts by the Trust in December 2004,
    were furnished by Bank of America. These prices were adjusted to
    the NYMEX posted prices for oil of $43.45 per barrel and for gas
    of $6.18 per million British thermal units, and were held
    constant for the lives of the properties. The weighted average
    prices over the lives of the properties were $39.14 per barrel
    of oil and $5.66 per thousand cubic feet.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Expenses</FONT></I>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">The properties appraised are royalties.
    Therefore, no operating expenses or capital costs are incurred.
    The expenses reported are primarily severance taxes and ad
    valorem taxes, which are based on historical tax rates furnished
    by Bank of America. Several properties incur additional expenses
    related to transportation, marketing, and/or other expenses that
    are charged to the royalty interests. These expenses are
    reported as transportation expenses. No escalation has been
    applied to the expenses.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">14
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A projection of the estimated future net revenue
from the properties appraised, as of January&nbsp;1, 2005, based
on the aforementioned assumptions concerning prices and expenses
is summarized as follows, expressed in thousands of
dollars&nbsp;(M$):
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="13%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="73%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Future Net</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Ending</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenue</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">December 31</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(M$)</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">2005
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38,353</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">2006
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">2007
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,227</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT size="2">Subtotal</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT size="2">102,430</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT size="2">Remaining</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT size="2">280,422</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT size="2">Total</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT size="2">382,852</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The present worth, at a discount rate of
10&nbsp;percent, of future net revenue, as of January&nbsp;1,
2005, is estimated to be M$194,229.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Estimates of oil, condensate, NGL, and gas
reserves and future net revenue should be regarded only as
estimates that may change as further production history and
additional information become available. Not only are such
reserves and revenue estimates based on that information which
is currently available, but such estimates are also subject to
the uncertainties inherent in the application of judgmental
factors in interpreting such information.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In our opinion, the information relating to
estimated proved reserves, estimated future net revenue from
proved reserves, and present worth of estimated future net
revenue from proved reserves of oil, condensate, natural gas
liquids, and gas contained in this report has been prepared in
accordance with Paragraphs 10&#150;13, 15 and 30(a)&#150;(b) of
Statement of Financial Accounting Standards No.&nbsp;69
(November 1982) of the FASB and Rules&nbsp;4&#150;10(a)
(1)&#150;(13) of Regulation&nbsp;S&#150;X and Rule&nbsp;302(b)
of Regulation&nbsp;S&#150;K of the SEC; provided, however, that
(i)&nbsp;certain estimated data have not been provided with
respect to changes in reserves information, (ii)&nbsp;future
income tax expenses have not been taken into account in
estimating the future net revenue and present worth values set
forth herein, and (iii)&nbsp;at the request of Bank of America
and because of the limited availability of data, proved
reserves, future net revenue therefrom, and the present worth
thereof for certain royalty interests accounting for
approximately 44&nbsp;percent of the Trust&#146;s total proved
reserves have been estimated in the aggregate by state or field
rather than on a property-by-property basis using net production
and revenue data and our general knowledge of producing
characteristics in the geographic areas in which such interests
are located.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To the extent that the above-enumerated rules,
regulations, and statements require determinations of an
accounting or legal nature or information beyond the scope of
our report, we are necessarily unable to express an opinion as
to whether the above-described information is in accordance
therewith or sufficient therefor.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Submitted,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">DeGOLYER and MacNAUGHTON
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">/s/&nbsp;&nbsp;Paul J. Szatkowski, P.E.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Paul J. Szatkowski, P.E.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Senior Vice President
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">DeGolyer and MacNaughton
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">15
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There are numerous uncertainties inherent in
estimating quantities of proved reserves and in projecting the
future rates of production and timing of development. The
preceding reserve data in the letter regarding the study
represent estimates only and should not be construed to be
exact. The estimated present worth of future net revenue amounts
shown by the study should not be construed as the current fair
market value of the estimated oil and gas reserves since a
market value determination would include many additional factors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Reserve estimates may be adjusted from time to
time as more accurate information on the volume or
recoverability of existing reserves becomes available. Actual
reserve quantities do not change, however, except through
production. The Trust continues to own only the Royalty
Properties that were initially transferred to the Trust at the
time of its creation and is prohibited by the Trust Agreement
from acquiring additional oil and gas interests.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The future net revenue shown by the study has not
been reduced for administrative costs and expenses of the Trust
in future years. The costs and expenses of the Trust may
increase in future years, depending on the amount of income from
the Royalty Properties, increases in the Trustee&#146;s fees
(including escrow agent fees) and expenses, accounting,
engineering, legal and other professional fees, and other
factors. It is expected that the costs and expenses of the Trust
in 2005 will be approximately $2,150,000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The present value of future net revenue of the
Trust&#146;s proved developed reserves increased from
$168,807,194 at January&nbsp;1, 2004 to $194,229,373 at
January&nbsp;1, 2005. This increase resulted primarily from the
gas prices used in the calculation of such amount, from
$5.28&nbsp;per Mcf of gas at January&nbsp;1, 2004 to
$5.66&nbsp;per Mcf of gas at January&nbsp;1, 2005, as well as an
increase in the price of oil from $29.76&nbsp;per barrel of oil
at January&nbsp;1, 2004 to $39.14&nbsp;per barrel of oil at
January&nbsp;1, 2005.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subsequent to year end, the price of both oil and
gas continued to fluctuate, giving rise to a correlating
adjustment of the respective standardized measure of discounted
future net cash flows. As of February&nbsp;25, 2005, the NYMEX
posted oil price was approximately $50.95&nbsp;per barrel, which
compared to the posted price of $43.45&nbsp;per barrel, used to
calculate the worth of future net revenue of the Trust&#146;s
proved developed reserves, would result in a larger standardized
measure of discounted future net cash flows for oil. As of
February&nbsp;25, 2005, the NYMEX posted gas price was
$6.29&nbsp;per million British thermal units. The use of such
price, as compared to the posted price of $6.18 per million
British thermal units, used to calculate the future net revenue
to the Trust&#146;s proved developed reserves would result in a
larger standardized measure of discounted future net cash flows
for gas.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The volatile nature of the world energy markets
makes it difficult to estimate future prices of oil and gas. The
prices obtained for oil and gas depend upon numerous factors,
none of which is within the Trustee&#146;s control, including
the domestic and foreign supply of oil and gas and the price of
foreign imports, market demand, the price and availability of
alternative fuels, the availability of pipeline capacity,
instability in oil-producing regions and the effect of
governmental regulations.
</FONT>

<DIV align="left">
<A name='123'></A>
</DIV>

<!-- link1 "Item 3. Legal Proceedings." -->

<P align="left">
<B><FONT size="2">Item&nbsp;3.&nbsp;<I>Legal
Proceedings.</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There are no material pending legal proceedings
to which the Registrant is a party or of which any of its
property is the subject.
</FONT>

<DIV align="left">
<A name='124'></A>
</DIV>

<!-- link1 "Item 4. Submission of Matters to a Vote of Security Holders." -->

<P align="left">
<B><FONT size="2">Item&nbsp;4.&nbsp;<I>Submission of Matters to
a Vote of Security Holders.</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable.
</FONT>

<P align="center"><FONT size="2">16
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='138'></A>
</DIV>

<!-- link1 "PART II" -->

<P align="center">
<B><FONT size="2">PART&nbsp;II</FONT></B>

<DIV align="left">
<A name='125'></A>
</DIV>

<!-- link1 "Item 5. Market for Registrant&#146;s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities." -->

<P align="left">
<B><FONT size="2">Item&nbsp;5.&nbsp;<I>Market for
Registrant&#146;s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities.</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Units are listed and traded on the New York
Stock Exchange under the symbol &#147;SBR.&#148; The following
table sets forth the high and low sales prices for the Units and
the aggregate amount of cash distributions paid by the Trust
during the periods indicated.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="64%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Sales Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Distributions</FONT></B></TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">per Unit</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">First Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32.75</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.60479</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Second Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36.42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.71585</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Third Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40.63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33.55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.75767</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Fourth Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42.49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33.60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.70763</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="64%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Sales Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Distributions</FONT></B></TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">per Unit</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">First Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24.75</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19.58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.45499</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Second Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20.52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.80739</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Third Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25.48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.69668</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Fourth Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25.81</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.56350</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At March&nbsp;4, 2005, there were
14,579,345&nbsp;Units outstanding and approximately
2,300&nbsp;Unit holders of record.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Trust does not maintain any equity
compensation plans.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Trust did not repurchase any Units during the
period covered by this report.
</FONT>

<DIV align="left">
<A name='126'></A>
</DIV>

<!-- link1 "Item 6. Selected Financial Data." -->

<P align="left">
<B><FONT size="2">Item&nbsp;6.&nbsp;<I>Selected Financial
Data.</I></FONT></B>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT size="1">Years Ended December&nbsp;31</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Royalty Income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42,338,724</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38,761,739</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,134,458</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,222,701</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34,407,684</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Distributable Income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,587,685</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,060,003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,539,751</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42,805,378</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,122,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Distributable Income per Unit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.82</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.94</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Total Assets at Year End
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,912,815</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,555,045</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,391,280</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,855,378</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,239,610</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Distributions per Unit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.79</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.86</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
<A name='127'></A>
</DIV>

<!-- link1 "Item 7. Trustee&#146;s Discussion and Analysis of Financial Condition and Results of Operations." -->

<P align="left">
<B><FONT size="2">Item&nbsp;7.&nbsp;<I>Trustee&#146;s Discussion
and Analysis of Financial Condition and Results of
Operations.</I></FONT></B>

<P align="left">
<B><FONT size="2">Liquidity and Capital Resources</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Sabine Royalty Trust (the &#147;Trust&#148;)
makes monthly distributions to its Unit holders of the excess of
the preceding month&#146;s revenues received over expenses
incurred. Upon receipt, royalty income is invested in short-term
investments until its subsequent distribution. In accordance
with the Trust Agreement, the Trust&#146;s only long-term assets
consist of royalty interests in producing oil and gas
properties. Although the Trust is permitted to borrow funds if
necessary to continue its operations, borrowings are not
anticipated in the foreseeable future. Accordingly the Trust is
dependent on its operations to generate excess cash flows
utilized in making distributions. These operating cash flows are
largely dependent on such factors as oil and gas prices and
production volumes, which are influenced by many factors beyond
the control of the Trust. As a royalty owner, the Trust does not
have access to certain types of information that would be
disclosed by a company with oil and gas operations. See
&#147;Item&nbsp;2. Properties&#148; for a discussion of the
types of information not available to the Trust.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The amount to be distributed to Unit holders
(&#147;Monthly Income Amount&#148;) is determined on a monthly
basis. The Monthly Income Amount is an amount equal to the sum
of cash received by the Trust during a monthly period (the
period commencing on the day after a monthly record date and
continuing
</FONT>

<P align="center"><FONT size="2">17
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">through and including the next succeeding monthly
record date) attributable to the Royalties, any reduction in
cash reserves and any other cash receipts of the Trust,
including interest, reduced by the sum of liabilities paid and
any increase in cash reserves. Unit holders of record as of the
monthly record date (the 15th&nbsp;day of each calendar month,
except in limited circumstances) are entitled to have
distributed to them the calculated Monthly Income Amount for
such month on or before 10&nbsp;business days after the monthly
record date. The Monthly Income Amount per Unit is declared by
the Trust no later than 10&nbsp;days prior to the monthly record
date.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The cash received by the Trust is primarily from
purchasers of the Trust&#146;s oil and gas production and
consists of gross sales of production less applicable severance
taxes. In September 2004, the Trust received a refund from the
State of Oklahoma in the amount of $510,271. This refund
represented taxes that were withheld from the proceeds of
production from the Royalties and remitted to the State of
Oklahoma by purchasers. Income taxes are not payable by the
Trust, but are the responsibility of the individual Unit
holders. Therefore the State of Oklahoma refunded the withheld
taxes, and the refund was included in the Trust&#146;s October
2004 distribution.
</FONT>

<P align="left">
<B><FONT size="2">Results of Operations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Distributable income consists of royalty income
plus interest income plus any decrease in cash reserves
established by the Trustee less general and administrative
expenses of the Trust less any increase in cash reserves
established by the Trustee. The Trust&#146;s royalty income
represents payments received during a particular time period for
oil and gas production from the Trust&#146;s properties. Because
of various factors which influence the timing of the
Trust&#146;s receipt of payments, royalty income for any
particular time period will usually include payments for oil and
gas produced in prior periods. The price and volume figures that
follow represent the volumes and prices for which the Trust
received payment during 2003 and 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net royalty income during 2004 increased
approximately $3,577,000, or 9.2&nbsp;percent, compared to 2003
net royalty income, which had increased approximately
$10,627,000, or 37.8&nbsp;percent, from 2002 net royalty income.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Revenues generated by sales of oil and gas
increased in 2004 from 2003 as a result of higher gas and oil
prices. These increases were tempered by a decreases in both
natural gas and oil volumes. Gas volumes decreased from
6,532,013 thousand cubic feet (&#147;Mcf&#148;) in 2003 to
6,029,402&nbsp;Mcf in 2004 after decreasing from
6,691,473&nbsp;Mcf in 2002. The average price per Mcf of gas
received by the Trust increased from $4.39&nbsp;per Mcf in 2003
to $4.80&nbsp;per Mcf in 2004, after increasing from
$2.70&nbsp;per Mcf in 2002. The Trustee believes that normal
market forces, international instability, and the cooler weather
in late fall and early winter resulted in the higher gas prices.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Oil volumes sold decreased to
525,862&nbsp;barrels in 2004 from 557,087&nbsp;barrels in 2003,
having decreased from 573,354&nbsp;barrels in 2002. The effect
of this volume decrease was offset by an increase in the average
price per barrel received by the Trust to $33.78 in 2004 from
$26.17 in 2003, which was an increase from $21.82 in 2002.
International instability and demand along with cooler weather
in the late fall and early winter led to the increase in price
for 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest income increased to $51,000 in 2004 from
$47,000 in 2003, which increased from $43,000 in 2002. Changes
in interest income are the result of changes in interest rates
and funds available for investment. General and administrative
expenses increased to $1,802,000 in 2004 compared to $1,749,000
in 2003 due primarily to increases in professional fees for
Sarbanes-Oxley compliance of approximately $91,000. This
increase in professional fees was offset somewhat by decreases
in fees related to Unit holder information services and tax
reporting services of approximately $24,000 and $15,000,
respectively. General and administrative expenses increased to
$1,749,000 in 2003 compared to $1,638,000 in 2002 due to
increases in professional fees and auditing fees of
approximately $73,000 and $20,000, respectively.
</FONT>

<P align="center"><FONT size="2">18
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Contractual Obligations</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="46%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Less than</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">More than</FONT></B></TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT size="1">Contractual Obligations</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1&nbsp;Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1-3&nbsp;Years</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">3-5&nbsp;Years</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">5&nbsp;Years</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Long-Term Debt Obligations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Capital Lease Obligations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Operating Lease Obligations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Purchase Obligations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Other Long-Term Liabilities Reflected on the
    Trusts Balance Sheet
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Critical Accounting Policies and
Estimates</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Trust&#146;s financial statements reflect the
selection and application of accounting policies that require
the Trust to make significant estimates and assumptions. The
following are some of the more critical judgement areas in the
application of accounting policies that currently affect the
Trust&#146;s financial condition and results of operations.
</FONT>

<P align="left">
<B><FONT size="2">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basis of
Accounting</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The financial statements of the Trust are
prepared on the following basis and are not intended to present
financial position and results of operations in conformity with
accounting principles generally accepted in the United States of
America:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Royalty income, net of severance and ad valorem
    taxes, and interest income are recognized in the month in which
    amounts are received by either the escrow agent or the Trust.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Trust expenses, consisting principally of routine
    general and administrative costs, include payments made during
    the accounting period. Expenses are accrued to the extent of
    amounts that become payable on the next monthly record date
    following the end of the accounting period. Reserves for
    liabilities that are contingent or uncertain in amount may also
    be established if considered necessary.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Royalties that are producing properties are
    amortized using the unit-of-production method. This amortization
    is shown as a reduction of Trust corpus.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Distributions to Unit holders are recognized when
    declared by the Trustee.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The financial statements of the Trust differ from
financial statements prepared in conformity with accounting
principles generally accepted in the United States of America
because of the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Royalty income is recognized in the month
    received rather than in the month of production.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Expenses other than those expected to be paid on
    the following monthly record date are not accrued.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Amortization of the Royalties is shown as a
    reduction to Trust corpus and not as a charge to operating
    results.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Reserves may be established for contingencies
    that would not be recorded under accounting principles generally
    accepted in the United States of America.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This comprehensive basis of accounting other than
GAAP corresponds to the accounting permitted for royalty trusts
by the U.S. Securities and Exchange Commission, as specified by
Staff Accounting Bulletin Topic 12:E, Financial Statements of
Royalty Trusts.
</FONT>

<P align="left">
<B><FONT size="2">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue
Recognition</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Revenues from royalty interests are recognized in
the period in which amounts are received by the Trust or escrow
agent. Royalty income received by the Trust or escrow agent in a
given calendar year will generally reflect the proceeds, on an
entitlements basis, from natural gas produced for the
twelve-month
</FONT>

<P align="center"><FONT size="2">19
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">period ended September&nbsp;30th in that calendar
year and from oil produced for the twelve-month period ended
October&nbsp;31st in the same calendar year.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reserve
Disclosure</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Independent petroleum engineers estimate the net
proved reserves attributable to the royalty interests. In
accordance with Statement of Financial Standards No.&nbsp;69,
&#147;Disclosures About Oil and Gas Producing Activities,&#148;
estimates of future net revenues from proved reserves have been
prepared using year-end contractual gas prices and related
costs. Numerous uncertainties are inherent in estimating volumes
and the value of proved reserves and in projecting future
production rates and the timing of development of non-producing
reserves. Such reserve estimates are subject to change as
additional information becomes available. The reserves actually
recovered and the timing of production may be substantially
different from the reserve estimates. See Note&nbsp;8 of the
Notes to Financial Statements in Item&nbsp;8 hereof for
additional information regarding the proved oil and gas reserves
of the Trust. Other than those filed with the SEC, our estimated
reserves have not been filed with or included in any reports to
any federal agency.
</FONT>

<P align="left">
<B><FONT size="2">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contingencies</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Contingencies related to the Royalty Properties
that are unfavorably resolved would generally be reflected by
the Trust as reductions to future royalty income payments to the
Trust with corresponding reductions to cash distributions to
Unit holders. The Trustee is aware of no such items as of
December&nbsp;31, 2004.
</FONT>

<P align="left">
<B><FONT size="2">New Accounting Pronouncements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SFAS No.&nbsp;123R, <I>&#147;Accounting for
Stock-Based Compensation&#148;</I> was issued in December 2004
and provides new implementation guidance for stock-based
compensation accounting. This Statement is effective for public
entities that do not file as small business issuers&nbsp;&#151;
as of the beginning of the first interim or annual reporting
period that begins after June&nbsp;15, 2005. The Trust has no
options or other stock-based instruments and accordingly, this
new Standard will have no impact on the financial statements of
the Trust.
</FONT>

<P align="left">
<B><FONT size="2">Off-Balance Sheet Arrangements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As stipulated in the Trust Agreement, the Trust
is intended to be passive in nature and the Trustee does not
have any control over or any responsibility relating to the
operation of the Royalty Properties. The Trustee has powers to
collect and distribute proceeds received by the Trust and to pay
Trust liabilities and expenses, and its actions have been
limited to those activities. Therefore, the Trust has not
engaged in any off-balance sheet arrangements.
</FONT>

<P align="left">
<B><FONT size="2">Inflation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prices obtained for oil and gas production depend
upon numerous factors that are beyond the control of the Trust,
including the extent of domestic and foreign production, imports
of foreign oil, market demand, domestic and worldwide economic
and political conditions, storage capacity and government
regulations and tax laws. Prices for both oil and gas have
fluctuated between 2002 and 2004. The following table presents
the weighted average prices received per year by the Trust:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="77%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Oil</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Gas</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Per BBL</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Per Mcf</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33.78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21.82</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Forward-Looking Statements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This Annual Report includes &#147;forward-looking
statements&#148; within the meaning of Section&nbsp;21E of the
Securities Exchange Act of 1934, which are intended to be
covered by the safe harbor created thereby. All
</FONT>

<P align="center"><FONT size="2">20
</FONT>
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<DIV align="left">
<FONT size="2">statements other than statements of historical
fact included in this Annual Report are forward-looking
statements. Such statements include, without limitation, factors
affecting the price of oil and natural gas contained in
Item&nbsp;1, &#147;Business,&#148; certain reserve information
and other statements contained in Item&nbsp;2,
&#147;Properties,&#148; and certain statements regarding the
Trust&#146;s financial position, industry conditions and other
matters contained in this Item&nbsp;7. Although the Trustee
believes that the expectations reflected in such forward-looking
statements are reasonable, such expectations are subject to
numerous risks and uncertainties and the Trustee can give no
assurance that they will prove correct. There are many factors,
none of which is within the Trustee&#146;s control, that may
cause such expectations not to be realized, including, among
other things, factors identified in this Annual Report affecting
oil and gas prices (including, without limitation, the domestic
and foreign supply of oil and gas and the price of foreign
imports, market demand, the price and availability of
alternative fuels, the availability of pipeline capacity,
instability in oil-producing regions and the effect of
governmental regulations) and the recoverability of reserves,
general economic conditions, actions and policies of
petroleum-producing nations and other changes in the domestic
and international energy markets.
</FONT>
</DIV>

<DIV align="left">
<A name='128'></A>
</DIV>

<!-- link1 "Item 7A. Quantitative and Qualitative Disclosures About Market Risk." -->

<P align="left">
<B><FONT size="2">Item 7A.&nbsp;<I>Quantitative and Qualitative
Disclosures About Market Risk.</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Trust is a passive entity, and other than the
Trust&#146;s ability to periodically borrow money as necessary
to pay expenses, liabilities and obligations of the Trust that
cannot be paid out of cash held by the Trust, the Trust is
prohibited from engaging in borrowing transactions. The amount
of any such borrowings is unlikely to be material to the Trust.
The Trust periodically holds short term investments acquired
with funds held by the Trust pending distribution to Unit
holders and funds held in reserve for the payment of Trust
expenses and liabilities. Because of the short-term nature of
these borrowings and investments and certain limitations upon
the types of such investments which may be held by the Trust,
the Trustee believes that the Trust is not subject to any
material interest rate risk. The Trust does not engage in
transactions in foreign currencies which could expose the Trust
or Unit holders to any foreign currency related market risk. The
Trust invests in no derivative financial instruments and has no
foreign operations or long-term debt instruments.
</FONT>

<P align="center"><FONT size="2">21
</FONT>

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<DIV align="left">
<A name='129'></A>
</DIV>

<!-- link1 "Item 8. Financial Statements and Supplementary Data." -->

<P align="left">
<B><FONT size="2">Item&nbsp;8.&nbsp;<I>Financial Statements and
Supplementary Data.</I></FONT></B>

<P align="center">
<B><FONT size="2">REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM</FONT></B>

<P align="left">
<FONT size="2">Unit Holders of Sabine Royalty Trust and
</FONT>

<DIV align="left">
<FONT size="2">Bank of America, N.A., Trustee
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have audited the accompanying statements of
assets, liabilities and trust corpus of Sabine Royalty Trust
(the &#147;Trust&#148;) as of December&nbsp;31, 2004 and 2003,
and the related statements of distributable income and changes
in trust corpus for each of the three years in the period ended
December&nbsp;31, 2004. These financial statements are the
responsibility of the Trustee. Our responsibility is to express
an opinion on these financial statements based on our audits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As described in Note&nbsp;2 to the financial
statements, these financial statements have been prepared on a
modified cash basis of accounting, which is a comprehensive
basis of accounting other than accounting principles generally
accepted in the United States of America.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In our opinion, such financial statements present
fairly, in all material respects, the assets, liabilities and
trust corpus of the Trust at December&nbsp;31, 2004 and 2003,
and the distributable income and changes in trust corpus for
each of the three years in the period ended December&nbsp;31,
2004, on the basis of accounting described in Note&nbsp;2.
</FONT>

<P align="left">
<FONT size="2">/s/ DELOITTE &#38; TOUCHE LLP
</FONT>

<P align="left">
<FONT size="2">Dallas, Texas
</FONT>

<DIV align="left">
<FONT size="2">March&nbsp;14, 2005
</FONT>
</DIV>

<P align="center"><FONT size="2">22
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">SABINE ROYALTY TRUST</FONT></B>

<P align="center">
<B><FONT size="2">FINANCIAL STATEMENTS</FONT></B>

<P align="center">
<B><FONT size="2">Statements of Assets, Liabilities and Trust
Corpus</FONT></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT size="2">Assets</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Cash and short-term investments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,753,282</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,247,094</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Royalty interests in oil and gas properties less
    accumulated amortization of $21,235,652 (2004)&nbsp;and
    $21,087,234 (2003)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,159,533</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,307,951</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,912,815</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,555,045</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT size="2">Liabilities and Trust&nbsp;Corpus</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Trust expenses payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">249,308</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">427,982</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Other payables (Note&nbsp;4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">140,432</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">426,070</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Total liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">389,740</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">854,052</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Trust&nbsp;Corpus (14,579,345&nbsp;units of
    beneficial interest authorized and outstanding)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,523,075</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,700,993</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,912,815</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,555,045</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<B><FONT size="2">Statements of Distributable Income</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="55%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Royalty Income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42,338,724</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38,761,739</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,134,458</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Interest Income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,785</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47,417</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43,337</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42,389,509</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38,809,156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,177,795</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">General and administrative expenses (Note&nbsp;6)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,801,824</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,749,153</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,638,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Distributable income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,587,685</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,060,003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,539,751</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Distributable income per unit (Basic and Assuming
    Dilution) (14,579,345&nbsp;units) (Note&nbsp;1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.82</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Distributions per unit (Note&nbsp;3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.79</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<B><FONT size="2">Statements of Changes in Trust
Corpus</FONT></B>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="52%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Trust corpus, beginning of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,700,993</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,603,219</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,677,097</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Amortization of royalty interests
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(148,418</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(184,950</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(221,506</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Distributable income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,587,685</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,060,003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,539,751</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Distributions to unit holders (Note&nbsp;3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(40,617,185</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(36,777,279</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(27,392,123</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Trust corpus, end of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,523,075</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,700,993</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,603,219</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying notes are an integral part of
these financial statements.
</FONT>

<P align="center"><FONT size="2">23
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">SABINE ROYALTY TRUST</FONT></B>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL STATEMENTS</FONT></B>

<P align="left">
<B><FONT size="2">1.&nbsp;Trust Organization and
Provisions</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Sabine Royalty Trust (the &#147;Trust&#148;) was
established by the Sabine Corporation Royalty Trust Agreement
(the &#147;Trust Agreement&#148;), made and entered into
effective as of December&nbsp;31, 1982, to receive a
distribution from Sabine Corporation (&#147;Sabine&#148;) of
royalty and mineral interests, including landowner&#146;s
royalties, overriding royalty interests, minerals (other than
executive rights, bonuses and delay rentals), production
payments and any other similar, nonparticipatory interest, in
certain producing and proved undeveloped oil and gas properties
located in Florida, Louisiana, Mississippi, New Mexico, Oklahoma
and Texas (the &#147;Royalties&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certificates evidencing units of beneficial
interest (the &#147;Units&#148;) in the Trust were mailed on
December&nbsp;31, 1982 to Sabine&#146;s shareholders of record
on December&nbsp;23, 1982, on the basis of one Unit for each
share of Sabine&#146;s outstanding common stock. In May 1988,
Sabine was acquired by Pacific Enterprises, a California
corporation. Through a series of mergers, Sabine was merged into
Pacific Enterprises Oil Company (USA) (&#147;Pacific
(USA)&#148;), a California corporation and a wholly owned
subsidiary of Pacific Enterprises, effective January&nbsp;1,
1990. This acquisition and the subsequent mergers had no effect
on the Units. Pacific (USA), as successor to Sabine, has assumed
by operation of law all of Sabine&#146;s rights and obligations
with respect to the Trust. The Units are listed and traded on
the New York Stock Exchange.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the transfer of the Royalties
to the Trust upon its formation, Sabine had reserved to itself
all executive rights, including rights to execute leases and to
receive bonuses and delay rentals. In January 1993, Pacific
(USA)&nbsp;completed the sale of substantially all its producing
oil and gas assets to a third party. The sale did not include
executive rights relating to the Royalties, and Pacific
(USA)&#146;s ownership of such rights was not affected by the
sale.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Bank of America, N.A. (the &#147;Trustee&#148;),
acts as trustee of the Trust. The terms of the Trust Agreement
provide, among other things, that:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Trust shall not engage in any business or
    commercial activity of any kind or acquire assets other than
    those initially transferred to the Trust.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Trustee may not sell all or any part of its
    assets unless approved by the holders of a majority of the
    outstanding Units in which case the sale must be for cash and
    the proceeds, after satisfying all existing liabilities,
    promptly distributed to Unit holders.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Trustee may establish a cash reserve for the
    payment of any liability that is contingent or uncertain in
    amount or that otherwise is not currently due and payable.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Trustee will use reasonable efforts to cause
    the Trust and the Unit holders to recognize income and expenses
    on monthly record dates.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Trustee is authorized to borrow funds to pay
    liabilities of the Trust provided that such borrowings are
    repaid in full before any further distributions are made to Unit
    holders.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Trustee will make monthly cash distributions
    to Unit holders of record on the monthly record date (see
    Note&nbsp;3).
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Because of the passive nature of the Trust and
the restrictions and limitations on the powers and activities of
the Trustee contained in the Trust Agreement, the Trustee does
not consider any of the officers and employees of the Trustee to
be &#147;officers&#148; or &#147;executive officers&#148; of the
Trust as such terms are defined under applicable rules and
regulations adopted under the Securities Exchange Act
of&nbsp;1934.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The proceeds of production from the Royalties are
receivable from hundreds of separate payors. In order to
facilitate creation of the Trust and to avoid the administrative
expense and inconvenience of daily reporting to Unit holders,
the conveyances by Sabine of the Royalties located in five of
the six states (Florida, Mississippi, New Mexico, Oklahoma, and
Texas) provided for the execution of an escrow agreement by
Sabine and the initial trustee of the Trust, in its capacities
as trustee of the Trust and as escrow
</FONT>

<P align="center"><FONT size="2">24
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">SABINE ROYALTY TRUST</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL STATEMENTS&nbsp;&#151;
(Continued)</FONT></B>

<P align="left">
<FONT size="2">agent. The conveyances by Sabine of the Royalties
located in Louisiana provided for the execution of a
substantially identical escrow agreement by Sabine and a
Louisiana bank in the capacities of escrow agent and of trustee
under the name of Sabine Louisiana Royalty Trust. Sabine
Louisiana Royalty Trust, the sole beneficiary of which is the
Trust, was established in order to avoid uncertainty under
Louisiana law as to the legality of the Trustee&#146;s holding
record title to the Royalties located in Louisiana. On
December&nbsp;31, 2001, Bank of America, N.A. assumed the duties
as Trustee of the Sabine Louisiana Royalty Trust, since
Louisiana law now permits an out-of-state bank to act in this
capacity. Therefore, the trust now only has one escrow agent,
which is the Trustee, and a single escrow agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the terms of the escrow agreement and
the conveyances of the properties by Sabine, the proceeds of
production from the Royalties for each calendar month, and
interest thereon, are collected by the escrow agent and are paid
to and received by the Trust only on the next monthly record
date. The escrow agent has agreed to endeavor to assure that it
incurs and pays expenses and fees for each calendar month only
on the next monthly record date. The Trust Agreement also
provides that the Trustee is to endeavor to assure that income
of the Trust will be accrued and received and expenses of the
Trust will be incurred and paid only on each monthly record
date. Assuming that the escrow agreement is recognized for
Federal income tax purposes and that the Trustee, as escrow
agent is able to control the timing of income and expenses, as
stated above, cash and accrual basis Unit holders should be
treated as realizing income only on each monthly record date.
The Trustee is treating the escrow agreement as effective for
tax purposes. However, for financial reporting purposes, royalty
and interest income are recorded in the calendar month in which
the amounts are received by either the escrow agent or the Trust.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Distributable income as determined for financial
reporting purposes for a given quarter will not usually equal
the sum of distributions made during that quarter. Rather,
distributable income for a given quarter will approximate the
sum of the distributions made during the last two months of such
quarter and the first month of the next quarter.
</FONT>

<P align="left">
<B><FONT size="2">2.&nbsp;Accounting Policies</FONT></B>

<P align="left">
<B><FONT size="2">Basis of Accounting</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The financial statements of the Trust are
prepared on the following basis and are not intended to present
financial position and results of operations in conformity with
accounting principles generally accepted in the United States of
America:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Royalty income, net of severance and ad valorem
    taxes, and interest income are recognized in the month in which
    amounts are received by either the escrow agent or the Trust
    (see Note&nbsp;1).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Trust expenses, consisting principally of routine
    general and administrative costs, include payments made during
    the accounting period. Expenses are accrued to the extent of
    amounts that become payable on the next monthly record date
    following the end of the accounting period. Reserves for
    liabilities that are contingent or uncertain in amount may also
    be established if considered necessary.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Royalties that are producing properties are
    amortized using the unit-of-production method. This amortization
    is shown as a reduction of Trust corpus.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Distributions to Unit holders are recognized when
    declared by the Trustee (see Note&nbsp;3).
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The financial statements of the Trust differ from
financial statements prepared in conformity with accounting
principles generally accepted in the United States of America
because of the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Royalty income is recognized in the month
    received rather than in the month of production.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Expenses other than those expected to be paid on
    the following monthly record date are not accrued.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Amortization of the Royalties is shown as a
    reduction to Trust corpus and not as a charge to operating
    results.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">25
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">SABINE ROYALTY TRUST</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL STATEMENTS&nbsp;&#151;
(Continued)</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Reserves may be established for contingencies
    that would not be recorded under accounting principles generally
    accepted in the United States of America.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This comprehensive basis of accounting other than
accounting principles generally accepted in the United States of
America corresponds to the accounting permitted for royalty
trusts by the U.S. Securities and Exchange Commission, as
specified by Staff Accounting Bulletin Topic 12:E, Financial
Statements of Royalty Trusts.
</FONT>

<P align="left">
<B><FONT size="2">Use of Estimates</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The preparation of financial statements in
conformity with the basis of accounting described above requires
management to make estimates and assumptions that affect
reported amounts of certain assets, liabilities, revenues and
expenses as of and for the reporting periods. Actual results may
differ from such estimates.
</FONT>

<P align="left">
<B><FONT size="2">Impairment</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Trustee routinely reviews its royalty
interests in oil and gas properties for impairment whenever
events or circumstances indicate that the carrying amount of an
asset may not be recoverable. If an impairment event occurs and
it is determined that the carrying value of the Trust&#146;s
royalty interests may not be recoverable, an impairment will be
recognized as measured by the amount by which the carrying
amount of the royalty interests exceeds the fair value of these
assets, which would likely be measured by discounting projected
cash flows.
</FONT>

<P align="left">
<B><FONT size="2">New Accounting Standards</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SFAS No.&nbsp;123R, <I>&#147;Accounting for
Stock-Based Compensation&#148; </I>was issued in December 2004
and provides new implementation guidance for stock-based
compensation accounting. This Statement is effective for public
entities that do not file as small business issuers&nbsp;&#151;
as of the beginning of the first interim or annual reporting
period that begins after June&nbsp;15, 2005. The Trust has no
options or other stock-based instruments and accordingly, this
new Standard will have no impact on the financial statements of
the Trust.
</FONT>

<P align="left">
<B><FONT size="2">Distributable Income Per Unit</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Basic distributable income per Unit is computed
by dividing distributable income by the weighted average Units
outstanding. Distributable income per Unit assuming dilution is
computed by dividing distributable income by the weighted
average number of Units and equivalent Units outstanding. The
Trust had no equivalent Units outstanding for any period
presented. Therefore, basic distributable income per Unit and
distributable income per Unit assuming dilution are the same.
</FONT>

<P align="left">
<B><FONT size="2">Federal Income Taxes</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Internal Revenue Service has ruled that the
Trust is classified as a grantor trust for Federal income tax
purposes and therefore is not subject to taxation at the trust
level. The Unit holders are considered, for Federal income tax
purposes, to own the Trust&#146;s income and principal as though
no trust were in existence. Accordingly, no provision for
Federal income tax expense has been made in these financial
statements. The income of the Trust will be deemed to have been
received or accrued by each Unit holder at the time such income
is received or accrued by the Trust, which is on the record date
following the end of each month, as discussed above in
Note&nbsp;1.
</FONT>

<P align="left">
<B><FONT size="2">3.&nbsp;Distributions to Unit
Holders</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The amount to be distributed to Unit holders
(&#147;Monthly Income Amount&#148;) is determined on a monthly
basis. The Monthly Income Amount is an amount equal to the sum
of cash received by the Trust during a monthly period (the
period commencing on the day after a monthly record date and
continuing
</FONT>

<P align="center"><FONT size="2">26
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">SABINE ROYALTY TRUST</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL STATEMENTS&nbsp;&#151;
(Continued)</FONT></B>

<P align="left">
<FONT size="2">through and including the next succeeding monthly
record date) attributable to the Royalties, any reduction in
cash reserves and any other cash receipts of the Trust,
including interest, reduced by the sum of liabilities paid and
any increase in cash reserves. Unit holders of record as of the
monthly record date (the 15th day of each calendar month except
in limited circumstances) are entitled to have distributed to
them the calculated Monthly Income Amount for such month on or
before 10 business days after the monthly record date. The
Monthly Income Amount per Unit is declared by the Trust no later
than 10&nbsp;days prior to the monthly record date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The cash received by the Trust is primarily from
purchasers of the Trust&#146;s oil and gas production and
consists of gross sales of production less applicable severance
taxes. In September 2004, the Trust received a refund from the
State of Oklahoma in the amount of $510,271. This refund
represented taxes that were withheld from the proceeds of
production from the Royalties and remitted to the State of
Oklahoma by purchasers. Income taxes are not payable by the
Trust, but are the responsibility of the individual Unit
holders. Therefore the State of Oklahoma refunded the withheld
taxes, and the refund was included as royalty income in the
Trust&#146;s October 2004 distribution.
</FONT>

<P align="left">
<B><FONT size="2">4.&nbsp;Other Payables</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other payables consist of the following:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="71%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Royalty receipts in suspense pending verification
    of ownership interest or&nbsp;title
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">140,432</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">426,070</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">140,432</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">426,070</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Trustee believes that these amounts represent
an ordinary operating condition of the Trust and that they will
be paid or released in the normal course of business.
</FONT>

<P align="left">
<B><FONT size="2">5.&nbsp;Subsequent Events</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subsequent to December&nbsp;31, 2004, the Trust
declared the following distributions:
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="34%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="26%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="17%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="16%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT size="1">Monthly Record Date</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Payment Date</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Distribution per Unit</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">January 18, 2005
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">January&nbsp;31, 2005
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.23163</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">February&nbsp;15, 2005
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">February&nbsp;28, 2005
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.26140</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">March&nbsp;15, 2005
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">March&nbsp;29, 2005
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.20350</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">6.&nbsp;General and Administrative
Expenses</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">General and administrative expenses for the years
ended December 31, were as follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="59%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Trustee&#146;s fee
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">291,480</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">288,221</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">284,172</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Escrow agent&#146;s fee
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">874,438</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">864,652</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">852,520</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Professional fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">264,216</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">182,745</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">144,741</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Unit holders&#146; services fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">244,970</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">267,427</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">232,388</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">126,720</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">146,108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124,223</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Total General and Administrative Expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,801,824</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,749,153</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,638,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">27
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">SABINE ROYALTY TRUST</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL STATEMENTS&nbsp;&#151;
(Continued)</FONT></B>

<P align="left">
<B><FONT size="2">7.&nbsp;Quarterly Financial Data
(Unaudited)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the royalty
income, distributable income and distributable income per Unit
of the Trust for each quarter in the years ended
December&nbsp;31, 2004 and 2003 (in thousands, except
per&nbsp;Unit amounts):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="50%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT size="1">Calendar</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Royalty</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Distributable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Distributable</FONT></B></TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT size="1">Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Income</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Income</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Income per&nbsp;Unit</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">First Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,709</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,233</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Second Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,376</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,889</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.68</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Third Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,984</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,612</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Fourth Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,270</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,854</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.67</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42,339</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,588</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">First Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,562</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Second Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,552</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,071</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.76</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Third Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,742</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,381</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.64</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Fourth Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,906</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,558</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.59</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38,762</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,060</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">8.&nbsp;Supplemental Oil and Gas Information
(Unaudited)</FONT></B>

<P align="left">
<B><FONT size="2">Reserve Quantities</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Information regarding estimates of the proved oil
and gas reserves attributable to the Trust are based on reports
prepared by DeGolyer and MacNaughton, independent petroleum
engineering consultants. Estimates were prepared in accordance
with Statement of Financial Accounting Standards No.&nbsp;69
(&#147;SFAS&nbsp;69&#148;) and the guidelines established by the
Securities and Exchange Commission. Certain information required
by SFAS&nbsp;69 is not presented because that information is not
applicable to the Trust due to its passive nature.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Oil and gas reserve quantities (all located in
the United&nbsp;States) are estimates based on information
available at the time of their preparation. Such estimates are
subject to change as additional information becomes available.
Reserves actually recovered, and the timing of the production of
those reserves, may
</FONT>

<P align="center"><FONT size="2">28
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">SABINE ROYALTY TRUST</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL STATEMENTS&nbsp;&#151;
(Continued)</FONT></B>

<P align="left">
<FONT size="2">differ substantially from original estimates. The
following schedule presents changes in the Trust&#146;s total
proved reserves (in thousands):
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="71%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Oil</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Gas</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Barrels)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Mcf)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">January&nbsp;1, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,430</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Revisions of previous estimates
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">181</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,457</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Production
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(526</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,614</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">December&nbsp;31, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,085</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,332</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Revisions of previous estimates
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">880</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,546</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Production
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(481</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,929</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">December&nbsp;31, 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,484</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,949</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Revisions of previous estimates
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">664</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,586</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Production
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(463</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,926</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">December&nbsp;31, 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,685</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,609</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Estimated quantities of proved developed reserves
of oil and gas as of the dates indicated were as follows (in
thousands):
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="71%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Oil</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Gas</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Barrels)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Mcf)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Proved developed reserves:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">January&nbsp;1, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,425</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,376</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">December&nbsp;31, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,067</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,239</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">December&nbsp;31, 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,454</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,878</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">December&nbsp;31, 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,642</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,550</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Disclosure of a Standardized Measure of
Discounted Future Net Cash Flows</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a summary of a standardized
measure (in thousands) of discounted future net cash flows
related to the Trust&#146;s total proved oil and gas reserve
quantities. Information presented is based upon a valuation of
proved reserves by using discounted cash flows based upon
current (at year end) oil and gas prices
($39.14&nbsp;per&nbsp;bbl and $5.66&nbsp;per&nbsp;Mcf,
respectively) and severance and ad valorem taxes, if any, and
economic conditions, discounted at the required rate of
10&nbsp;percent. As the Trust is not subject to taxation at the
trust level, no provision for income taxes has been made in the
following disclosure. The impact of changes in current prices on
reserves could vary significantly from year to year.
Accordingly, the information presented below should not be
viewed as an estimate of the fair market value of the
Trust&#146;s oil and gas properties nor should it be viewed as
indicative of any trends.
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="59%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Future net cash inflows
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">382,852</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">324,013</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">270,513</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Discount of future net cash flows @ 10%
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(188,623</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(155,206</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(132,058</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Standardized measure of discounted future net
    cash inflows
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">194,229</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">168,807</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">138,455</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">29
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">SABINE ROYALTY TRUST</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL STATEMENTS&nbsp;&#151;
(Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The change in the standardized measure of
discounted future net cash flows for the years ended
December&nbsp;31, 2004, 2003 and 2002 is as follows
(in&nbsp;thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="62%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Standardized measure of discounted future net
    cash flows, January&nbsp;1,
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">168,807</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">138,455</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86,115</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Royalty income, net of severance and ad valorem
    taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(42,339</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(38,762</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(28,134</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Changes in prices, net of related costs
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27,440</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,279</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51,026</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Revisions of previous estimates and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,440</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31,989</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,836</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Accretion of discount
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,881</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,846</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,612</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Standardized measure of discounted future net
    cash flows, December&nbsp;31,
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">194,229</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">168,807</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">138,455</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subsequent to year end, the price of both oil and
gas continued to fluctuate, giving rise to a correlating
adjustment of the respective standardized measure of discounted
future net cash flows. As of February&nbsp;25, 2005, the NYMEX
posted oil price was approximately $50.95 per barrel, which
compared to the posted price of $43.45 per barrel, used to
calculate the worth of future net revenue of the Trust&#146;s
proved developed reserves, would result in a larger standardized
measure of discounted future net cash flows for oil. As of
February&nbsp;25, 2005, the NYMEX posted gas price was $6.29 per
million British thermal units. The use of such price, as
compared to the posted price of $6.18 per million British
thermal units, used to calculate the future net revenue of the
Trust&#146;s proved developed reserves would result in a larger
standardized measure of discounted future net cash flows for gas.
</FONT>

<P align="center"><FONT size="2">30
</FONT>

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<P align="center">
<B><FONT size="2">REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM</FONT></B>

<P align="left">
<FONT size="2">To the Trustee on Behalf of Unit holders of
Sabine Royalty Trust:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have audited the accompanying Statements of
Fees and Expenses (as defined in Exhibit&nbsp;C to the Sabine
Royalty Trust Agreement) paid by Sabine Royalty Trust to Bank of
America,&nbsp;N.A., (the &#147;Trustee&#148;), as trustee and
escrow agent, for the years ended December&nbsp;31, 2004, 2003
and 2002. These statements are the responsibility of the
Trustee&#146;s management. Our responsibility is to express an
opinion on these statements based on our audits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the Statements of Fees and Expenses are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
Statements of Fees and Expenses. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As described in Note&nbsp;3 , the Statements of
Fees and Expenses were prepared on a modified cash basis of
accounting, which is a comprehensive basis of accounting other
than accounting principles generally accepted in the United
States of America.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In our opinion, the Statements of Fees and
Expenses referred to above present fairly, in all material
respects, the fees and expenses paid by Sabine Royalty Trust to
Bank of America, N.A., as trustee and escrow agent, for the
years ended December&nbsp;31, 2004, 2003 and 2002, on the basis
of accounting described in Note&nbsp;3.
</FONT>

<P align="left">
<FONT size="2">/s/ PRICEWATERHOUSECOOPERS LLP
</FONT>

<P align="left">
<FONT size="2">PricewaterhouseCoopers LLP
</FONT>

<DIV align="left">
<FONT size="2">Charlotte, North Carolina
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">March 10, 2005
</FONT>
</DIV>

<P align="center"><FONT size="2">31
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">STATEMENTS OF FEES AND EXPENSES</FONT></B>

<DIV align="center">
<B><FONT size="2">PAID BY SABINE ROYALTY TRUST TO</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">BANK OF AMERICA, N.A., AS</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">TRUSTEE AND ESCROW AGENT, FOR EACH OF THE
THREE</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">YEARS IN THE PERIOD ENDED DECEMBER&nbsp;31,
2004</FONT></B>
</DIV>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="59%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Trustee&#146;s fee
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">291,480</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">288,221</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">284,172</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Escrow agent&#146;s fee
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">874,438</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">864,652</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">852,520</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Total fees and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,165,918</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,152,873</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,136,692</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying notes are an integral part of
these statements.
</FONT>

<P align="left">
<B><FONT size="2">Notes</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">1.&nbsp;</FONT></B><FONT size="2">Sabine
Royalty Trust (the &#147;Trust&#148;) is an express trust formed
under the laws of Texas by the Sabine Corporation Royalty Trust
Agreement (the &#147;Trust Agreement&#148;) made and entered
into effective as of December&nbsp;31, 1982, between Sabine
Corporation (&#147;Sabine&#148;), as trustor, and Bank of
America, N.A. (the &#147;Bank&#148;), as successor trustee (the
&#147;Trustee&#148;). Contemporaneously with the execution of
the Trust Agreement, Sabine, the Trustee and the predecessor of
the Bank, as escrow agent (the &#147;Escrow Agent&#148;),
entered into an escrow agreement which establishes an escrow
(the &#147;Escrow&#148;). Prior to distribution of units of
beneficial interest (the &#147;Units&#148;) in the Trust to
Sabine&#146;s shareholders, Sabine transferred to the Trust
royalty and mineral interests, including landowner&#146;s
royalties, overriding royalty interests, minerals (other than
executive rights, bonuses and delay rentals), production
payments and other similar, non-participatory interests, in
certain producing and proved undeveloped oil and gas properties
in six states (the &#147;Royalty Properties&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May 1988, Sabine was acquired by Pacific
Enterprise (&#147;Pacific&#148;), a California corporation.
Through a series of mergers, Sabine was merged into Pacific
Enterprises Oil Company (USA) (&#147;Pacific (USA)&#148;), a
California corporation and a wholly owned subsidiary of Pacific,
effective January&nbsp;1, 1990. This acquisition and the
subsequent mergers had no effect on the Units. Pacific (USA), as
successor to Sabine, has assumed by operation of law all of
Sabine&#146;s rights and obligations with respect to the Trust.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The compensation agreement under the Trust
Agreement provides for a &#147;cost plus&#148; fee payable to
the Bank for all services rendered in its capacities as Trustee
and as Escrow Agent. Generally, the fees payable to the Bank are
calculated by dividing the expenses incurred by the Bank, as
Trustee and as Escrow Agent, solely for services provided by the
Bank in the administration of the Trust and the Escrow by
seven-tenths (0.7). Professional and other noncontributing
(out-of-pocket) expenses incurred by the Bank, as Trustee or as
Escrow Agent, as the case may be, in the performance of its
duties in the foregoing capacities are charged to the Trust or
the Escrow, as the case may be, at cost. These expenses do not
contribute to the fees payable to the Bank described above.
Annually, the Trustee must estimate Trust and Escrow expenses
contributing to the fee for the forthcoming year and publish
this amount in the Trust&#146;s first quarterly report to Unit
holders. The Trustee can be penalized by forfeiture of
reimbursement for part of its expenses if such expenses exceed
the estimate. The Trustee also can earn a bonus by administering
the Trust for total costs that are lower than the estimate. The
Bank elected to forgo bonuses earned of $34,082, $22,118 and
$38,308 in 2004, 2003 and 2002, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">2.&nbsp;</FONT></B><FONT size="2">Escrow
Agent&#146;s fees and Trustee&#146;s fees consist of a profit
margin plus all fully allocated costs incurred by the Bank, as
Trustee and as Escrow Agent, in performing administrative
services to the Trust as specified in the Trust Agreement.
Allocated costs do not include any professional and related
expenses paid to third parties.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All costs incurred by the Bank in its capacities
as Trustee and as Escrow Agent are accumulated in one account.
Fees based thereon are allocated between the Trustee function
and the Escrow Agent function
</FONT>

<P align="center"><FONT size="2">32
</FONT>

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<DIV align="left">
<FONT size="2">according to the actual administrative services
rendered by the Bank in each capacity. Any determinations by the
Bank as to the allocation of the fee between the Trustee and the
Escrow Agent are conclusive and binding on the Unit holders and
Pacific (USA), but in no event does the Bank&#146;s allocation
affect the aggregate fee payable to the Bank.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">3.</FONT></B><FONT size="2">&nbsp;The
Statements of Fees and Expenses are prepared on a modified cash
basis, which is a comprehensive basis of accounting other than
accounting principles generally accepted in the United States of
America. Trust expenses include payments made during the
accounting period. Expenses are accrued to the extent of amounts
that become payable on the next monthly record date following
the end of the accounting period. These statements differ from
statements prepared in conformity with accounting principles
generally accepted in the United States of America because
expenses other than those expected to be paid on the following
monthly record date are not accrued.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This comprehensive basis of accounting other than
accounting principles generally accepted in the United States of
America corresponds to the accounting permitted for royalty
trusts by the U.S. Securities and Exchange Commission, as
specified by Staff Accounting Bulletin Topic 12:E, Financial
Statements of Royalty Trusts.
</FONT>

<P align="center"><FONT size="2">33
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='130'></A>
</DIV>

<!-- link1 "Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure." -->

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;9.&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Changes in and Disagreements with
    Accountants on Accounting and Financial
    Disclosure.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">None.
</FONT>

<DIV align="left">
<A name='141'></A>
</DIV>

<!-- link1 "Item 9A. Controls and Procedures." -->

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;9A.&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Controls and Procedures.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">
<I><FONT size="2">Conclusion Regarding the Effectiveness of
Disclosure Controls and Procedures</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Trustee conducted an evaluation of the
Trust&#146;s disclosure controls and procedures, as such term is
defined under Rule&nbsp;13a-15(e) promulgated under the
Securities Exchange Act of 1934, as amended. Based on this
evaluation, the Trustee has concluded that the Trust&#146;s
disclosure controls and procedures were effective as of the end
of the period covered by this annual report.
</FONT>

<P align="left">
<I><FONT size="2">Trustee&#146;s Report on Internal Control Over
Financial Reporting</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As permitted by the Order Under Section&nbsp;36
of the Securities Exchange Act of 1934 Granting an Exemption
from Specified Provisions of Exchange Act Rules&nbsp;13a-1 and
15d-1 issued by the SEC on November&nbsp;30, 2004, the Trustee
will file the Trustee&#146;s Report on Internal Control Over
Financial Reporting and the related Attestation Report of
Deloitte &#38; Touche LLP, an independent registered public
accounting firm, by April&nbsp;30, 2005 through an amendment to
this annual report on Form&nbsp;10-K.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There has not been any change in the Trust&#146;s
internal control over financial reporting during the fourth
quarter of 2004 that has materially affected, or is reasonably
likely to materially affect, the Trust&#146;s internal control
over financial reporting.
</FONT>

<P align="center"><FONT size="2">34
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='142'></A>
</DIV>

<!-- link1 "Item 9B. Other Information." -->

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;9B.&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Other Information.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">None.
</FONT>

<DIV align="left">
<A name='139'></A>
</DIV>

<!-- link1 "PART III" -->

<P align="center">
<B><FONT size="2">PART&nbsp;III</FONT></B>

<DIV align="left">
<A name='131'></A>
</DIV>

<!-- link1 "Item 10. Directors and Executive Officers of the Registrant." -->

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;10.&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Directors and Executive Officers of the
    Registrant.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Directors and Executive
Officers.</FONT></I><FONT size="2"> The Registrant has no
directors or executive officers. The Trustee is a corporate
trustee which may be removed, with or without cause, by the
affirmative vote at a meeting duly called and held of the
holders of a majority of the Units represented at the meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Compliance with Section 16(a) of the Exchange
Act.</FONT></I><FONT size="2"> The Trust has no directors and
officers and knows of no Unit holder that is a beneficial owner
of more than ten percent of the outstanding Units, and is
therefore unaware of any person that failed to report on a
timely basis reports required by Section&nbsp;16(a) of the
Securities Exchange Act of 1934, as amended.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Code of Ethics.
</FONT></I><FONT size="2">Because the Trust has no employees, it
does not have a code of ethics. Employees of the Trustee, Bank
of America, N.A., must comply with the bank&#146;s code of
ethics, a copy of which will be made available to Unit holders
without charge, upon request by appointment at Bank of America
Plaza, 17th&nbsp;Floor, 901&nbsp;Main Street, Dallas, Texas,
75202.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Audit Committee. </FONT></I><FONT size="2">The
Trust has no directors and therefore has no audit committee or
audit committee financial expert.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Nominating Committee.
</FONT></I><FONT size="2">The Trust has no directors and
therefore has no nominating committee.
</FONT>

<DIV align="left">
<A name='132'></A>
</DIV>

<!-- link1 "Item 11. Executive Compensation." -->

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;11.&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Executive Compensation.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable.
</FONT>

<DIV align="left">
<A name='133'></A>
</DIV>

<!-- link1 "Item 12. Security Ownership of Certain Beneficial Owners and Management." -->

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;12.&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Security Ownership of Certain Beneficial
    Owners and Management.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(a)&nbsp;<I>Security Ownership of Certain
Beneficial Owners. </I>As of February&nbsp;25, 2005 there were
no Unit holders known to the Trustee to be beneficial owners of
more that 5% of the outstanding Units.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(b)&nbsp;<I>Security Ownership of Management.
</I>The Trust has no directors or executive officers. Bank of
America, N.A., the Trustee, held as of March&nbsp;3, 2005 an
aggregate of 201,227&nbsp;Units in various fiduciary capacities,
and it had shared voting and investment power with respect to
23,497 of such Units.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(c)&nbsp;<I>Changes in Control. </I>The Trustee
knows of no arrangements the operation of which may at a
subsequent date result in a change in control of the Registrant.
</FONT>

<DIV align="left">
<A name='134'></A>
</DIV>

<!-- link1 "Item 13. Certain Relationships and Related Transactions." -->

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;13.&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Certain Relationships and Related
    Transactions.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable.
</FONT>

<DIV align="left">
<A name='135'></A>
</DIV>

<!-- link1 "Item 14. Principal Accounting Fees and Services." -->

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;14.&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Principal Accounting Fees and
    Services.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Fees for services performed by Deloitte &#38;
Touche LLP for the years ended December&nbsp;31, 2004 and 2003
are:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="77%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Audit fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">83,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Audit-related fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Tax fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,795</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,589</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">All other fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As referenced in Item&nbsp;10, above, the Trust
has no audit committee, and as a result, has no audit committee
pre-approval policy with respect to fees paid to Deloitte &#38;
Touche LLP.
</FONT>

<P align="center"><FONT size="2">35
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='140'></A>
</DIV>

<!-- link1 "PART IV" -->

<P align="center">
<B><FONT size="2">PART IV</FONT></B>

<DIV align="left">
<A name='136'></A>
</DIV>

<!-- link1 "Item 15. Exhibits, Financial Statement Schedules." -->

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;15.&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Exhibits, Financial Statement
    Schedules.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(a)&nbsp;The following documents are filed as a
part of this report:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">1.&nbsp;<I>Financial Statements (included in
Item&nbsp;8 of this report)</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Report of Independent Registered Public
    Accounting Firm
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Statements of Assets, Liabilities and Trust
    Corpus at December&nbsp;31, 2004 and 2003
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Statements of Distributable Income for Each of
    the Three Years in the Period Ended December&nbsp;31, 2004
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Statements of Changes in Trust Corpus for Each of
    the Three Years in the Period Ended December&nbsp;31, 2004
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Notes to Financial Statements
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">2.&nbsp;<I>Financial Statement Schedules</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Financial statement schedules are omitted because
of the absence of conditions under which they are required or
because the required information is included in the financial
statements and notes thereto.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.&nbsp;<I>Exhibits</I>
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="13%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="13%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="70%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">(4)(a)</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&#151;&nbsp;Sabine Corporation Royalty Trust
    Agreement effective as of December&nbsp;31, 1982, by and between
    Sabine Corporation and InterFirst Bank Dallas, N.A., as trustee.
    </FONT></DIV>
    </TD>
</TR>

<TR>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">(b)</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&#151;&nbsp;Sabine Corporation Louisiana Royalty
    Trust Agreement effective as of December&nbsp;31, 1982, by and
    between Sabine Corporation and Hibernia National Bank in
    New&nbsp;Orleans, as trustee, and joined in by InterFirst Bank
    Dallas, N.A., as trustee.
    </FONT></DIV>
    </TD>
</TR>

<TR>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">(23)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&#151;&nbsp;Consent of DeGolyer and MacNaughton.
    </FONT></DIV>
    </TD>
</TR>

<TR>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&#151;&nbsp;Rule&nbsp;13a-14(a)(15d-14(a))
    Certification.
    </FONT></DIV>
    </TD>
</TR>

<TR>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&#151;&nbsp;Certification by Bank of America,
    Trustee of Sabine Royalty Trust, dated March&nbsp;10, 2004 and
    submitted pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act
    of 2002 (18 U.S.C. Section 1350).
    </FONT></DIV>
    </TD>
</TR>

<TR>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">(99)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&#151;&nbsp;Report dated February&nbsp;10, 2005
    of the Trustee containing interim tax information for each of
    the 12&nbsp;months in the year ending December&nbsp;31, 2004.
    </FONT></DIV>
    </TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="2%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">*&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Exhibits 4(a) and 4(b) are incorporated herein by
    reference to Exhibits&nbsp;4(a) and 4(b), respectively, of the
    Registrant&#146;s Annual Report on Form&nbsp;10-K for the year
    ended December&nbsp;31, 1993.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">36
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">SIGNATURES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the requirements of Section&nbsp;13
or 15(d)&nbsp;of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">SABINE ROYALTY TRUST
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="3%"></TD>
    <TD width="57%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">BY:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">BANK OF AMERICA, N.A., Trustee
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ RON&nbsp;E. HOOPER
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Ron&nbsp;E. Hooper
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Senior Vice-President
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Date: March&nbsp;16, 2005
</FONT>

<P align="center">
<B><FONT size="2">(The Registrant has no directors or executive
officers.)</FONT></B>

<P align="center"><FONT size="2">37
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">INDEX TO EXHIBITS</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="13%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="13%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="70%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">(4)(a)</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&#151;&nbsp;Sabine Corporation Royalty Trust
    Agreement effective as of December&nbsp;31, 1982, by and between
    Sabine Corporation and InterFirst Bank Dallas, N.A., as trustee.
    </FONT></DIV>
    </TD>
</TR>

<TR>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">(b)</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&#151;&nbsp;Sabine Corporation Louisiana Royalty
    Trust Agreement effective as of December&nbsp;31, 1982, by and
    between Sabine Corporation and Hibernia National Bank in
    New&nbsp;Orleans, as trustee, and joined in by InterFirst Bank
    Dallas, N.A., as trustee.
    </FONT></DIV>
    </TD>
</TR>

<TR>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">(23)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&#151;&nbsp;Consent of DeGolyer and MacNaughton.
    </FONT></DIV>
    </TD>
</TR>

<TR>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&#151;&nbsp;Rule&nbsp;13a-14(a)(15d-14(a))
    Certification.
    </FONT></DIV>
    </TD>
</TR>

<TR>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&#151;&nbsp;Certification by Bank of America,
    Trustee of Sabine Royalty Trust, dated March&nbsp;10, 2004 and
    submitted pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act
    of 2002 (18 U.S.C. Section 1350).
    </FONT></DIV>
    </TD>
</TR>

<TR>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">(99)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">&#151;&nbsp;Report dated February&nbsp;10, 2005
    of the Trustee containing interim tax information for each of
    the 12&nbsp;months in the year ending December&nbsp;31, 2004.
    </FONT></DIV>
    </TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="2%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">*&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Exhibits 4(a) and 4(b) are incorporated herein by
    reference to Exhibits&nbsp;4(a) and 4(b), respectively, of the
    Registrant&#146;s Annual Report on Form&nbsp;10-K for the year
    ended December&nbsp;31, 1993.
    </FONT></TD>
</TR>

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</BODY>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>2
<FILENAME>d22692exv23.txt
<DESCRIPTION>CONSENT OF DEGOLYER AND MACNAUGHTON
<TEXT>
<PAGE>
                                                                      EXHIBIT 23

                            DEGOLYER AND MACNAUGHTON
                        4925 Greenville Avenue, Suite 400
                                One Energy Square
                               Dallas, Texas 75206


                                 March 4, 2005



Sabine Royalty Trust
Bank of America, N.A.
Bank of America Plaza - 17th Floor
901 Main Street
Dallas, Texas 75202


Gentlemen:

         We hereby consent to the inclusion of our letter report dated March 2,
2005, concerning the reserves and revenue, as of January 1, 2005, of certain
royalty interests owned by Sabine Royalty Trust in the Annual Report on Form
10-K for the year ended December 31, 2004, of the Sabine Royalty Trust to be
filed with the Securities and Exchange Commission. We also consent to the
references to our firm under "Properties--Reserves" in Item 2 and under
"Supplemental Oil and Gas Information (Unaudited)--Reserve Quantities" in Item 8
of the Form 10-K.

                                                     Very truly yours,



                                                     DeGOLYER and MacNAUGHTON


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>3
<FILENAME>d22692exv31.txt
<DESCRIPTION>RULE 13A-14(A)(15D-14(A)) CERTIFICATION
<TEXT>
<PAGE>

                                                                      EXHIBIT 31

                                 CERTIFICATIONS

I, Ron Hooper, certify that:

1. I have reviewed this annual report on Form 10-K of Sabine Royalty Trust, for
which Bank of America, N.A. acts as Trustee;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, distributable income and changes in trust
corpus of the registrant as of, and for, the periods presented in this annual
report;

4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), or for
causing such controls and procedures to be established and maintained, for the
registrant and I have:

         a)       designed such disclosure controls and procedures, or caused
                  such disclosure controls and procedures to be designed under
                  my supervision, to ensure that material information relating
                  to the registrant, including its consolidated subsidiaries, is
                  made known to me by others within those entities, particularly
                  during the period in which this annual report is being
                  prepared;

         b)       evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this annual report my
                  conclusions about the effectiveness of the disclosure controls
                  and procedures as of the end of the period covered by this
                  annual report based on such evaluation; and

         c)       disclosed in this annual report any changes in the
                  registrant's internal control over financial reporting that
                  occurred during the registrant's most recent fiscal quarter
                  (the registrant's fourth fiscal quarter in the case of an
                  annual report) that has materially affected, or is reasonably
                  likely to materially affect, the registrant's internal control
                  over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over
financial reporting, to the registrant's auditors:

         a)       all significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

         b)       any fraud, whether or not material, that involves persons who
                  have a significant role in the registrant's internal control
                  over financial reporting.


Date: March 16, 2005                         By: /s/ Ron Hooper
                                                 -------------------------------
                                                 Ron Hooper
                                                 Senior Vice President and
                                                 Trust Administrator
                                                 Bank of America, N.A.






</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>4
<FILENAME>d22692exv32.txt
<DESCRIPTION>CERTIFICATION PURSUANT TO SECTION 906
<TEXT>
<PAGE>

                                                                      EXHIBIT 32


      CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT
                TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Sabine Royalty Trust (the "Trust") on
Form 10-K for the annual period ended December 31, 2004 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), the
undersigned, not in its individual capacity but solely as the trustee of the
Trust, certifies pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that to its knowledge:

         (1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended; and

         (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Trust.



                                   BANK OF AMERICA, N.A., TRUSTEE FOR
                                   SABINE ROYALTY TRUST

                                   By: /s/ Ron E. Hooper
                                       -----------------------------------------
                                       Ron E. Hooper,
                                       Senior Vice President, Royalty Management

Date: March 16, 2005


A signed original of this written statement required by Section 906 has been
provided to Sabine Royalty Trust and will be retained by Sabine Royalty Trust
and furnished to the Securities and Exchange Commission or its staff upon
request.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>5
<FILENAME>d22692exv99.txt
<DESCRIPTION>REPORT DATED FEBRUARY 10, 2005
<TEXT>
<PAGE>

                                                                      EXHIBIT 99

                          [SABINE ROYALTY TRUST LOGO]

                                TAX INFORMATION

                                      2004

         This booklet contains tax information relevant to ownership of
              Units of Sabine Royalty Trust and should be retained.

<PAGE>

                              SABINE ROYALTY TRUST

                                FEBRUARY 10, 2005

TO UNIT HOLDERS:

      This booklet provides 2004 tax information which will allow you to
determine your pro rata share of income and deductions attributable to your
investment in Sabine Royalty Trust (the "Trust"). Each Unit holder is encouraged
to read the entire booklet very carefully.

      The material included in this booklet enables you to compute the
information to be included in your Federal and state income tax returns. This
booklet is the only information source for Unit holders to determine their share
of the items of income and expense of the Trust for the entire 2004 calendar
year. The Trust does not file nor does it furnish a Form 1099 to Unit holders
(except where Federal backup withholding is required). Unit holders should
retain this booklet as part of their tax records.

      The material herein is not intended and should not be construed as
professional tax or legal advice. Each Unit holder should consult the Unit
holder's own tax advisor regarding all tax compliance matters relating to the
Units.

      THIS YEAR'S TAX BOOKLET CONTAINS ADDITIONAL SCHEDULES DESIGNED TO ASSIST
YOU OR YOUR TAX ADVISOR IN CALCULATING THE INFORMATION TO BE INCLUDED IN YOUR
FEDERAL INCOME TAX RETURNS. THOSE SCHEDULES ARE INCLUDED ON PAGES 20 THROUGH 21.
WE HAVE ALSO CONSOLIDATED SOME OF THE HISTORICAL DEPLETION INFORMATION THAT IS
NO LONGER APPLICABLE.

Very truly yours,

Sabine Royalty Trust,
By Bank of America, N.A., Trustee
1-800-365-6541

<PAGE>

                              SABINE ROYALTY TRUST

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                    PAGE
                                                                                    ----
<S>                                                                                 <C>
2004 TAX INFORMATION
- - Reading the Income and Expense Schedules.....................................      1
- - Identifying Which Income and Expense Schedules to Use........................      1
- - Applying the Data From the Income and Expense Schedules......................      1
- - Computing Depletion..........................................................      1
- - Sale or Exchange of Units....................................................      2
- - Classification of Investment.................................................      2
- - Nonresident Foreign Unit Holders.............................................      3
- - Unrelated Business Taxable Income............................................      3
- - Backup Withholding...........................................................      3
- - State Income Tax.............................................................      3
- - Table of 2004 Monthly Record Dates and Cash Distributions Per Unit...........      4
- - Tax Computation Worksheet....................................................      5
- - Supplement to Tax Computation Worksheet......................................      6
- - Tax Information Schedules....................................................      7
  - - Form 1041, Grantor Trust for Calendar Year 2004..........................      7
  - - Form 1041, Grantor Trust for January 2004................................      8
  - - Form 1041, Grantor Trust for February 2004...............................      9
  - - Form 1041, Grantor Trust for March 2004..................................     10
  - - Form 1041, Grantor Trust for April 2004..................................     11
  - - Form 1041, Grantor Trust for May 2004....................................     12
  - - Form 1041, Grantor Trust for June 2004...................................     13
  - - Form 1041, Grantor Trust for July 2004...................................     14
  - - Form 1041, Grantor Trust for August 2004.................................     15
  - - Form 1041, Grantor Trust for September 2004..............................     16
  - - Form 1041, Grantor Trust for October 2004................................     17
  - - Form 1041, Grantor Trust for November 2004...............................     18
  - - Form 1041, Grantor Trust for December 2004...............................     19
  - - Supplemental Tax Table I--Gross Royalty Income...........................     20
  - - Supplemental Tax Table II--Severance Tax.................................     20
  - - Supplemental Tax Table III--Interest Income..............................     21
  - - Supplemental Tax Table IV--Trust Administrative Expense..................     21
  - - Depletion Schedule I.....................................................     22
  - - Depletion Schedule II....................................................     23
  - - Depletion Schedule III...................................................     23
- - Sample Tax Forms for Individual Unit Holders.................................     24
- - Comprehensive Example........................................................     28
- - Sabine Royalty Trust Historical Tax Worksheet................................     31
DISCUSSION OF TAX CONSIDERATIONS PERTAINING TO THE OWNERSHIP OF UNITS IN
SABINE ROYALTY TRUST
- - Tax Background Information...................................................    A-1
  - - Effect of Escrow Arrangement.............................................    A-1
- - Depletion....................................................................    A-2
  - - Cost Depletion...........................................................    A-2
  - - Percentage Depletion.....................................................    A-2
- - Nonresident Foreign Unit Holders.............................................    A-3
- - Sale or Exchange of Units....................................................    A-4
- - Backup Withholding...........................................................    A-4
- - Substantial Understatement Penalty...........................................    A-4
- - State Income Tax.............................................................    A-5
    (SRT 2004 TAX)
</TABLE>

<PAGE>

                              SABINE ROYALTY TRUST

                              2004 TAX INFORMATION

READING THE INCOME AND EXPENSE SCHEDULES

      The accompanying income and expense schedules reflect tax information
attributable to Sabine Royalty Trust (the "Trust") for 2004. This information
has been assembled on a per Unit basis and is expressed in decimal fractions of
one dollar. A cumulative schedule for the twelve months ended December 29, 2004,
which is the last distribution payment date for 2004, and separate non
cumulative schedules for the months of January through December 2004 are
enclosed. Separate depletion schedules are enclosed which provide the necessary
information for Unit holders to compute cost depletion with respect to their
interests in the Trust.

IDENTIFYING WHICH INCOME AND EXPENSE SCHEDULES TO USE

      Pursuant to the terms of the Trust agreement and the escrow agreement, the
Trust receives income and incurs expenses only on Monthly Record Dates.
Furthermore, only Unit holders of record on Monthly Record Dates are entitled to
cash distributions. On the basis of these agreements, both cash and accrual
basis Unit holders should be considered as realizing income and incurring
expenses only on Monthly Record Dates. Therefore, if you were not the Unit
holder of record on a specified Monthly Record Date, you should not use the tax
information for the month in which that Monthly Record Date falls. A table of
Monthly Record Dates and cash distributions per Unit is included on page 4.

      The appropriate schedules to be used by a Unit holder will depend upon (i)
the date the Unit holder became a holder of record of the Units, (ii) if
applicable, the date the Unit holder ceased to be the holder of record of the
Units, and (iii) the tax year-end of the Unit holder. For instance, a Unit
holder reporting on the calendar year basis who acquired Units and became a Unit
holder of record on June 15, 2004 and who still owned only those Units on
December 15, 2004 must use each of the separate monthly schedules for June
through December 2004 (located on pages 13-19), and Depletion Schedule III
(located on page 23) for such Units. However, Unit holders reporting on a
calendar year basis who became Unit holders of record prior to January 15, 2004
and who continued to own only those Units on December 15, 2004, must use only
the cumulative schedule for calendar year 2004 (located on page 7) and either
Depletion Schedule I or II (located on pages 22-23), as appropriate.

APPLYING THE DATA FROM THE INCOME AND EXPENSE SCHEDULES

      The tax data, other than depletion, specifically applicable to a Unit
holder may be determined by multiplying the appropriate decimal fractions times
the number of Units owned. Unit holders who must use the separate monthly income
and expense schedules should combine the individual income and expense factors
from the monthly schedules for each month during which the Units were owned on a
Monthly Record Date. For a worksheet approach to computing these decimal
fractions, see the Supplement to Tax Computation Worksheet on page 6.

COMPUTING DEPLETION

      Depletion schedules are included which provide information for Unit
holders to compute cost depletion deductions with respect to their interests in
the Trust. To compute depletion for any taxable period, Unit holders should
multiply the depletion factor indicated on the relevant schedule times their
original tax basis in the respective Unit(s) as reduced by the cost depletion
that was allowable as a deduction (whether or not deducted) in prior calendar
years during which they owned the Units. A factor for percentage depletion is
not included, as cost depletion exceeded the percentage depletion calculated.

(SRT 2004 TAX)

                                       1
<PAGE>

      As discussed at page A-2 in the back portion of this booklet, the
composite depletion factors are determined on the basis of a weighted average
ratio of current production from each Trust property to the estimated future
production from such property. This method of weighting the depletion factors
permits the presentation of a single depletion factor for all Unit holders
acquiring Units during a period in which there is no substantial change in the
relative fair market values of the Trust properties. Primarily as a result of
the decline in oil prices which occurred during 1986, there was a change in the
relative fair market values of the Trust properties. Accordingly, two mutually
exclusive depletion computations are included herein reflecting the composite
depletion factors required to compute depletion for Units acquired in 1986.

      The proper depletion schedule to use in computing 2004 depletion depends
on the date when the Units were acquired, as described below. Therefore, Unit
holders are encouraged to maintain records indicating the date of acquisition
and the acquisition price for each Unit or lot of Units acquired.

      Unit holders who acquired Units during or before 2003 use Depletion
Schedule I (located on page 22). The Federal depletion factors in Depletion
Schedule I are presented on a cumulative basis for 2004. Depletion Schedule I
contains no state-specific depletion factors. Unit holders should refer to
Schedule III (located on page 23) for the state-specific depletion factors.

      Unit holders who acquired Units in 2004 use Depletion Schedule II (located
on page 23). The Federal depletion factors in Depletion Schedule II are
presented on a cumulative and non cumulative basis for 2004. Depletion Schedule
II contains no state-specific depletion factors. Unit holders should refer to
Schedule III (located on page 23) for the state-specific depletion factors.

      Depletion Schedule III contains state-specific depletion factors, which
are presented on a noncumulative basis for all years. These factors are
appropriate for use in calculating the 2004 depletion allowance for Units
purchased in all years. You may calculate state depletion by either (a)
calculating the amount of state depletion for each month and adding together the
monthly depletion amounts or (b) adding together the applicable monthly
depletion factors for the relevant state to create a composite depletion factor
for such state and multiplying that factor by the adjusted basis of your Units.
Both methods should produce the same result.

SALE OR EXCHANGE OF UNITS

      A discussion concerning the tax consequences associated with the sale or
exchange of Units is presented on page A-4 in the back portion of this booklet.

CLASSIFICATION OF INVESTMENT

      Tax reform measures enacted in 1986 and 1987 require items of income and
expense to be categorized as "passive," "active" or "portfolio" in nature. An
explanation of the application of these rules to the items of income and expense
reported by the Trust are contained on page A-1 in the back portion of this
booklet.

(SRT 2004 TAX)

                                       2
<PAGE>

NONRESIDENT FOREIGN UNIT HOLDERS

      Nonresident alien individual and foreign corporation Unit holders
("Foreign Taxpayer(s)") are subject to special tax rules with respect to their
investments in the Trust. These rules are outlined beginning on page A-3 in the
back portion of this booklet.

UNRELATED BUSINESS TAXABLE INCOME

      Certain organizations that are generally exempt from federal income tax
under Internal Revenue Code Section 501 are subject to federal income tax on
certain types of business income defined in Section 512 as unrelated business
taxable income ("UBTI"). In the opinion of the Trust's tax counsel, Thompson &
Knight LLP, the income of the Trust as to any tax-exempt organization should not
be UBTI so long as the Trust units are not "debt-financed property" within the
meaning of Section 514(b) of the Internal Revenue Code. In general, a Trust unit
would be debt-financed if the Trust incurs debt or if the tax-exempt
organization that is a Trust Unit holder incurs debt to acquire a Trust Unit or
otherwise incurs or maintains a debt that would not have been incurred or
maintained if the Trust Unit had not been acquired. A real property exception
applies to the debt-financed property rules for certain types of exempt
organizations. Consult your tax advisor if applicable.

BACKUP WITHHOLDING

      Unit holders, other than Foreign Taxpayers, who have had amounts withheld
in 2004 pursuant to the Federal backup withholding provisions should have
received a Form 1099-MISC from the Trust. The Form 1099-MISC reflects the total
Federal income tax withheld from distributions. Unlike other Forms 1099 that you
may receive, the amount reported on the Form 1099-MISC received from the Trust
should not be included as additional income in computing taxable income, as such
amount is already included in the per Unit income items on the income and
expense schedules included herein. The Federal income tax withheld, as reported
on the Form 1099-MISC, should be considered as a credit by the Unit holder in
computing any Federal income tax liability. Individual Unit holders should
include the amount of backup withholding in the Payment section of the Unit
holder's 2004 Form 1040. For a further discussion of backup withholding, see
page A-4 in the back portion of this booklet. For amounts withheld from Foreign
Taxpayers, see pages A-3 to A-4 in the back portion of this booklet.

STATE INCOME TAX

      Since the Trust holds royalty interests and receives income that is
attributable to various states, Unit holders may be obligated to file a return
and may have a tax liability in states in addition to their state of residence.
The accompanying schedules have been prepared in such a manner that income and
deductions attributable to the various states may be determined by each Unit
holder. State income tax matters are more fully discussed on pages A-5 to A-6 in
the back portion of this booklet.

(SRT 2004 TAX)

                                       3
<PAGE>

TABLE OF 2004 MONTHLY RECORD DATES AND CASH DISTRIBUTIONS PER UNIT

      Unit holders, as reflected in the transfer books of the Trust on a Monthly
Record Date, received the following per Unit cash distributions for 2004. The
per Unit cash distributions reflected below have not been reduced by any taxes
that may have been withheld from distributions to Foreign Taxpayers or from
distributions to Unit holders subject to the Federal backup withholding rules.
The distribution checks were dated and mailed on the corresponding Date Payable.

<TABLE>
<CAPTION>
                                             DISTRIBUTION
MONTHLY RECORD DATE       DATE PAYABLE         PER UNIT
- -------------------       ------------         --------
<S>                    <C>                   <C>
January 15, 2004       January 29, 2004        0.23520
February 17, 2004      February 27, 2004       0.18008
March 15, 2004         March 29, 2004          0.18951
April 15, 2004         April 29, 2004          0.26367
May 17, 2004           May 28, 2004            0.24520
June 15, 2004          June 29, 2004           0.20698
July 15, 2004          July 29, 2004           0.22614
August 16, 2004        August 30, 2004         0.23616
September 15, 2004     September 29, 2004      0.29537
October 15, 2004       October 29, 2004        0.26336
November 15, 2004      November 29, 2004       0.20490
December 15, 2004      December 29, 2004       0.23937
</TABLE>

(SRT 2004 TAX)

                                        4
<PAGE>

                              SABINE ROYALTY TRUST
                            TAX COMPUTATION WORKSHEET

                                      2004

          (RETAIN THIS WORKPAPER AS PART OF YOUR PERMANENT TAX RECORDS)

                                     PART I

                               INCOME AND EXPENSE

<TABLE>
<CAPTION>
                                   A                     B                    C
                                                   INCOME/EXPENSE
                                                      PER UNIT
                                NUMBER OF          FROM APPROPRIATE
                               UNITS OWNED            SCHEDULE(S)                        WHERE TO REFLECT ON
       ITEM                     (NOTE 1)               (NOTE 2)             TOTALS     2004 FORM 1040 (NOTE 3)
       ----                    -----------         ----------------         ------   --------------------------
<S>                            <C>                 <C>                      <C>      <C>
Gross Royalty Income .......   -----------    x    ----------------    =    ------   Line 4, PART I, Schedule E
Severance Tax ..............   -----------    x    ----------------    =    ------   Line 16, PART I, Schedule E
Interest Income ............   -----------    x    ----------------    =    ------   Line 1, PART I, Schedule B
Administrative Expense .....   -----------    x    ----------------    =    ------   Line 18, PART I, Schedule E
</TABLE>

                                 PART II

                         COST DEPLETION (NOTE 4)

<TABLE>
<CAPTION>
                       COST DEPLETION
                      ALLOWABLE IN PRIOR       ADJUSTED BASIS FOR          APPROPRIATE 2004
                       CALENDAR YEARS            COST DEPLETION          COST DEPLETION FACTOR
ORIGINAL BASIS             (NOTE 5)                 PURPOSES                   (NOTE 4)                2004 COST DEPLETION*
- ---------------       ------------------       ------------------        ---------------------         -------------------
<S>                   <C>                      <C>                       <C>                           <C>
                  -                        =                        x                             =
- ---------------       ------------------       ------------------        ---------------------         -------------------
</TABLE>

*Reflect cost depletion on 2004 Form 1040, line 20, Part 1, Schedule E (Note 3).

                                    PART III

                  COMPUTATION OF GAIN OR (LOSS) FOR UNITS SOLD

<TABLE>
<CAPTION>
                                                  WHERE TO REFLECT ON
NET SALES         ADJUSTED BASIS          GAIN      2004 FORM 1040
  PRICE              (NOTE 6)            (LOSS)        (NOTE 3)
- ---------         --------------         -----   ---------------------
<S>               <C>                    <C>     <C>
                                                     Form 4797,
             -                      =            Part III, Lines 19-24
- ---------         --------------         -----      and Schedule D
</TABLE>

NOTES
- -----

(1)   In order to correctly calculate total income and expense to be reported on
      your 2004 Federal and, if applicable, state income tax returns as
      different factors apply depending on when Units were acquired, it is
      recommended that you reproduce and complete a separate Tax Computation
      Worksheet for each block of Units acquired at different times. If more
      than one Tax Computation Worksheet is required, then the separate amounts
      from each Tax Computation Worksheet should be added together and those
      aggregate numbers reported on your 2004 income tax returns.

(2)   If you did not become a Unit holder of record of any Unit(s) or did not
      cease to be a Unit holder of record of any Unit(s) during the period from
      January 15, 2004 through December 15, 2004, then the amounts reflected on
      the cumulative schedule for 2004 (located on page 7) should be used to
      complete Part I. If any Units were held of record for only part of the
      period defined above, the Supplement to Tax Computation Worksheet on page
      6 should be used to derive the income and expense factors to be inserted
      in column B.

(3)   The Trustee believes that individual Unit holders owning the Units as an
      investment should report the amounts determined in this manner. See Sample
      Tax Forms on pages 24-27. The U.S. Corporation Income Tax Return (Form
      1120) does not require that royalty income and related expenses be
      separately identified on any specific schedules. See "Sale or Exchange of
      Units" on page A-4 for a discussion of the tax consequences resulting from
      the sale of a Unit.

(4)   The appropriate depletion schedule(s) to be utilized depends on when the
      Units were acquired. See "Computing Depletion" on pages 1 and 2 to
      determine the proper schedule(s) to be used.

(5)   Cost depletion allowable in prior calendar years cannot be computed from
      the schedules contained in this booklet. Depletion schedules contained in
      Sabine Royalty Trust Tax Information Booklet(s) from prior years should be
      used to determine the appropriate cost depletion amount(s) allowable in
      prior calendar years.

(6)   The adjusted basis is equal to the cost or other basis of the Unit(s) less
      the cost depletion allowable from the date of acquisition through the date
      of sale (whether or not deducted).

(SRT 2004 TAX)

                                        5

<PAGE>

                              SABINE ROYALTY TRUST

                    SUPPLEMENT TO TAX COMPUTATION WORKSHEET

                                      2004

                    FOR UNITS HELD FOR ONLY PART OF THE YEAR

      This worksheet should be used by Unit holders who became holders of record
of Units or ceased to be holders of record of Units during the period from
January 15, 2004 through December 15, 2004. This worksheet is designed to assist
Unit holders in determining the proper income and expense factors to be used on
the Tax Computation Worksheet -- Part I (located on page 5), under the heading
entitled "Income/Expense Per Unit from Appropriate Schedule(s)." In order to
complete this schedule, Unit holders should insert only the individual income
and expense factors from the supplemental schedules (pages 20-21) for each month
during which the Units were owned on a Monthly Record Date. (See page 4 for a
list of Monthly Record Dates).

<TABLE>
<CAPTION>
                                       MONTH(S) DURING WHICH UNITS WERE OWNED ON A MONTHLY RECORD DATE                   CALCULATED
                       ------------------------------------------------------------------------------------------------    FACTOR
                       JANUARY  FEBRUARY  MARCH  APRIL  MAY  JUNE  JULY  AUGUST  SEPTEMBER  OCTOBER  NOVEMBER  DECEMBER   PER UNIT*
                       -------  --------  -----  -----  ---  ----  ----  ------  ---------  -------  --------  --------  ----------
<S>                    <C>      <C>       <C>    <C>    <C>  <C>   <C>   <C>     <C>        <C>      <C>       <C>       <C>
Gross Royalty
  Income..........
                       -------  --------  -----  -----  ---  ----  ----  ------  ---------  -------  --------  --------  ----------
Severance
  Tax ............
                       -------  --------  -----  -----  ---  ----  ----  ------  ---------  -------  --------  --------  ----------
Interest
  Income..........
                       -------  --------  -----  -----  ---  ----  ----  ------  ---------  -------  --------  --------  ----------
Administrative
  Expense.........
                       -------  --------  -----  -----  ---  ----  ----  ------  ---------  -------  --------  --------  ----------
</TABLE>

- -----------------------
* This column of calculated factors per Unit should be inserted in column B of
  the Income and Expense section (Part I) of the Tax Computation Worksheet on
  page 5.

(STR 2004 TAX)

                                       6
<PAGE>

                                                                 CUMULATIVE 2004

                              SABINE ROYALTY TRUST
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST

                    Federal and State Income Tax Information
                            See Instructions for Use

                                    SECTION I
                           INCOME AND EXPENSE PER UNIT

<TABLE>
<CAPTION>
                                                                      OTHER INCOME
                                 ROYALTY INCOME AND EXPENSE            AND EXPENSE
                             ----------------------------------   ------------------------
                                                         NET
                               GROSS      SEVERANCE    ROYALTY    INTEREST   ADMINISTRATIVE
      SOURCE                  INCOME         TAX       PAYMENTS    INCOME       EXPENSE
      ------                 ---------    ---------   ---------   --------   --------------
<S>                          <C>          <C>         <C>         <C>        <C>
Florida ..................   $ .030418    $ .002067   $ .028351   $      *     $ .001988

Louisiana ................     .129207      .008486     .120721          *       .008761

Mississippi ..............     .147951      .011808     .136143          *       .010243

New Mexico ...............     .247936      .038993     .208943          *       .017298

Oklahoma .................     .638881      .080904     .557977          *       .041796

Texas ....................    2.082673      .129347    1.953326    .003421       .142855
                             ---------    ---------   ---------   --------     ---------
     TOTAL ...............   $3.277066    $ .271605   $3.005461   $.003421     $ .222941
                             =========    =========   =========   ========     =========
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
                   ITEM                                                  AMOUNT
                   ----                                                 --------
<S>                                                                     <C>
1.    Total Net Royalty Payments ................................       $3.005461
2.    Interest Income ...........................................         .003421
3.    Administrative Expense ....................................        (.222941)
                                                                        ---------
4.    Cash Distribution Per Unit ** .............................       $2.785941
                                                                        =========
</TABLE>

- -----------------
*     Revenue attributable to these states was invested and earned interest
      income. Since the investments were made in Dallas, Texas, and the interest
      was paid there, such interest is included in the Texas interest income
      because under Texas law interest income is sourced to the location of the
      payor.

**    Includes amounts withheld by the Trust both from distributions to Foreign
      Taxpayers and pursuant to the backup withholding provisions. These amounts
      were remitted directly to the United States Treasury.

(SRT 2004 TAX)

                                       7
<PAGE>

                                                                FOR JANUARY 2004

                              SABINE ROYALTY TRUST
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST

                    Federal and State Income Tax Information
                            See Instructions for Use

                                    SECTION I
                           INCOME AND EXPENSE PER UNIT

<TABLE>
<CAPTION>
                                                                                           OTHER INCOME
                                                      ROYALTY INCOME AND EXPENSE            AND EXPENSE
                                                    ------------------------------   -------------------------
                                                                            NET
                                                    GROSS     SEVERANCE   ROYALTY   INTEREST   ADMINISTRATIVE
             SOURCE                                 INCOME       TAX     PAYMENTS    INCOME       EXPENSE
             ------                                 ---------  ---------  --------   --------   --------------
<S>                                                 <C>        <C>        <C>        <C>          <C>
Florida ........................................    $.004166   $.000299   $.003867   $      *     $.000422
Louisiana  .....................................     .015988    .001043    .014945          *      .001621
Mississippi ....................................     .013563    .003109    .010454          *      .001375
New Mexico .....................................     .021016    .003995    .017021          *      .002131
Oklahoma .......................................     .049104    .005974    .043130          *      .004978
Texas  .........................................     .185738    .010842    .174896    .000244      .018829
                                                    --------   --------   --------   --------     --------
      TOTAL ....................................    $.289575   $.025262   $.264313   $.000244     $.029356
                                                    ========   ========   ========   ========     ========
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
            ITEM                                       AMOUNT
            ----                                      ---------
<C>                                                   <C>
1. Total Net Royalty Payments ...................     $ .264313
2. Interest Income* .............................       .000244
3. Administrative Expense .......................      (.029356)
                                                      ---------
4. Cash Distribution Per Unit ** ................     $ .235201
                                                      =========
</TABLE>

- -------------------
*     Revenue attributable to these states was invested and earned interest
      income. Since the investments were made in Dallas, Texas, and the interest
      was paid there, such interest is included in the Texas interest income
      because under Texas law interest income is sourced to the location of the
      payor.

**    Includes amounts withheld by the Trust both from distributions to Foreign
      Taxpayers and pursuant to the backup withholding provisions. These amounts
      were remitted directly to the United States Treasury.

(SRT 2004 TAX)

                                       8
<PAGE>

                                                               FOR FEBRUARY 2004

                              SABINE ROYALTY TRUST
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST

                    Federal and State Income Tax Information
                            See Instructions for Use

                                    SECTION I
                           INCOME AND EXPENSE PER UNIT

<TABLE>
<CAPTION>
                                                                                         OTHER INCOME
                                                 ROYALTY INCOME AND EXPENSE               AND EXPENSE
                                             ----------------------------------    ---------------------------
                                                                         NET
                                              GROSS      SEVERANCE     ROYALTY     INTEREST     ADMINISTRATIVE
  SOURCE                                      INCOME        TAX       PAYMENTS      INCOME         EXPENSE
  ------                                     --------    ---------    ---------    ---------    --------------
<S>                                          <C>         <C>          <C>          <C>          <C>
Florida ................................     $.002383    $ .000165    $ .002218    $       *      $    .000097
Louisiana  .............................      .010072      .000565      .009507            *           .000411
Mississippi ............................      .011906      .000708      .011198            *           .000485
New Mexico .............................      .012597      .001819      .010778            *           .000513
Oklahoma ...............................      .038785      .004756      .034029            *           .001581
Texas  .................................      .127493      .006996      .120497      .000137           .005197
                                             --------    ---------    ---------    ---------    --------------
        TOTAL ..........................     $.203236    $ .015009    $ .188227    $ .000137    $      .008284
                                             ========    =========    =========    =========    ==============
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
              ITEM                                                AMOUNT
              ----                                              ---------
<S>                                                             <C>
1. Total Net Royalty Payments ............................      $ .188227
2. Interest Income* ......................................        .000137
3. Administrative Expense ................................       (.008284)
                                                                ---------
4. Cash Distribution Per Unit ** .........................      $ .180080
                                                                =========
</TABLE>

- -------------------
*     Revenue attributable to these states was invested and earned interest
      income. Since the investments were made in Dallas, Texas, and the
      interest was paid there, such interest is included in the Texas interest
      income because under Texas law interest income is sourced to the location
      of the payor.

**    Includes amounts withheld by the Trust both from distributions to Foreign
      Taxpayers and pursuant to the backup withholding provisions. These amounts
      were remitted directly to the United States Treasury.

(SRT 2004 TAX)

                                       9
<PAGE>

                                                                  FOR MARCH 2004

                              SABINE ROYALTY TRUST
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST

                    Federal and State Income Tax Information
                            See Instructions for Use

                                    SECTION I
                           INCOME AND EXPENSE PER UNIT

<TABLE>
<CAPTION>
                                                                                         OTHER INCOME
                                                 ROYALTY INCOME AND EXPENSE               AND EXPENSE
                                             ----------------------------------     ---------------------------
                                                                          NET
                                               GROSS      SEVERANCE     ROYALTY     INTEREST     ADMINISTRATIVE
                 SOURCE                        INCOME        TAX       PAYMENTS      INCOME         EXPENSE
                 ------                      ---------    ---------    ---------    --------     --------------
<S>                                          <C>         <C>           <C>          <C>          <C>

Florida ................................     $ .000678    $ .000041    $ .000637    $      *     $      .000039
Louisiana ..............................       .012967      .000614      .012353           *            .000742
Mississippi ............................       .010273      .000501      .009772           *            .000588
New Mexico .............................       .019721      .002872      .016849           *            .001128
Oklahoma ...............................       .052644      .005148      .047496           *            .003011
Texas  .................................       .121270      .006537      .114733     .000115            .006937
                                             ---------    ---------    ---------    --------     --------------
        TOTAL ..........................     $ .217553    $ .015713    $ .201840    $.000115     $      .012445
                                             =========    =========    =========    ========     ==============
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
             ITEM                                                AMOUNT
             ----                                               ---------
<S>                                                             <C>
1. Total Net Royalty Payments ..............................    $ .201840
2. Interest Income*  .......................................      .000115
3. Administrative Expense ..................................     (.012445)
                                                                ---------
4. Cash Distribution Per Unit ** ...........................    $ .189510
                                                                =========
</TABLE>

- -----------------
*     Revenue attributable to these states was invested and earned interest
      income. Since the investments were made in Dallas, Texas, and the interest
      was paid there, such interest is included in the Texas interest income
      because under Texas law interest income is sourced to the location of the
      payor.

**    Includes amounts withheld by the Trust both from distributions to Foreign
      Taxpayers and pursuant to the backup withholding provisions. These amounts
      were remitted directly to the United States Treasury.

(SRT 2004 TAX)

                                       10

<PAGE>

                                                                  FOR APRIL 2004

                              SABINE ROYALTY TRUST
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST

                    Federal and State Income Tax Information
                            See Instructions for Use

                                    SECTION I
                           INCOME AND EXPENSE PER UNIT

<TABLE>
<CAPTION>
                                                                                         OTHER INCOME
                                                 ROYALTY INCOME AND EXPENSE               AND EXPENSE
                                             ----------------------------------     ---------------------------
                                                                         NET
                                               GROSS      SEVERANCE     ROYALTY     INTEREST    ADMINISTRATIVE
                SOURCE                         INCOME        TAX       PAYMENTS      INCOME        EXPENSE
                ------                       ---------    ---------    ---------    --------    --------------
<S>                                          <C>          <C>          <C>          <C>         <C>
Florida ..............................       $ .003920    $ .000294    $ .003626    $      *    $      .000162
Louisiana ............................         .012770      .000973      .011797           *           .000527
Mississippi ..........................         .010433      .000918      .009515           *           .000431
New Mexico ...........................         .021252      .003792      .017460           *           .000877
Oklahoma .............................         .030110      .004679      .025431           *           .001243
Texas  ...............................         .222597      .014531      .208066     .000207           .009191
                                             ---------    ---------    ---------    --------    --------------
        TOTAL ........................       $ .301082    $ .025187    $ .275895    $.000207    $      .012431
                                             =========    =========    =========    ========    ==============
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
           ITEM                                   AMOUNT
           ----                                 --------
<S>                                             <C>
1. Total Net Royalty Payments ..............     .275895
2. Interest Income .........................     .000207
5. Administrative Expense ..................    (.012431)
                                                --------
6. Cash Distribution Per Unit ** ...........     .263671
                                                ========
</TABLE>

- --------------------
*     Revenue attributable to these states was invested and earned interest
      income. Since the investments were made in Dallas, Texas, and the
      interest was paid there, such interest is included in the Texas interest
      income because under Texas law interest income is sourced to the location
      of the payor.

**    Includes amounts withheld by the Trust both from distributions to Foreign
      Taxpayers and pursuant to the backup withholding provisions. These amounts
      were remitted directly to the United States Treasury.

(SRT 2004 TAX)

                                       11

<PAGE>

                                                                    FOR MAY 2004

                              SABINE ROYALTY TRUST
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST

                    Federal and State Income Tax Information
                            See Instructions for Use

                                    SECTION I
                           INCOME AND EXPENSE PER UNIT

<TABLE>
<CAPTION>
                                                                                         OTHER INCOME
                                                 ROYALTY INCOME AND EXPENSE               AND EXPENSE
                                             ----------------------------------     --------------------------
                                                                         NET
                                               GROSS      SEVERANCE     ROYALTY     INTEREST    ADMINISTRATIVE
             SOURCE                            INCOME        TAX       PAYMENTS      INCOME        EXPENSE
             ------                          ---------    ---------    ---------    ---------   --------------
<S>                                          <C>          <C>          <C>          <C>         <C>
Florida .........................            $ .002317    $. 000134    $ .002183     $      *   $      .000069
Louisiana .......................              .009036      .000603      .008433            *          .000268
Mississippi .....................              .013605      .000865      .012740            *          .000403
New Mexico ......................              .021171      .003158      .018013            *          .000628
Oklahoma ........................              .064655      .007992      .056663            *          .001917
Texas ...........................              .164891      .009800      .155091      .000251          .004889
                                             ---------    ---------    ---------    ---------   --------------
        TOTAL ...................            $ .275675    $ .022552    $ .253123    $ .000251   $      .008174
                                             =========    =========    =========    =========   ==============
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
           ITEM                                 AMOUNT
           ----                                ---------
<S>                                            <C>
1. Total Net Royalty Payments ............     $ .253123
2. Interest Income .......................       .000251
3. Administrative Expense ................      (.008174)
                                               ---------
4. Cash Distribution Per Unit ** .........     $ .245200
                                               =========
</TABLE>

- -------------------
*       Revenue attributable to these states was invested and earned interest
        income. Since the investments were made in Dallas, Texas, and the
        interest was paid there, such interest is included in the Texas interest
        income because under Texas law interest income is sourced to the
        location of the payor.

**      Includes amounts withheld by the Trust both from distributions to
        Foreign Taxpayers and pursuant to the backup withholding provisions.
        These amounts were remitted directly to the United States Treasury.

(SRT 2004 TAX)

                                       12
<PAGE>

                                                                   FOR JUNE 2004

                              SABINE ROYALTY TRUST
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST

                    Federal and State Income Tax Information
                            See Instructions for Use

                                    SECTION I
                           INCOME AND EXPENSE PER UNIT

<TABLE>
<CAPTION>
                                                                                         OTHER INCOME
                                                 ROYALTY INCOME AND EXPENSE               AND EXPENSE
                                             ----------------------------------     --------------------------
                                                                          NET
                                               GROSS      SEVERANCE     ROYALTY     INTEREST    ADMINISTRATIVE
                  SOURCE                       INCOME        TAX       PAYMENTS      INCOME        EXPENSE
                  ------                     ---------    ---------    ---------    ---------   --------------
<S>                                          <C>          <C>          <C>          <C>         <C>
Florida ..................................   $ .002595    $ .000195    $ .002400    $       *   $      .000156
Louisiana ................................     .012371      .000854      .011517            *          .000742
Mississippi ..............................     .009172      .000609      .008563            *          .000550
New Mexico ...............................     .021249      .003695      .017554            *          .001274
Oklahoma .................................     .047253      .005744      .041509            *          .002834
Texas ....................................     .148950      .009251      .139699      .000228          .008933
                                             ---------    ---------    ---------    ---------   --------------
        TOTAL ............................   $ .241590    $ .020348    $ .221242    $ .000228   $      .014489
                                             =========    =========    =========    =========   ==============
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
<TABLE>
<CAPTION>
         ITEM                                     AMOUNT
         ----                                    ---------
<S>                                              <C>
1. Total Net Royalty Payments ..............     $ .221242
2. Interest Income .........................       .000228
3. Administrative Expense ..................      (.014489)
                                                 ---------
4. Cash Distribution Per Unit ** ...........     $ .206981
                                                 =========
</TABLE>

- -------------------------
*     Revenue attributable to these states was invested and earned interest
      income. Since the investments were made in Dallas, Texas, and the interest
      was paid there, such interest is included in the Texas interest income
      because under Texas law interest income is sourced to the location of the
      payor.

**    Includes amounts withheld by the Trust both from distributions to Foreign
      Taxpayers and pursuant to the backup withholding provisions. These amounts
      were remitted directly to the United States Treasury.

(SRT 2004 TAX)

                                       13
<PAGE>

                                                                   FOR JULY 2004

                              SABINE ROYALTY TRUST
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST

                    Federal and State Income Tax Information
                            See Instructions for Use

                                    SECTION I
                           INCOME AND EXPENSE PER UNIT

<TABLE>
<CAPTION>
                                                                                         OTHER INCOME
                                                 ROYALTY INCOME AND EXPENSE               AND EXPENSE
                                             ----------------------------------     --------------------------
                                                                          NET
                                               GROSS      SEVERANCE     ROYALTY     INTEREST    ADMINISTRATIVE
                SOURCE                         INCOME        TAX       PAYMENTS      INCOME        EXPENSE
                ------                       ---------    ---------    ---------    ---------   --------------
<S>                                          <C>          <C>          <C>          <C>         <C>
Florida ..............................       $ .002398    $ .000167    $ .002231    $       *   $      .000106
Louisiana ............................         .012760      .000957      .011803            *          .000563
Mississippi ..........................         .015259      .000884      .014375            *          .000673
New Mexico ...........................         .019366      .002930      .016436            *          .000854
Oklahoma .............................         .047756      .006192      .041564            *          .002107
Texas ................................         .160840      .009932      .150908      .000224          .007096
                                             ---------    ---------    ---------    ---------   --------------
        TOTAL ........................       $ .258379    $ .021062    $ .237317    $ .000224   $      .011399
                                             =========    =========    =========    =========   ==============
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
<TABLE>
<CAPTION>
            ITEM                                  AMOUNT
            ----                                 ---------
<S>                                              <C>
1. Total Net Royalty Payments ..............     $ .237317
2. Interest Income .........................       .000224
3. Administrative Expense ..................      (.011399)
                                                 ---------
4. Cash Distribution Per Unit ** ...........     $0.226142
                                                 =========
</TABLE>

- ---------------------
*     Revenue attributable to these states was invested and earned interest
      income. Since the investments were made in Dallas, Texas, and the interest
      was paid there, such interest is included in the Texas interest income
      because under Texas law interest income is sourced to the location of the
      payor.

**    Includes amounts withheld by the Trust both from distributions to Foreign
      Taxpayers and pursuant to the backup withholding provisions. These amounts
      were remitted directly to the United States Treasury.

(SRT 2004 TAX)

                                       14
<PAGE>

                                                                 FOR AUGUST 2004

                              SABINE ROYALTY TRUST
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST

                    Federal and State Income Tax Information
                            See Instructions for Use

                                    SECTION I
                           INCOME AND EXPENSE PER UNIT

<TABLE>
<CAPTION>
                                                                                              OTHER INCOME
                                                    ROYALTY INCOME AND EXPENSE                AND EXPENSE
                                                -----------------------------------    --------------------------
                                                                             NET
                                                  GROSS      SEVERANCE     ROYALTY     INTEREST    ADMINISTRATIVE
                   SOURCE                         INCOME        TAX       PAYMENTS      INCOME        EXPENSE
                   ------                       ---------    ---------    ---------    ---------   --------------
<S>                                             <C>          <C>          <C>          <C>         <C>
Florida .....................................   $ .002644    $ .000174    $ .002470    $       *   $      .000089
Louisiana ...................................     .009552      .000534      .009018            *          .000321
Mississippi .................................     .013024      .000911      .012113            *          .000437
New Mexico ..................................     .020038      .002937      .017101            *          .000672
Oklahoma ....................................     .055330      .011218      .044112            *          .001857
Texas .......................................     .171372      .011199      .160173      .000297          .005750
                                                ---------    ---------    ---------    ---------   --------------
        TOTAL ...............................   $ .271960    $ .026973    $ .244987    $ .000297   $      .009126
                                                =========    =========    =========    =========   ==============
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
               ITEM                                         AMOUNT
               ----                                        ---------
<S>                                                        <C>
1.  Total Net Royalty Payments ........................    $ .244987
2.  Interest Income ...................................      .000297
3.  Administrative Expense ............................     (.009126)
                                                           ---------
4.  Cash Distribution Per Unit ** .....................    $0.236158
                                                           =========
</TABLE>

- ---------------------
*     Revenue attributable to these states was invested and earned interest
      income. Since the investments were made in Dallas, Texas, and the interest
      was paid there, such interest is included in the Texas interest income
      because under Texas law interest income is sourced to the location of the
      payor.

**    Includes amounts withheld by the Trust both from distributions to Foreign
      Taxpayers and pursuant to the backup withholding provisions. These amounts
      were remitted directly to the United States Treasury.

(SRT 2004 TAX)

                                       15
<PAGE>

                                                              FOR SEPTEMBER 2004

                              SABINE ROYALTY TRUST
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST

                    Federal and State Income Tax Information
                            See Instructions for Use

                                    SECTION I
                           INCOME AND EXPENSE PER UNIT

<TABLE>
<CAPTION>
                                                                                                  OTHER INCOME
                                                        ROYALTY INCOME AND EXPENSE                AND EXPENSE
                                                    -----------------------------------    --------------------------
                                                                                 NET
                                                      GROSS      SEVERANCE     ROYALTY     INTEREST    ADMINISTRATIVE
                     SOURCE                           INCOME        TAX       PAYMENTS      INCOME        EXPENSE
                     ------                         ---------    ---------    ---------    ---------   --------------
<S>                                                 <C>          <C>          <C>          <C>         <C>
Florida ........................................    $ .002639    $ .000182    $ .002457    $       *   $      .000068
Louisiana ......................................      .010194      .000612      .009582            *          .000264
Mississippi ....................................      .012352      .000850      .011502            *          .000320
New Mexico .....................................      .028480      .004322      .024158            *          .000737
Oklahoma .......................................      .055310      .008237      .047073            *          .001432
Texas ..........................................      .223118      .014285      .208833      .000360          .005775
                                                    ---------    ---------    ---------    ---------   --------------
        TOTAL ..................................    $ .332093    $ .028488    $ .303605    $ .000360   $      .008596
                                                    =========    =========    =========    =========   ==============
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
           ITEM                                       AMOUNT
           ----                                      ---------
<S>                                                  <C>
1. Total Net Royalty Payments ..................     $ .303605
2. Interest Income  ............................       .000360
3. Administrative Expense ......................      (.008596)
                                                     ---------
4. Cash Distribution Per Unit ** ...............     $0.295369
</TABLE>

- --------------------
*     Revenue attributable to these states was invested and earned interest
      income. Since the investments were made in Dallas, Texas, and the interest
      was paid there, such interest is included in the Texas interest income
      because under Texas law interest income is sourced to the location of the
      payor.

**    Includes amounts withheld by the Trust both from distributions to Foreign
      Taxpayers and pursuant to the backup withholding provisions. These amounts
      were remitted directly to the United States Treasury.

(SRT 2004 TAX)

                                       16
<PAGE>

                                                                FOR OCTOBER 2004

                              SABINE ROYALTY TRUST
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST

                    Federal and State Income Tax Information
                            See Instructions for Use

                                    SECTION I
                           INCOME AND EXPENSE PER UNIT

<TABLE>
<CAPTION>
                                                                                             OTHER INCOME
                                                    ROYALTY INCOME AND EXPENSE                AND EXPENSE
                                                -----------------------------------    --------------------------
                                                                             NET
                                                  GROSS      SEVERANCE     ROYALTY     INTEREST    ADMINISTRATIVE
                 SOURCE                           INCOME        TAX       PAYMENTS      INCOME        EXPENSE
                 ------                         ---------    ---------    ---------    ---------   --------------
<S>                                             <C>          <C>          <C>          <C>         <C>
Florida ................................        $ .002333    $ .000141    $. 002192    $       *   $      .000070
Louisiana ..............................          .004996      .000303      .004693            *          .000149
Mississippi ............................          .011994      .000812      .011182            *          .000358
New Mexico .............................          .015441      .002271      .013170            *          .000461
Oklahoma ...............................          .091728      .006262      .085466            *          .002738
Texas ..................................          .165964      .011001      .154963      .000424          .004954
                                                ---------    ---------    ---------    ---------   --------------
        TOTAL ..........................        $ .292456    $ .020790    $ .271666    $ .000424   $      .008730
                                                =========    =========    =========    =========   ==============
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
            ITEM                                  AMOUNT
            ----                                 ---------
<S>                                              <C>
1. Total Net Royalty Payments ..............     $ .271666
2. Interest Income .........................       .000424
3. Administrative Expense ..................      (.008730)
                                                 =========
4. Cash Distribution Per Unit ** ...........     $ .263360
                                                 =========
</TABLE>

- -----------------------
*     Revenue attributable to these states was invested and earned interest
      income. Since the investments were made in Dallas, Texas, and the interest
      was paid there, such interest is included in the Texas interest income
      because under Texas law interest income is sourced to the location of the
      payor.

**    Includes amounts withheld by the Trust both from distributions to Foreign
      Taxpayers and pursuant to the backup withholding provisions. These amounts
      were remitted directly to the United States Treasury.

(SRT 2004 TAX)

                                       17
<PAGE>

                                                               FOR NOVEMBER 2004

                              SABINE ROYALTY TRUST
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST

                    Federal and State Income Tax Information
                            See Instructions for Use

                                    SECTION I
                           INCOME AND EXPENSE PER UNIT

<TABLE>
<CAPTION>
                                                                                             OTHER INCOME
                                                    ROYALTY INCOME AND EXPENSE                AND EXPENSE
                                                -----------------------------------    --------------------------
                                                                             NET
                                                  GROSS      SEVERANCE     ROYALTY     INTEREST    ADMINISTRATIVE
                SOURCE                            INCOME        TAX       PAYMENTS      INCOME        EXPENSE
                ------                          ---------    ---------    ---------    ---------   --------------
<S>                                             <C>          <C>          <C>          <C>         <C>
Florida ..............................          $ .001614    $ .000095    $ .001519    $       *   $      .000312
Louisiana ............................            .009654      .000702      .008952            *          .001865
Mississippi ..........................            .016473      .000988      .015485            *          .003182
New Mexico ...........................            .022976      .003425      .019551            *          .004438
Oklahoma .............................            .055434      .007978      .047456            *          .010708
Texas  ...............................            .177982      .011626      .166356      .000466          .034380
                                                ---------    ---------    ---------    ---------   --------------
        TOTAL ........................          $ .284133    $ .024814    $ .259319    $ .000466   $      .054885
                                                =========    =========    =========    =========   ==============
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
              ITEM                                 AMOUNT
              ----                                ---------
<S>                                               <C>
1. Total Net Royalty Payments ................    $ .259319
2. Interest Income ...........................      .000466
3. Administrative Expense ....................     (.054885)
                                                  ---------
4. Cash Distribution Per Unit ** .............    $ .204900
                                                  =========
</TABLE>

- -------------------------
*     Revenue attributable to these states was invested and earned interest
      income. Since the investments were made in Dallas, Texas, and the interest
      was paid there, such interest is included in the Texas interest income
      because under Texas law interest income is sourced to the location of the
      payor.

**    Includes amounts withheld by the Trust both from distributions to Foreign
      Taxpayers and pursuant to the backup withholding provisions. These amounts
      were remitted directly to the United States Treasury.

(SRT 2004 TAX)

                                       18
<PAGE>

                                                               FOR DECEMBER 2004

                              SABINE ROYALTY TRUST
                                 EIN 75-6297143
                            FORM 1041, GRANTOR TRUST

                    Federal and State Income Tax Information
                            See Instructions for Use

                                    SECTION I
                           INCOME AND EXPENSE PER UNIT

<TABLE>
<CAPTION>
                                                             OTHER INCOME
                     ROYALTY INCOME AND EXPENSE               AND EXPENSE
                 ----------------------------------    -------------------------
                                             NET
                  GROSS      SEVERANCE     ROYALTY     INTEREST   ADMINISTRATIVE
    SOURCE        INCOME        TAX        PAYMENTS     INCOME        EXPENSE
    ------       --------    ---------     --------    --------   --------------
<S>              <C>         <C>           <C>         <C>        <C>
Florida.......   $.002731     $.000180     $.002551    $      *     $.000398
Louisiana.....    .008847      .000726      .008121           *      .001288
Mississippi...    .009897      .000653      .009244           *      .001441
New Mexico....    .024629      .003777      .020852           *      .003585
Oklahoma......    .050772      .006724      .044048           *      .007390
Texas.........    .212458      .013347      .199111     .000468      .030924
                 --------     --------     --------    --------     --------
       TOTAL..   $.309334     $.025407     $.283927    $.000468     $.045026
                 ========     ========     ========    ========     ========
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
            ITEM                       AMOUNT
            ----                     ---------
<S>                                  <C>
1. Total Net Royalty Payments ....   $ .283927
2. Interest Income ...............     .000468
3. Administrative Expense ........    (.045026)
                                     ---------
4. Cash Distribution Per Unit **..   $ .239369
                                     =========
</TABLE>

- ----------
*   Revenue attributable to these states was invested and earned interest
    income. Since the investments were made in Dallas, Texas, and the interest
    was paid there, such interest is included in the Texas interest income
    because under Texas law interest income is sourced to the location of the
    payor.

**  Includes amounts withheld by the Trust both from distributions to Foreign
    Taxpayers and pursuant to the backup withholding provisions. These amounts
    were remitted directly to the United States Treasury.

(SRT 2004 TAX)

                                       19
<PAGE>

                          SABINE ROYALTY TRUST FEDERAL

TABLE I: 2004 GROSS ROYALTY INCOME (CUMULATIVE $ PER UNIT)

<TABLE>
<CAPTION>
                                AND THE LAST CASH DISTRIBUTION ON SUCH UNIT WAS ATTRIBUTABLE TO THE MONTHLY RECORD DATE
                                                             FOR THE MONTH OF:
             -----------------------------------------------------------------------------------------------------------------------
                                                                     2004
ACQUISITION  -----------------------------------------------------------------------------------------------------------------------
 MONTH:       JANUARY  FEBRUARY    MARCH    APRIL      MAY       JUNE      JULY     AUGUST   SEPTEMBER  OCTOBER   NOVEMBER  DECEMBER
- ---------    --------  --------  --------  --------  --------  --------  --------  --------  ---------  --------  --------  --------
<S>          <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>        <C>       <C>       <C>
January ...  0.289575  0.492811  0.710364  1.011446  1.287121  1.528711  1.787090  2.059050  2.391143   2.683599  2.967732  3.277066
February ..        --  0.203236  0.420789  0.721871  0.997546  1.239136  1.497515  1.769475  2.101568   2.394024  2.678157  2.987491
March .....        --        --  0.217553  0.518635  0.794310  1.035900  1.294279  1.566239  1.898332   2.190788  2.474921  2.784255
April .....        --        --        --  0.301082  0.576757  0.818347  1.076726  1.348686  1.680779   1.973235  2.257368  2.566702
May .......        --        --        --        --  0.275675  0.517265  0.775644  1.047604  1.379697   1.672153  1.956286  2.265620
June ......        --        --        --        --        --  0.241590  0.499969  0.771929  1.104022   1.396478  1.680611  1.989945
July ......        --        --        --        --        --        --  0.258379  0.530339  0.862432   1.154888  1.439021  1.748355
August ....        --        --        --        --        --        --        --  0.271960  0.604053   0.896509  1.180642  1.489976
September .        --        --        --        --        --        --        --        --  0.332093   0.624549  0.908682  1.218016
October ...        --        --        --        --        --        --        --        --        --   0.292456  0.576589  0.885923
November ..        --        --        --        --        --        --        --        --        --         --  0.284133  0.593467
December ..        --        --        --        --        --        --        --        --        --         --        --  0.309334
</TABLE>

TABLE II: 2004 SEVERANCE TAX (CUMULATIVE $ PER UNIT)

<TABLE>
<CAPTION>
                               AND THE LAST CASH DISTRIBUTION ON SUCH UNIT WAS ATTRIBUTABLE TO THE MONTHLY RECORD DATE
                                                                FOR THE MONTH OF:
             -----------------------------------------------------------------------------------------------------------------------
                                                                      2004
ACQUISITION  -----------------------------------------------------------------------------------------------------------------------
  MONTH:     JANUARY   FEBRUARY    MARCH     APRIL      MAY      JUNE      JULY     AUGUST   SEPTEMBER  OCTOBER   NOVEMBER  DECEMBER
- -----------  --------  --------  --------  --------  --------  --------  --------  --------  ---------  --------  --------  --------
<S>          <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>        <C>       <C>       <C>       <C>
January ...  0.025262  0.040271  0.055984  0.081171  0.103723  0.124071  0.145133  0.172106   0.200594  0.221384  0.246198  0.271605
February ..        --  0.015009  0.030722  0.055909  0.078461  0.098809  0.119871  0.146844   0.175332  0.196122  0.220936  0.246343
March .....        --        --  0.015713  0.040900  0.063452  0.083800  0.104862  0.131835   0.160323  0.181113  0.205927  0.231334
April .....        --        --        --  0.025187  0.047739  0.068087  0.089149  0.116122   0.144610  0.165400  0.190214  0.215621
May .......        --        --        --        --  0.022552  0.042900  0.063962  0.090935   0.119423  0.140213  0.165027  0.190434
June ......        --        --        --        --        --  0.020348  0.041410  0.068383   0.096871  0.117661  0.142475  0.167882
July ......        --        --        --        --        --        --  0.021062  0.048035   0.076523  0.097313  0.122127  0.147534
August ....        --        --        --        --        --        --        --  0.026973   0.055461  0.076251  0.101065  0.126472
September .        --        --        --        --        --        --        --        --   0.028488  0.049278  0.074092  0.099499
October ...        --        --        --        --        --        --        --        --         --  0.020790  0.045604  0.071011
November ..        --        --        --        --        --        --        --        --         --        --  0.024814  0.050221
December ..        --        --        --        --        --        --        --        --         --        --        --  0.025407
</TABLE>

(SRT 2004 TAX)

                                       20
<PAGE>

                          SABINE ROYALTY TRUST FEDERAL

TABLE III: 2004 INTEREST INCOME (CUMULATIVE $ PER UNIT)

<TABLE>
<CAPTION>
                                                AND THE LAST CASH DISTRIBUTION ON SUCH UNIT WAS
                                            ATTRIBUTABLE TO THE MONTHLY RECORD DATE FOR THE MONTH OF:
             -----------------------------------------------------------------------------------------------------------------------
                                                                      2004
ACQUISITION  -----------------------------------------------------------------------------------------------------------------------
   MONTH:    JANUARY   FEBRUARY   MARCH     APRIL      MAY       JUNE      JULY     AUGUST   SEPTEMBER  OCTOBER   NOVEMBER  DECEMBER
- -----------  --------  --------  --------  --------  --------  --------  --------  --------  ---------  --------  --------  --------
<S>          <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>        <C>       <C>       <C>
January ...  0.000244  0.000381  0.000496  0.000703  0.000954  0.001182  0.001406  0.001703  0.002063   0.002487  0.002953  0.003421
February ..        --  0.000137  0.000252  0.000459  0.000710  0.000938  0.001162  0.001459  0.001819   0.002243  0.002709  0.003177
March .....        --        --  0.000115  0.000322  0.000573  0.000801  0.001025  0.001322  0.001682   0.002106  0.002572  0.003040
April .....        --        --        --  0.000207  0.000458  0.000686  0.000910  0.001207  0.001567   0.001991  0.002457  0.002925
May .......        --        --        --        --  0.000251  0.000479  0.000703  0.001000  0.001360   0.001784  0.002250  0.002718
June ......        --        --        --        --        --  0.000228  0.000452  0.000749  0.001109   0.001533  0.001999  0.002467
July ......        --        --        --        --        --        --  0.000224  0.000521  0.000881   0.001305  0.001771  0.002239
August ....        --        --        --        --        --        --        --  0.000297  0.000657   0.001081  0.001547  0.002015
September .        --        --        --        --        --        --        --        --  0.000360   0.000784  0.001250  0.001718
October ...        --        --        --        --        --        --        --        --        --   0.000424  0.000890  0.001358
November ..        --        --        --        --        --        --        --        --        --         --  0.000466  0.000934
December ..        --        --        --        --        --        --        --        --        --         --        --  0.000468
</TABLE>

TABLE IV: 2004 TRUST ADMINISTRATIVE EXPENSE (CUMULATIVE $ PER UNIT)

<TABLE>
<CAPTION>
                                                  AND THE LAST CASH DISTRIBUTION ON SUCH UNIT WAS
                                            ATTRIBUTABLE TO THE MONTHLY RECORD DATE FOR THE MONTH OF:
             -----------------------------------------------------------------------------------------------------------------------
                                                                      2004
ACQUISITION  -----------------------------------------------------------------------------------------------------------------------
   MONTH:    JANUARY   FEBRUARY   MARCH      APRIL     MAY       JUNE      JULY     AUGUST   SEPTEMBER  OCTOBER   NOVEMBER  DECEMBER
- -----------  --------  --------  --------  --------  --------  --------  --------  --------  ---------  --------  --------  --------
<S>          <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>        <C>       <C>       <C>       <C>
January ...  0.029356  0.037640  0.050085  0.062516  0.070690  0.085179  0.096578  0.105704   0.114300  0.123030  0.177915  0.222941
February ..        --  0.008284  0.020729  0.033160  0.041334  0.055823  0.067222  0.076348   0.084944  0.093674  0.148559  0.193585
March .....        --        --  0.012445  0.024876  0.033050  0.047539  0.058938  0.068064   0.076660  0.085390  0.140275  0.185301
April .....        --        --        --  0.012431  0.020605  0.035094  0.046493  0.055619   0.064215  0.072945  0.127830  0.172856
May .......        --        --        --        --  0.008174  0.022663  0.034062  0.043188   0.051784  0.060514  0.115399  0.160425
June ......        --        --        --        --        --  0.014489  0.025888  0.035014   0.043610  0.052340  0.107225  0.152251
July ......        --        --        --        --        --        --  0.011399  0.020525   0.029121  0.037851  0.092736  0.137762
August ....        --        --        --        --        --        --        --  0.009126   0.017722  0.026452  0.081337  0.126363
September .        --        --        --        --        --        --        --        --   0.008596  0.017326  0.072211  0.117237
October ...        --        --        --        --        --        --        --        --         --  0.008730  0.063615  0.108641
November ..        --        --        --        --        --        --        --        --         --        --  0.054885  0.099911
December ..        --        --        --        --        --        --        --        --         --        --        --  0.045026
</TABLE>

(SRT 2004 TAX)

                                       21
<PAGE>

                              SABINE ROYALTY TRUST

                              DEPLETION SCHEDULE I

      The cumulative federal depletion factors reflected in Depletion Schedule I
should be used to compute 2004 federal depletion amounts attributable to Units
purchased for which the Unit holder initially became entitled to distributions
in the year stated. The applicable number to use is the number related to the
last month in which Units were owned in 2004. This schedule should not be used
to compute depletion for any other Units owned. For depletion factors relating
to the individual states, Unit holders should use Depletion Schedule III
(located on page 23). (See accompanying information for computation
instructions.)

<TABLE>
<CAPTION>
FOR A UNIT
ACQUIRED OF                         LAST MONTH IN WHICH UNITS WERE OWNED ON THE MONTHLY RECORD DATE IN 2004
RECORD DURING     ---------------------------------------------------------------------------------------------------------------
THE YEAR OF:      JANUARY  FEBRUARY   MARCH    APRIL     MAY     JUNE      JULY    AUGUST  SEPTEMBER  OCTOBER  NOVEMBER  DECEMBER
- -------------     -------  --------  -------  -------  -------  -------  -------  -------  ---------  -------  --------  --------
<S>               <C>      <C>       <C>      <C>      <C>      <C>      <C>      <C>      <C>        <C>      <C>       <C>
ORIGINAL
DISTRIBUTION....  .013804  .024517   .034448  .047610  .060020  .070495  .080978  .091585   .104595   .114782   .125404   .136973
1983............  .012893  .022470   .031089  .044308  .055376  .065004  .074606  .084399   .097042   .106419   .116092   .127159
1984............  .010364  .018035   .024922  .035596  .044430  .052149  .059862  .067719   .077886   .085386   .093140   .102019
1985............  .011976  .020821   .028771  .041131  .051302  .060205  .069121  .078198   .089964   .098599   .107565   .117824

BEFORE MARCH 17,
1986............  .010658  .018508   .025550  .036598  .045618  .053530  .061457  .069529   .080025   .087696   .095663   .104804

AFTER MARCH 17,
1986............  .009243  .016042   .022157  .031718  .039527  .046385  .053255  .060249   .069337   .075970   .082872   .090788
1987............  .010983  .019073   .026335  .037701  .047013  .055172  .063335  .071654   .082462   .090377   .098584   .108005
1988............  .011424  .019916   .027545  .039270  .049108  .057647  .066151  .074838   .086061   .094401   .102977   .112808
1989............  .011224  .019688   .027306  .038663  .048547  .057005  .065392  .073981   .084961   .093300   .101794   .111478
1990............  .010945  .019182   .026613  .037662  .047288  .055534  .063695  .072054   .082742   .090852   .099112   .108548
1991............  .010666  .018705   .026063  .036626  .046077  .054142  .062069  .070190   .080510   .088399   .096435   .105606
1992............  .011553  .020472   .028658  .039868  .050541  .059422  .068059  .076970   .088138   .096998   .105840   .115890
1993............  .011757  .020782   .029091  .040447  .051206  .060212  .068968  .077981   .089269   .098177   .107110   .117265
1994............  .011082  .019644   .027495  .038130  .048347  .056859  .065121  .073629   .084210   .092664   .101089   .110637
1995............  .011483  .020418   .028574  .039512  .050205  .059043  .067613  .076458   .087383   .096219   .104967   .114856
1996............  .011297  .020321   .028602  .039053  .050060  .058925  .067397  .076207   .086903   .095934   .104670   .114512
1997............  .013158  .023443   .032861  .045289  .057639  .067808  .077626  .087765   .100235   .110416   .120449   .131785
1998............  .013596  .024270   .034083  .046848  .059628  .070140  .080330  .090825   .103667   .114171   .124587   .136253
1999............  .014128  .025014   .035228  .048312  .061093  .071888  .082412  .093091   .106121   .116524   .127144   .138925
2000............  .014100  .024998   .035288  .048231  .060963  .071711  .082266  .092942   .105879   .116177   .126832   .138506
2001............  .014880  .026583   .038074  .050547  .064331  .075857  .086930  .098033   .110921   .121720   .132861   .144823
2002............  .014500  .025664   .036393  .049213  .062327  .073420  .084137  .094953   .107893   .118354   .129118   .140954
2003............  .014203  .025294   .035851  .048552  .061685  .072626  .083232  .094002   .106901   .117445   .128193   .139983
</TABLE>

(SRT 2004 TAX)

                                       22
<PAGE>

                              SABINE ROYALTY TRUST

                              DEPLETION SCHEDULE II

      The cumulative depletion factors reflected in Depletion Schedule II should
be used to compute 2004 federal depletion amounts attributable to Units
purchased for which the Unit holder initially became entitled to distributions
in 2004. The applicable number to use is the number related to the last month in
which Units were owned in 2004. This schedule should not be used to compute
depletion for any other Units owned. For depletion factors relating to the
individual states, Unit holders should use Depletion Schedule III (located
below). (See accompanying information for computation instructions.)

<TABLE>
<CAPTION>
FIRST MONTH
IN WHICH
UNITS WERE
OWNED ON THE
MONTHLY
RECORD DATE
IN 2004       JANUARY  FEBRUARY   MARCH    APRIL     MAY     JUNE      JULY   AUGUST   SEPTEMBER  OCTOBER  NOVEMBER  DECEMBER
- ------------  -------  --------  -------  -------  -------  -------  -------  -------  ---------  -------  --------  --------
<S>           <C>      <C>       <C>      <C>      <C>      <C>      <C>      <C>      <C>        <C>      <C>       <C>
January.....  .014224  .025098   .035437  .048402  .061079  .071886  .082438  .093083   .106000   .116216  .126810   .138490
February....       --  .010874   .021213  .034178  .046855  .057662  .068214  .078859   .091776   .101992  .112586   .124266
March.......       --       --   .010339  .023304  .035981  .046788  .057340  .067985   .080902   .091118  .101712   .113392
April.......       --       --        --  .012965  .025642  .036449  .047001  .057646   .070563   .080779  .091373   .103053
May.........       --       --        --       --  .012677  .023484  .034036  .044681   .057598   .067814  .078408   .090088
June........       --       --        --       --       --  .010807  .021359  .032004   .044921   .055137  .065731   .077411
July........       --       --        --       --       --       --  .010552  .021197   .034114   .044330  .054924   .066604
August......       --       --        --       --       --       --       --  .010645   .023562   .033778  .044372   .056052
September...       --       --        --       --       --       --       --       --   .012917   .023133  .033727   .045407
October.....       --       --        --       --       --       --       --       --        --   .010216  .020810   .032490
November....       --       --        --       --       --       --       --       --        --        --  .010594   .022274
December....       --       --        --       --       --       --       --       --        --        --       --   .011680
</TABLE>

                             DEPLETION SCHEDULE III

      The cumulative depletion factors reflected in Depletion Schedule III
should be used to compute 2004 state depletion amounts attributable to Units
purchased in any year. The applicable number to use is the number related to the
last month in which Units were owned in 2004. (See accompanying information for
computation instructions.)

<TABLE>
<CAPTION>
STATE DEPLETION
FACTORS          JANUARY  FEBRUARY   MARCH    APRIL     MAY      JUNE     JULY    AUGUST  SEPTEMBER  OCTOBER  NOVEMBER  DECEMBER
- ------------     -------  --------  -------  -------  -------  -------  -------  -------  ---------  -------  --------  --------
<S>              <C>      <C>       <C>      <C>      <C>      <C>      <C>      <C>      <C>        <C>      <C>       <C>
Florida .......  .000208  .000121   .000040  .000182  .000109  .000113  .000106  .000114   .000113   .000095  .000067   .000102
Louisiana .....  .001018  .000575   .000764  .000595  .000451  .000686  .000622  .000462   .000455   .000239  .000445   .000438
Mississippi ...  .000769  .000680   .000737  .000491  .000588  .000519  .000705  .000607   .000522   .000364  .000688   .000401
New Mexico ....  .001102  .000655   .000887  .000796  .000791  .000787  .000707  .000693   .000899   .000503  .000701   .000839
Oklahoma ......  .002334  .002697   .002522  .001217  .003918  .002382  .001944  .002235   .002080   .003053  .002296   .002404
Texas .........  .008793  .006146   .005389  .009684  .006820  .006320  .006468  .006534   .008848   .005962  .006397   .007496
                 -------  -------   -------  -------  -------  -------  -------  -------   -------   -------  -------   -------
 TOTAL ........  .014224  .010874   .010339  .012965  .012677  .010807  .010552  .010645   .012917   .010216  .010594   .011680
                 =======  =======   =======  =======  =======  =======  =======  =======   =======   =======  =======   =======
</TABLE>

(SRT 2004 TAX)

                                       23
<PAGE>

                  SAMPLE TAX FORMS FOR INDIVIDUAL UNIT HOLDERS

<TABLE>
<CAPTION>
SCHEDULE E                                      SUPPLEMENTAL INCOME AND LOSS                      OMB NO. 1545-0074
(FORM 1040)                          (FROM RENTAL REAL ESTATE, ROYALTIES, PARTNERSHIPS,           -----------------
                                       S CORPORATIONS, ESTATES, TRUSTS, REMICs, ETC.)                   2004
Department of the Treasury                  - ATTACH TO FORM 1040 OR FORM 1041.                      Attachment
Internal Revenue Service (99)         - SEE INSTRUCTIONS FOR SCHEDULE E (FORM 1040).                Sequence No. 13
- -------------------------------------------------------------------------------------------------------------------------
<S>                            <C>                                                            <C>
Name(s) shown on return                                                                       YOUR SOCIAL SECURITY NUMBER
                                                                                                   :             :
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

PART 1 INCOME OR LOSS FROM RENTAL REAL ESTATE AND ROYALTIES NOTE. If you are
       in the business of renting personal property, use SCHEDULE C or C-EZ
       (see page E-3). Report farm rental income or loss from FORM 4835 on page
       2, line 40.

<TABLE>
<S>                                                                 <C>                                          <C>   <C>   <C>
1 List the type and location of each RENTAL REAL ESTATE PROPERTY:   2 For each rental real estate property             YES   NO
- -----------------------------------------------------------------     listed on line 1, did you or your family
A                                                                     use it during the tax year for personal    A
- -----------------------------------------------------------------     purposes for more than the greater of:     ---   ---   ---
B                                                                       14 days OR                               B
- -----------------------------------------------------------------       10% of the total days rented at          ---   ---   ---
C                                                                       fair rental value?                       C
                                                                      (See page E-3.)                            ---   ---   ---
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                         PROPERTIES                TOTALS
                                                                         ----------
                         INCOME                                      A      B         C   (Add columns A, B, and C.)
                                                                    --     --        --   --------------------------
<S>                      <C>                                    <C> <C>    <C>       <C>  <C>
                          3 Rents received                       3                        3
                                                                ---------------------------------------------------
GROSS ROYALTY INCOME      4 Royalties received                   4                        4
                         ------------------------------------------------------------------------------------------
                         EXPENSES:
                          5 Advertising                          5
                                                                ---------------------------------------------------
                          6 Auto and travel (see page E-4)       6
                                                                ---------------------------------------------------
                          7 Cleaning and maintenance             7
                                                                ---------------------------------------------------
                          8 Commissions                          8
                                                                ---------------------------------------------------
                          9 Insurance                            9
                                                                ---------------------------------------------------
                         10 Legal and other professional fee..  10
                                                                ---------------------------------------------------
                         11 Management fees                     11
                                                                ---------------------------------------------------
                         12 Mortgage interest paid to banks,
                            etc. (see page E-4)                 12                        12
                                                                ---------------------------------------------------
                         13 Other interest                      13
                                                                ---------------------------------------------------
                         14 Repairs                             14
                                                                ---------------------------------------------------
                         15 Supplies                            15
                                                                ---------------------------------------------------
SEVERANCE TAX            16 Taxes                               16
                                                                ---------------------------------------------------
                         17 Utilities                           17
                                                                ---------------------------------------------------
ADMINISTRATIVE EXPENSES  18 Other (list) -

                                                                18
                                                                ---------------------------------------------------

                         ------------------------------------------------------------------------------------------
                         19 Add lines 5 through 18              19                        19
                                                                ---------------------------------------------------
DEPLETION                20 Depreciation expense or depletion
                            (see page E-4)                      20                        20
                                                                ---------------------------------------------------
                         21 Total expenses. Add lines 19 and 20 21
                                                                ---------------------------------------------------
                         22 Income or (loss) from rental real
                            estate or royalty properties.
                            Subtract line 21 from line 3
                            (rents) or line 4 (royalties). If
                            the result is a (loss), see page
                            E-4 to find out if you must file
                            FORM 6198                           22
                                                                ---------------------------------------------------
                         23 Deductible rental real estate
                            loss. CAUTION. Your rental real
                            estate loss on line 22 may be
                            limited. See page E-4 to find out
                            if you must file FORM 8582. Real
                            estate professionals must complete
                            line 43 on page 2                   23  ( )  (        )  ( )
                                                                ---------------------------------------------------
                         24 INCOME. Add positive amounts shown on line 22. DO NOT
                            include any losses                                            24
                                                                                          -------------------------
                         25 LOSSES. Add royalty losses from line 22 and rental real
                            estate losses from line 23. Enter total losses here.          25  (                   )
                                                                                          -------------------------
                         26 TOTAL RENTAL REAL ESTATE AND ROYALTY INCOME OR (LOSS).
                            Combine lines 24 and 25. Enter the result here. If Parts II,
                            III, IV, and line 40 on page 2 do not apply to you, also
                            enter this amount on Form 1040, line 17. Otherwise, include
                            this amount in the total on line 41 on page 2
                                                                                          -------------------------
</TABLE>

<TABLE>
<S>                                                                 <C>                   <C>
FOR PAPERWORK REDUCTION ACT NOTICE, SEE FORM 1040 INSTRUCTIONS.     Cat No. 11344L        SCHEDULE E (FORM 1040) 2004
</TABLE>

                                       24
<PAGE>

                  SAMPLE TAX FORMS FOR INDIVIDUAL UNIT HOLDERS

<TABLE>
<S>                                                                             <C>
Schedules A&B (Form 1040) 2004                                                  OMB No. 1545-0074   Page 2
- -----------------------------------------------------------------------------------------------------------
Name(s)shown on Form 1040. Do not enter name and social security number         YOUR SOCIAL SECURITY NUMBER
if shown on other side.
- -----------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                                                 Attachment
                                          SCHEDULE B--INTEREST AND ORDINARY DIVIDENDS          Sequence No. 08
                                          -------------------------------------------          ---------------
<S>           <C>                  <C>                                                         <C>
              PART 1               1  List name of payer. If any interest is from a                AMOUNT
              INTEREST                seller-financed mortgage and the buyer used the property
                                      as a personal residence, see page B-1 and list this
                                      interest first. Also, show that buyer's social security
                                      number and address -
              (See page B-1           -------------------------------------------------------     --------
              and the                 -------------------------------------------------------     --------
              instructions for        -------------------------------------------------------     --------
INTEREST      Form 1040,              -------------------------------------------------------     --------
INCOME        line 8a.)               -------------------------------------------------------  1  --------
                                      -------------------------------------------------------     --------
              NOTE. If you            -------------------------------------------------------     --------
              received a Form         -------------------------------------------------------     --------
              1099-INT, Form          -------------------------------------------------------     --------
              1099-OID, or            -------------------------------------------------------     --------
              substitute              -------------------------------------------------------     --------
              statement from          -------------------------------------------------------     --------
              a brokerage firm,       -------------------------------------------------------     --------
              list the firm's         -------------------------------------------------------     --------
              name as the             -------------------------------------------------------     --------
              payer and enter
              the total interest
              shown on that        2  Add the amounts on line 1                                2
              form.                                                                           ------------
                                   3  Excludable interest on series EE and I U.S. savings
                                      bonds issued after 1989. Attach Form 8815                3
                                                                                              ------------
                                   4  Subtract line 3 from line 2. Enter the result here and
                                      on Form 1040, line 8a -                                  4
                                   ------------------------------------------------------------------------
                                   NOTE. If line 4 is over $1,500, you must complete Part III.    AMOUNT

              PART II              5  List name of Payer -  ----------------------------------    --------
              ORDINARY                --------------------------------------------------------    --------
              DIVIDENDS               --------------------------------------------------------    --------
              (See Page B-2           --------------------------------------------------------    --------
              and the                 --------------------------------------------------------    --------
              instructions for        --------------------------------------------------------    --------
              Form 1040,              --------------------------------------------------------    --------
              line 9a.)               --------------------------------------------------------    --------
                                      --------------------------------------------------------    --------
              NOTE. If you            --------------------------------------------------------    --------
              received a Form         --------------------------------------------------------    --------
              1099-DIV or             -------------------------------------------------------- 5  --------
              substitute              --------------------------------------------------------    --------
              statement from          --------------------------------------------------------    --------
              a brokerage firm,       --------------------------------------------------------    --------
              list the firm's         --------------------------------------------------------    --------
              name as the             --------------------------------------------------------    --------
              payer and enter         --------------------------------------------------------    --------
              the ordinary            --------------------------------------------------------    --------
              dividends shown         --------------------------------------------------------    --------
              on that form.           --------------------------------------------------------    --------
                                   6  Add the amounts on line 5. Enter the total here and on
                                      Form 1040, line 9a. -                                     6
                                   -----------------------------------------------------------------------
                                   NOTE. If line 6 is over $1,500, you must complete Part III.
- -----------------------------------------------------------------------------------------------------------
              PART III             You must complete this part if you (a) had over $1,500 of    YES      NO
              FOREIGN              taxable interest or ordinary dividends; or (b) had a
              ACCOUNTS             foreign account; or (c) received a distribution from, or
              AND TRUST            were a grantor of, or a transferor to, a foreign trust.
              (See                 ----------------------------------------------------------   ------------
               page B-2.)          7a   At any time during 2004, did you have an interest in
                                        or a signature or other authority over a financial
                                        account in a foreign country, such as a bank account,
                                        securities account, or other financial account? See
                                        page B-2 for exceptions and filing requirements for
                                        Form TD F 90-22.1                                       ------------
                                    b   If "Yes" enter the name of the foreign country -
                                   8    During 2004, did you receive a distribution from, or
                                        were you the grantor of, or transferor to, a foreign
                                        trust? If "Yes," you may have to file Form 3520.
                                        See page B-2
</TABLE>

<TABLE>
<S>                                                                        <C>
FOR PAPERWORK REDUCTION ACT NOTICE, SEE FORM 1040 INSTRUCTIONS.            SCHEDULE B (FORM 1040) 2004
</TABLE>

                                       25
<PAGE>

                  SAMPLE TAX FORMS FOR INDIVIDUAL UNIT HOLDERS

<TABLE>
<S>                                   <C>                                                                       <C>
Form 4797                                                                                                         OMB No. 1545-0184
                                                   SALES OF BUSINESS PROPERTY                                   -------------------
                                      (ALSO INVOLUNTARY CONVERSIONS AND RECAPTURE AMOUNTS                              2004
                                                UNDER SECTIONS 179 AND 280F(b)(2))                                  Attachment
Department of the Treasury            ATTACH TO YOUR TAX RETURN. SEE SEPARATE INSTRUCTIONS.                       Sequence No. 27
Internal Revenue Service (99)

- ------------------------------------------------------------------------------------------------------------------------------------
Name(s) shown on return                                                                                           IDENTIFYING NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------

1  Enter the gross proceeds from sales or exchanges reported to you for 2004 on Form(s)
   1099-B or 1099-S (or substitute statement) that you are including on line 2, 10 or 20
   (see instructions)                                                                                                              1
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

PART I SALES OR EXCHANGES OF PROPERTY USED IN A TRADE OR BUSINESS AND
       INVOLUNTARY CONVERSIONS FROM OTHER THAN CASUALTY OR THEFT--MOST PROPERTY
       HELD MORE THAN 1 YEAR (see instructions)

<TABLE>
<CAPTION>
                                                                        (e) Depreciation   (f) Cost or other
                                                                            allowed or         basis, plus       (g) Gain or (loss)
 (a) Description   (b) Date acquired   (c) Date sold       (d) Gross     allowable since     improvements and  subtract (f) from the
   of property      (mo., day, yr.)    (mo., day, yr.)    sales price       acquisition       expense of sale    sum of (d) and (e)
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                <C>                 <C>                <C>           <C>                <C>                 <C>
2
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<S>                                                                                                    <C>
3  Gain, if any, from Form 4684, line 39                                                               3
                                                                                                       -----------------------------
4  Section 1231 gain from installment sales from Form 6252, line 26 or 37                              4
                                                                                                       -----------------------------
5  Section 1231 gain or (loss) from like-kind exchanges from Form 8824                                 5
                                                                                                       -----------------------------
6  Gain, if any, from line 32, from other than casualty or theft                                       6
                                                                                                       -----------------------------
7  Combine lines 2 through 6. Enter the gain or (loss) here and on the approprite
   line as follows:                                                                                    7
                                                                                                       -----------------------------

   PARTNERSHIPS (EXCEPT ELECTING LARGE PARTNERSHIPS) AND S CORPORATIONS. Report the gain
   or (loss) following the instructions for Form 1065, Schedule K, line 10, or Form
   1120S, Schedule K, line 9. Skip lines 8, 9, 11, and 12 below.

   ALL OTHERS. If line 7 is zero or a loss, enter the amount from line 7 on line 11
   below and skip lines 8 and 9. If line 7 is a gain and you did not have any prior
   year section 1231 losses, or they were recaptured in an earlier year, enter the
   gain from line 7 as a lone-term capital gain on Schedule D and skip lines 8, 9, 11,
   and 12 below.

8  Nonrecaptured net section 1231 losses from prior years (see instructions)                           8
                                                                                                       -----------------------------
9  Subtract line 8 from line 7. If zero or less, enter -0- . If line 9 is zero, enter the
   gain from line 7 on line 12 below. If line 9 is more than zero, enter the amount from
   line 8 on line 12 below and enter the gain from line 9 as a lone-term capital gain on
   Schedule D (see instructions)                                                                       9
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

PART II ORDINARY GAINS AND LOSSES

<TABLE>
<S>                                                                                                 <C>        <C>
10 Ordinary gains and losses not included on lines 11 through 16 (include
   property held 1 year or less):
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
11 Loss, if any, from line 7                                                                         11        (                  )
                                                                                                     -------------------------------
12 Gain, if any, from line 7 or amount from line 8, if applicable                                    12
                                                                                                     -------------------------------
13 Gain, if any, from line 31                                                                        13
                                                                                                     -------------------------------
14 Net gain or (loss) from Form 4684, lines 31 and 38a                                               14
                                                                                                     -------------------------------
15 Ordinary gain from installment sales from Form 6252, line 25 or 36                                15
                                                                                                     -------------------------------
16 Ordinary gain or(loss) from like-kind exchanges from Form 8824                                    16
                                                                                                     -------------------------------
17 Combine lines 10 through 16                                                                       17
                                                                                                     -------------------------------
18 For all except individual returns, enter the amount from line 17 on the appropriate
   line of your return and skip lines a and b below. For individual returns, complete
   lines a and b below:
  a If the loss on line 11 includes a loss from Form 4684, line 35,column(b)(ii), enter
    that part of the loss here. Enter the part of the loss from income-producing property
    on schedule A (Form 1040), line 27, and the part of the loss from property used as an
    employee on Schedule A (Form 1040), line 22. Identify as from OForm 4797, line 18a.
    See instructions                                                                                18a
                                                                                                     -------------------------------
  b Redetermine the gain or (loss) on line 17 excluding the loss, if any, on line 18a.
    Enter here and on Form 1040, line 14                                                            18b
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<S>                                                                       <C>                                     <C>
FOR PAPERWORK REDUCTION ACT NOTICE, SEE PAGE 8 OF THE INSTRUCTIONS.       Cat. No. 130861                         Form 4797 (2004)
</TABLE>

                                       26
<PAGE>

                  SAMPLE TAX FORMS FOR INDIVIDUAL UNIT HOLDERS

Form 4797(2004)                                                           Page 2

PART III GAIN FROM DISPOSITION OF PROPERTY UNDER SECTIONS 1245, 1250, 1252,
1254, AND 1255

<TABLE>
<CAPTION>
                                                                             (b) Date acquired  (c) Date sold
19  (a) Description of section 1245, 1250, 1252, 1254, or 1255 property:      (mo., day, yr.)  (mo., day, yr.)
- --------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>               <C>
A
- --------------------------------------------------------------------------------------------------------------
B
- --------------------------------------------------------------------------------------------------------------
C
- --------------------------------------------------------------------------------------------------------------
D
- --------------------------------------------------------------------------------------------------------------
</TABLE>
F
                           GAIN OR LOSS ON UNITS SOLD

<TABLE>
<CAPTION>
THESE COLUMNS RELATE TO THE PROPERTIES ON LINES 19A THROUGH 19D.                      PROPERTY A  PROPERTY B  PROPERTY C  PROPERTY D
- ----------------------------------------------------------------------------          ----------  ----------  ----------  ----------
<S>                                                                              <C>  <C>         <C>         <C>         <C>
20     Gross sales price (NOTE: See line 1 before completing.)                   20
                                                                                 ---------------------------------------------------
21     Cost of other basis plus expense of sale                                  21
                                                                                 ---------------------------------------------------
22     Depreciation (or depletion) allowed or allowable                          22
                                                                                 ---------------------------------------------------
23     Adjusted basis. subtract line 22 from line 21                             23
                                                                                 ---------------------------------------------------
24     Total gain. subtract line 23 from line 20                                 24
- ------------------------------------------------------------------------------------------------------------------------------------
25     IF SECTION 1245 PROPERTY:
   a   Depreciation or allowed or allowable from line 22                         25a
                                                                                 ---------------------------------------------------
   b   Enter the SMALLER of line 24 or 25a                                       25b
- ------------------------------------------------------------------------------------------------------------------------------------
26     IF SECTION 1250 PROPERTY: if straight line depreciation was used, enter
       -0- on line 26g, except for a corporation  subject to section 291.
   a   Additional depreciation after 1975 (see instructions)                     26a
                                                                                 ---------------------------------------------------
   b   Applicable percentage multiplied by the  SMALLER of line 24
       or line 26a (see instructions)                                            26b
                                                                                 ---------------------------------------------------
   c   subtract line 26a from line 24. If residential rental property
       OR line 24 is not more than line 26a, skip lines 26d and 26e              26c
                                                                                 ---------------------------------------------------
   d   Additional depreciation after 1969 and before 1976                        26d
                                                                                 ---------------------------------------------------
   e   Enter the SMALLER of line 26c or 26d                                      26e
                                                                                 ---------------------------------------------------
   f   Section 291 amount (corporations only)                                    26f
                                                                                 ---------------------------------------------------
   g   Add lines 26b, 26e, and 26f                                               26g
- ------------------------------------------------------------------------------------------------------------------------------------
27     IF SECTION 1252 PROPERTY: skip this section if you did not
       dispose of farmland or if this form is being completed for a
       partnership (other than and electing large partnership).
   a   Soil, water, and land clearing expenses                                   27a
                                                                                 ---------------------------------------------------
   b   Line 27a multiplied by applicable percentage (see instructions)           27b
                                                                                 ---------------------------------------------------
   c   Enter the SMALLER of line 24 or 27b                                       27c
- ------------------------------------------------------------------------------------------------------------------------------------
28     IF SECTION 1254 PROPERTY:
   a   Intangible drilling and development costs, expenditures for
       development of mines and other natural deposites, and
       mining exploration costs (see instructions)                               28a
                                                                                 ---------------------------------------------------
   b   Enter the SMALLER of line 24 or 28a                                       28b
- ------------------------------------------------------------------------------------------------------------------------------------
29     IF SECTION 1255 PROPERTY:
   a   Applicable percentage of payments excluded from income
       under section 126 (see instructions)                                      29a
                                                                                 ---------------------------------------------------
   b   Enter the SMALLER of line 24 or 29a (see instructions)                    29b
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

SUMMARY OF PART III GAINS. Complete property columns A through D through line
29b before going to line 30.

<TABLE>
<S>                                                                                                                     <C>
30     Total gains for all properties. Add property columns A through D, line 24                                        30
                                                                                                                        ---------
31     Add property columns A through D, lines 25b, 26g, 27c, 28b and 29b. Enter here and on line 13                    31
                                                                                                                        ---------
32     Subtract line 31 from line 30. Enter the portion from casualty or theft on form 4684, line 33. Enter the portion
       from other than casualty or theft on from 4797, line 6                                                           32
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

PART IV RECAPTURE AMOUNTS UNDER SECTIONS 179 AND 280F (b)(2) WHEN BUSINESS USE
        DROPS TO 50% OF LESS (see instructions)

<TABLE>
<CAPTION>
                                                                                     (a) SECTION   (b) SECTION
                                                                                         179        280F(b)(2)
                                                                                     -----------  -------------
<S>                                                                              <C> <C>          <C>
33     Section 179 expense deduction or depreciation allowable in prior years    33
                                                                                 ------------------------------
34     recomputed depreciation. See instructions                                 34
                                                                                 ------------------------------
35     Recapture amount. Subtract line 34 from line 33. See the instructions
       for where to report                                                       35
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

                                                                Form 4797 (2004)

                                       27
<PAGE>

                             COMPREHENSIVE EXAMPLE 1

     The following example illustrates the computations necessary for an
individual to determine income and expense attributable to Units acquired in
March of 1984 and held throughout 2004.

COMPUTATION OF INCOME AND EXPENSE FOR UNITS OWNED ON ALL MONTHLY RECORD DATES IN
2004

                              SABINE ROYALTY TRUST
                            TAX COMPUTATION WORKSHEET

                                      2004

          (RETAIN THIS WORKPAPER AS PART OF YOUR PERMANENT TAX RECORDS)

                                     PART I

                               INCOME AND EXPENSE

<TABLE>
<CAPTION>
                                           A                       B                      C
                                                        INCOME/EXPENSE PER UNIT
                                       NUMBER OF           FROM APPROPRIATE                              WHERE TO REFLECT ON
                                      UNITS OWNED             SCHEDULE(S)                                 FORM 1040 (NOTE 3)
       ITEM                            (NOTE 1)                (NOTE 2)                  TOTALS                  2004
- -------------------------------       ----------        -----------------------         ---------    --------------------------
<S>                                   <C>               <C>                             <C>          <C>
Gross Royalty Income...........          100      x         $ 3.277066             =    $ 327.71     Line 4, Part I, Schedule E
                                         ---                ----------                  --------
Severance Tax..................          100      x         $  .271605             =    $  27.16     Line 16, Part I, Schedule E
                                         ---                ----------                  --------
Interest Income................          100      x         $  .003421             =    $    .34     Line 1, Part I, Schedule B
                                         ---                ----------                  --------
Administrative Expense.........          100      x         $  .222941             =    $  22.29     Line 18, Part I, Schedule E
                                         ---                ----------                  --------
</TABLE>

                                     PART II

                             COST DEPLETION (NOTE 4)

<TABLE>
<CAPTION>
                      COST DEPLETION                                      APPROPRIATE 2004
                    ALLOWABLE IN PRIOR       ADJUSTED BASIS FOR        COST DEPLETION FACTOR
    ASSUMED           CALENDAR YEARS            COST DEPLETION             PER DEPLETION
 ORIGINAL BASIS*        (NOTE 5)                  PURPOSES                  SCHEDULE I                 2004 COST DEPLETION**
- ----------------    ------------------       ------------------        ---------------------          -----------------------
<S>                 <C>                      <C>                       <C>                            <C>
 $  2,100.00   -       $  1,992.41      =       $     107.59      x           .102019         =              $   10.98
</TABLE>

* This number is used for example purposes only. Each Unit holder's basis is
  unique to that specific Unit holder.

** Reflect cost depletion on 2004 Form 1040, line 20, Part 1, Schedule E (Note
   3).

                        See Page 5 for Applicable Notes.

(SRT 2004 TAX)

                                       28
<PAGE>

                             COMPREHENSIVE EXAMPLE 2

      The following example illustrates the computations necessary for an
individual to determine income and expenses and gain or loss on units acquired
in 1984 and disposed of during 2004.

<TABLE>
<CAPTION>
ACQUISITION       UNITS         ORIGINAL        SALES       UNITS        SALES
   DATE          ACQUIRED         BASIS          DATE        SOLD        PRICE
- -----------      --------      ----------      -------      -----     ----------
<S>              <C>           <C>             <C>          <C>       <C>
 03-21-84          100         $ 2,100.00      04-2-04       100      $ 1,275.00
</TABLE>

            COMPUTATION OF INCOME AND EXPENSE FOR UNITS SOLD IN 2004

                              SABINE ROYALTY TRUST
                            TAX COMPUTATION WORKSHEET

                                      2004

          (RETAIN THIS WORKPAPER AS PART OF YOUR PERMANENT TAX RECORDS)

                                     PART I

                               INCOME AND EXPENSE
 SEE SUPPLEMENT TO TAX COMPUTATION WORKSHEET ON PAGE 30 FOR FURTHER EXPLANATION

<TABLE>
<CAPTION>
                                     A                       B                     C
                                                   INCOME/EXPENSE PER UNIT
                                  NUMBER OF           FROM APPROPRIATE
                                 UNITS OWNED             SCHEDULE(S)                            WHERE TO REFLECT ON
       ITEM                       (NOTE 1)                (NOTE 2)                TOTALS      2004 FORM 1040 (NOTE 3)
- -------------------------------  -----------       -----------------------        ------     --------------------------
<S>                              <C>               <C>                            <C>        <C>
Gross Royalty Income...........      100      x          $  .710364          =    $71.04     Line 4, Part I, Schedule E
                                     ---                 ----------               ------
Severance Tax..................      100      x          $  .055984          =    $ 5.60     Line 16, Part I, Schedule E
                                     ---                 ----------               ------
Interest Income................      100      x          $  .000496          =    $  .05     Line 1, Part I, Schedule B
                                     ---                 ----------               ------
Administrative Expense.........      100      x          $  .050085          =    $ 5.01     Line 18, Part I, Schedule E
                                     ---                 ----------               ------
</TABLE>

                                     PART II

                             COST DEPLETION (NOTE 4)

<TABLE>
<CAPTION>
                   COST DEPLETION                                          APPROPRIATE 2004
                  ALLOWABLE IN PRIOR         ADJUSTED BASIS FOR          COST DEPLETION FACTOR
    ASSUMED        CALENDAR YEARS                COST DEPLETION              PER DEPLETION
ORIGINAL BASIS*       (NOTE 5)                    PURPOSES                    SCHEDULE I              2004 COST DEPLETION**
- ---------------   ------------------         ------------------          ---------------------        ---------------------
<S>               <C>                        <C>                         <C>                          <C>
$  2,100.00   -     $  1,992.41        =          $  107.59         x            .024922         =        $  2.68
</TABLE>

*This number is used for example purposes only. Each Unit holder's basis is
 unique to that specific Unit holder.

**Reflect cost depletion on 2004 Form 1040, line 20, Part 1, Schedule E (Note
  3).

                                    PART III

                  COMPUTATION OF GAIN OR (LOSS) FOR UNITS SOLD

<TABLE>
<CAPTION>
                                                          WHERE TO REFLECT ON
                  ADJUSTED BASIS           GAIN             2004 FORM 1040
NET SALES PRICE      (NOTE 6)             (LOSS)               (NOTE 3)
- ---------------   --------------        -----------       --------------------
<S>               <C>                   <C>               <C>
                                                              Form 4797,
                                                         Part III, Lines 19-24
$  1,275.00   -    $  104.91       =    $  1,170.09         and Schedule D
</TABLE>

                        See Page 5 for Applicable Notes.

(SRT 2004 TAX)

                                       29
<PAGE>

                             COMPREHENSIVE EXAMPLE 2
                                   (CONTINUED)

                              SABINE ROYALTY TRUST

                     SUPPLEMENT TO TAX COMPUTATION WORKSHEET

                                      2004

                    FOR UNITS HELD FOR ONLY PART OF THE YEAR

      This worksheet should be used by Unit holders who became holders of record
of Units or ceased to be holders of record of Units during the period from
January 15, 2004 through December 15, 2004. This worksheet is designed to assist
Unit holders in determining the proper income and expense factors to be used on
the Tax Computation Worksheet--Part I (located on page 5), under the heading
entitled "Income/Expense Per Unit from Appropriate Schedule(s)". In order to
complete this schedule, Unit holders should insert only the individual income
and expense factors from the supplemental schedules (pages 20-21) for the
appropriate month during which the Units were owned on a Monthly Record Date.
(See page 4 for a list of Monthly Record Dates.)

<TABLE>
<CAPTION>
                                        MONTH(S) DURING WHICH UNITS WERE OWNED ON A MONTHLY RECORD DATE                   CALCULATED
                      --------------------------------------------------------------------------------------------------    FACTOR
                      JANUARY  FEBRUARY   MARCH   APRIL  MAY  JUNE  JULY  AUGUST  SEPTEMBER  OCTOBER  NOVEMBER  DECEMBER  PER UNIT*
                      -------  --------   -----   -----  ---  ----  ----  ------  ---------  -------  --------  --------  ---------
<S>                   <C>      <C>       <C>      <C>    <C>  <C>   <C>   <C>     <C>        <C>      <C>       <C>       <C>
Gross Royalty
    Income........    .289575   .203236  .217553   --     --   --    --     --       --        --       --         --      .710364
Severance
    Tax...........    .025262   .015009  .015713   --     --   --    --     --       --        --       --         --      .055984
Interest
    Income........    .000244   .000137  .000115   --     --   --    --     --       --        --       --         --      .000496
Administrative
    Expense.......    .029356   .008284  .012445   --     --   --    --     --       --        --       --         --      .050085
</TABLE>

- --------------
* This column of calculated factors per Unit should be inserted in column B of
  the Income and Expense section (Part I) of the Tax Computation Worksheet on
  page 5.

(SRT 2004 TAX)

                                       30
<PAGE>

                  SABINE ROYALTY TRUST HISTORICAL TAX WORKSHEET

<TABLE>
<CAPTION>
                            WINDFALL                  NET                                  MISC.       NET
                 GROSS       PROFIT    SEVERANCE    ROYALTY    INTEREST        ADMIN.     INCOME/      CASH
                 INCOME       TAX        TAX         PMTS       INCOME        EXPENSE     EXPENSE     DISTRIB
                --------    --------   ---------    --------   --------       --------   ---------    ---------
<S>             <C>         <C>        <C>          <C>        <C>            <C>         <C>         <C>
1983.........   2.721361    0.316613   0.155445     2.249303   0.019377       0.086800    0.000000    2.181880
1984.........   3.496106    0.323679   0.196022     2.976405   0.031846       0.155652    0.000000    2.852599
1985.........   2.853378    0.190767   0.171256     2.491355   0.021277       0.169099   -0.005487    2.338046
1986.........   1.807003    0.041149   0.114513     1.651341   0.012242       0.184580    0.005487    1.484490
1987.........   1.648950    0.000209   0.095558     1.553183   0.010601       0.127094    0.000000    1.436690
1988.........   1.556021    0.000077   0.101561     1.454383   0.010753       0.098526    0.000000    1.366610
1989.........   1.594196    0.000028   0.131330     1.462838   0.013627       0.096295    0.000000    1.380170
1990.........   1.748059    0.000000   0.155821     1.592238   0.014058       0.075026    0.000000    1.531270
1991.........   1.810596    0.000000   0.188955     1.621641   0.010622       0.084643    0.000000    1.547620
1992.........   1.556025    0.000000   0.132087     1.423938   0.005520       0.135228    0.000000    1.294230
1993.........   1.751674    0.000000   0.126197     1.625477   0.005316       0.169163    0.000000    1.461630
1994.........   1.422338    0.000000   0.094300     1.328038   0.005172       0.135390    0.000000    1.197820
1995.........   1.257833    0.000000   0.086219     1.171614   0.007424       0.151878    0.000000    1.027160
1996.........   1.650891    0.000000   0.102044     1.548847   0.009748       0.187465    0.000000    1.371130
1997.........   1.955335    0.000000   0.144324     1.811011   0.010812       0.177263    0.000000    1.644560
1998.........   1.937789    0.000000   0.123769     1.814020   0.011159       0.171521    0.000000    1.653658
1999.........   1.663391    0.000000   0.115700     1.547691   0.008112       0.148838    0.000000    1.406965
2000.........   2.586743    0.000000   0.157354     2.429389   0.016044       0.170794    0.000000    2.274639
2001.........   3.240755    0.000000   0.210965     3.029790   0.014627       0.183788    0.000000    2.860629
2002.........   2.175093    0.000000   0.125845     2.049248   0.003150       0.173568    0.000000    1.878830
2003.........   2.930078    0.000000   0.214244     2.715834   0.003272       0.196541    0.000000    2.522565
2004.........   3.277066    0.000000   0.271605     3.005461   0.003421       0.222941    0.000000    2.785941
</TABLE>

(SRT 2004 TAX)

                                       31
<PAGE>

                              SABINE ROYALTY TRUST

               DISCUSSION OF TAX CONSIDERATIONS PERTAINING TO THE
                   OWNERSHIP OF UNITS IN SABINE ROYALTY TRUST

      The tax law requires individuals, estates, trusts, closely held C
corporations and personal service corporations to categorize income and expense
into one of three classes, "active," "portfolio" or "passive", based upon the
nature of the activity and the involvement of the taxpayer in such activity.
Since the Trust is a grantor trust, the Unit holders are deemed to hold the
investment in the royalty interests directly and the proper classification of
the Trust income and expense will be dependent upon the relevant facts and
circumstances of each Unit holder. Generally, income or loss resulting from an
interest in the Trust is properly classified as portfolio income and as such can
be reported as directed on the tax computation worksheet (page 5). However,
under certain limited circumstances a different tax classification may be
appropriate. Accordingly Unit holders should consult their own tax advisor
regarding all tax compliance matters related to the Units.

TAX BACKGROUND INFORMATION

      Sabine received a private letter ruling from the Internal Revenue Service,
dated May 2, 1983 (the "Ruling"), concerning certain tax considerations relevant
to the creation and continued existence of the Trust. Pursuant to the Ruling,
the Trust is classified for Federal income tax purposes as a "grantor trust" and
not as an association taxable as a corporation. A grantor trust is not subject
to Federal income tax. Instead, its beneficiaries (the Unit holders in the case
of the Trust) are generally considered to own the trust's income and principal
as though no trust were in existence. A grantor trust simply files an
information return reflecting all items of income and/or deductions that will be
included in the returns of the beneficiaries. Accordingly, each Unit holder of
the Trust is taxable on his pro rata share of the Trust's income and/or
deductions.

      The income received or accrued and the deductions paid or incurred by the
Trust are deemed to be received or accrued and paid or incurred, respectively,
by each Unit holder at the same time as the Trust, which is on each Monthly
Record Date. On the basis of both the Trust Agreement and the escrow agreement
(discussed below), both cash and accrual basis Unit holders should be considered
as realizing income and incurring expenses only on the Monthly Record Dates.

   Effect of Escrow Arrangement

      The assets of the Trust include royalty and mineral interests in certain
producing and proved undeveloped oil and gas properties (the "Properties"),
which constitute economic interests in gross production of oil, gas and other
minerals free of the costs of production. The Properties are located in six
states and were not carved out of any of Sabine's working interests in effecting
the distribution. In order to facilitate creation of the Trust and avoid the
administrative expense and inconvenience of daily reporting to Unit holders, the
conveyances by Sabine of the Properties located in five of the six states
provided for the execution of an escrow agreement by Sabine, the Trustee and
Bank of America, N.A., in its capacity as escrow agent. The conveyances by
Sabine of the Properties located in Louisiana provided for the execution of a
substantially identical escrow agreement by Sabine and Bank of America, N.A., in
the capacities of escrow agent and of trustee under Sabine Louisiana Royalty
Trust. Sabine Louisiana Royalty Trust, the sole beneficiary of which is the
Trust, was established in order to avoid uncertainty under Louisiana law as to
the legality of the Trustee's holding record title to the Properties located in
Louisiana.

(SRT 2004 TAX)

                                       A-1

<PAGE>

      Pursuant to the terms of the escrow agreement and the conveyances of the
Properties by Sabine, the proceeds of production from the Properties for each
calendar month, and interest thereon, are collected by the escrow agents and are
paid to and received by the Trust only on the next Monthly Record Date. The
escrow agents have agreed to endeavor to assure that they incur and pay expenses
for each calendar month only on the Monthly Record Date. The Trust Agreement
also provides that the Trustee is to endeavor to assure that income of the Trust
will be accrued and received and that expenses of the Trust will be incurred and
paid only on each Monthly Record Date. Assuming the escrow arrangement is
respected for Federal income tax purposes and the Trustee and the escrow agents
are able to control the timing of income and expenses, as stated above, both
cash and accrual basis Unit holders will be treated as realizing income only on
each Monthly Record Date. The Trustee is treating the escrow arrangement as
effective for tax purposes and the accompanying tax information has been
presented accordingly.

      If the escrow arrangement is not respected for Federal income tax
purposes, a mismatching of income and deductions could occur between a
transferor and a transferee upon the sale or exchange of Units. In addition, the
Trustee would be required to report the proceeds from production, interest
income thereon, and any deductions to the Unit holders on a daily basis,
resulting in a substantial increase in the administrative expenses of the Trust.

DEPLETION

   Cost Depletion

      Pursuant to the Ruling, each Unit holder is entitled to deduct cost
depletion with respect to his pro rata interest in the Properties. A Unit
holder's cost depletion deduction is computed by reference to the Unit holder's
adjusted basis in each of his Units.

      The deduction for cost depletion must be computed by a Unit holder with
respect to each separate property in the Trust. A Unit holder's tax basis in
each separate property generally must be determined at the time each Unit is
acquired by allocating such Unit holder's cost in each Unit among all properties
in the Trust based on their relative fair market values. However, a corporate
Unit holder that acquired Units in the distribution from Sabine must determine
its tax basis in each separate property in the Trust at the time of the
distribution by reference to Sabine's tax basis in each separate property
included in the distribution. The cost depletion deduction attributable to each
separate property is calculated for a taxable year by multiplying the tax basis
of the property times the appropriate factor reported herein. The factors are
derived by dividing total estimated equivalent units of production (barrels of
oil and MCF's of gas) expected to be recovered from the property as of the
beginning of the taxable year by the number of equivalent units produced and
sold from such property during the taxable year. The resulting deduction for
cost depletion cannot exceed the adjusted tax basis in the property. The
composite depletion factors presented herein were derived in a manner that
encompasses this separate property concept.

   Percentage Depletion

      The Revenue Reconciliation Act of 1990 repealed the rules denying
percentage depletion to a transferee of a proven oil or gas property for
transfers after October 11, 1990. Since substantially all of the properties were
"proven properties" on the date of the original distribution, the percentage
depletion deduction has limited applicability to Unit holders who became Unit
holders prior to October 12, 1990.

(SRT 2004 TAX)

                                       A-2

<PAGE>

      A computation of percentage depletion has been made with respect to the
post October 11, 1990 transfers. However, since cost depletion exceeds any
otherwise allocable percentage depletion, percentage depletion factors have not
been presented by reference to the number of units a Unit holder owns.
Percentage depletion will continue to be computed and compared to cost depletion
on an annual basis for applicable transfers occurring after October 11, 1990.

NONRESIDENT FOREIGN UNIT HOLDERS

      Nonresident alien individual and foreign corporation Unit holders
("Foreign Taxpayer(s)"), in general, are subject to tax on the gross income
attributable to the Trust at a rate equal to 30 percent (or the lower rate under
any applicable treaty) without any deductions. This 30 percent tax applies to
U.S. source income that is not effectively connected with a U.S. trade or
business. Different tax rates and rules apply to income effectively connected
with a U.S. trade or business and those rules are not discussed herein. The 30
percent tax is withheld by the Trust and remitted directly to the United States
Treasury. Foreign Taxpayers who have had tax withheld in 2004 should have
received a Form 1042S from the Trust. The Form 1042S will reflect the total
Federal income tax withheld from distributions. The amount reported on the Form
1042S should not be included as additional income in computing taxable income,
as such amount is already included in the per Unit income items on the income
and expense schedules. The Federal income tax withheld, as reported on the Form
1042S, should be considered as a credit by the Unit holder in computing any
Federal income tax liability.

      A Foreign Taxpayer holding income producing real property may elect to
treat the income from such real property as effectively connected with the
conduct of a United States trade or business. As discussed above, different tax
rates and rules apply to Foreign Taxpayers with income effectively connected
with a U.S. trade or business and those rules are not discussed in detail
herein. The income attributable to the Properties is considered as income
produced from real property. Therefore, this election should be available to
Foreign Taxpayers with respect to the taxable income resulting from the
ownership of Units. A Unit holder so electing is entitled to claim all
deductions with respect to such income, but must file a United States income tax
return to claim such deductions. This election, once made, is generally
irrevocable unless an applicable treaty allows the election to be made
periodically.

      The Foreign Investment in Real Property Tax Act of 1980, as amended
("FIRPTA"), generally treats interests in trusts owning United States real
property as United States real property interests. However, pursuant to
applicable Treasury regulations, Units in the Trust, for purposes of FIRPTA
only, are not considered United States real property interests since the Trust
is publicly traded unless they are owned by a Foreign Taxpayer having greater
than a 5% interest in the Trust. Additionally, certain reporting provisions are
applicable with respect to Foreign Taxpayers owning a greater than 5% interest
in the Trust.

      When the FIRPTA provisions apply, as described in the preceding paragraph,
income tax is required to be withheld from any proceeds distributed to Foreign
Taxpayers at the rate of 10% of the amount realized by Foreign Taxpayers upon
the sale, exchange or other disposition of a Unit. In addition, distributions,
if any, that represent the Foreign Taxpayer's allocable share of gain realized
upon the sale, exchange or other disposition of a United States real property
interest by the Trust, will generally be subject to withholding tax at a 35%
rate.

      In order to avoid withholding under FIRPTA, Foreign Taxpayers will be
required to furnish the applicable withholding agent with an exemption
certificate certifying why such withholding is not required.

(SRT 2004 TAX)

                                       A-3

<PAGE>

      Foreign Taxpayers are encouraged to consult their own tax advisors
concerning the tax consequences of their investment in the Trust.

SALE OR EXCHANGE OF UNITS

      Generally, a Unit holder realizes gain or loss upon the sale or exchange
of any Unit measured by the difference between the amount realized from the sale
or exchange and the adjusted tax basis of such Unit. The adjusted tax basis of a
Unit is the original basis of such Unit reduced by depletion deductions
allowable (whether deducted or not) with respect to such Unit. Trust income
allocable to such Unit to the date of sale is taxable to the selling Unit
holder. The purchaser of a Unit is taxable on Trust income allocable to such
Unit from the date of purchase forward. For Federal income tax purposes, Trust
income should generally be allocable only to the holder of record of a Unit on
each Monthly Record Date.

      Gain or loss on the sale of Units by a Unit holder who is not a dealer
with respect to such Units and who has a holding period for the Units of more
than one year will be treated as long-term capital gain or loss except to the
extent of the depletion recapture amount. For Federal income tax purposes, the
sale of a Unit will be treated as a sale by a Unit holder of his interest in a
royalty interest. Thus, upon the sale of the Units, a Unit holder must treat as
ordinary income his depletion recapture amount. Such amount equals the lesser of
(1) the gain on such sale attributable to the disposition of the royalty
interest, or (2) the sum of the prior depletion deductions taken with respect to
the royalty interests (but not in excess of the initial basis of such Units
allocated to the royalty interests).

BACKUP WITHHOLDING

      A payer is required under specified circumstances to withhold tax at the
rate of 28% on "reportable interest or dividend payments" and "other reportable
payments" (including certain oil and gas royalty payments). Generally, this
"backup withholding" is required on payments if the payee has failed to furnish
the payer a taxpayer identification number or if the payer is notified by the
Secretary of the Treasury to withhold taxes on such payments with respect to the
payee.

      Amounts withheld by payers pursuant to the backup withholding provisions
are remitted to the Internal Revenue Service and are considered a credit against
the payee's Federal income tax liability. If the payee does not incur a Federal
income tax liability for the year in which the taxes are withheld, the payee
will be required to file the appropriate income tax return to claim a refund of
the taxes withheld.

SUBSTANTIAL UNDERSTATEMENT PENALTY

      Section 6662 of the Internal Revenue Code imposes a penalty in certain
circumstances for a substantial understatement of taxes if a taxpayer's tax
liability is understated by more than the greater of (a) 10 percent of the taxes
required to be shown on the return or (b) $5,000 ($10,000 for most corporations
other than S corporations). The penalty (which is not deductible) is 20 percent
of the understatement. No assurance is given either by the Trustee or counsel to
the Trustee as to the possible application of this penalty or other penalties,
in part because such application depends largely upon the individual
circumstances under which such Units were acquired. As a result, purchasers of
Units after the Public Offering should consult their personal tax advisers.

(SRT 2004 TAX)

                                       A-4

<PAGE>

STATE INCOME TAX

      Unit holders may be required to file state income tax returns and may be
liable for state income tax as a result of their ownership of Units. The
Properties are located in Florida, Louisiana, Mississippi, New Mexico, Oklahoma
and Texas. The tax information included in this booklet is being presented in a
manner to enable Unit holders to compute the income and deductions of the Trust
attributable to each of these states. Unit holders will need this information to
comply with the state income tax filing requirements in those states imposing a
state income tax. The laws pertaining to income tax in any given state may vary
from those of another state and from those applicable to Federal income tax.
Accordingly, Unit holders should to consult their own tax advisors concerning
state income tax compliance matters relating to ownership of Units.

      The Trustee has been informed that certain states have contacted Unit
holders regarding underpayments of the state income tax imposed on the Unit
holders' income from the Trust. Failure by Unit holders to report their state
tax liability properly could result in the direct withholding of state taxes
from Trust distributions. Accordingly, Unit holders are urged to review
carefully the various filing requirements of the states listed below in order to
determine if a current or prior year state income tax liability exists as a
result of the ownership of Units in the Trust.

      The State of Texas does not impose an individual income tax; therefore, no
part of the income attributable to the Trust will be subject to state income tax
in Texas. However, corporations (and limited liability companies regardless of
how taxed for Federal income tax purposes) doing business in Texas are subject
to the Texas franchise tax, which includes a calculation based on the
corporation's (or LLC's) taxable income for Federal income tax purposes. The
state of Florida imposes an income tax on resident and nonresident corporations
but not individuals. Each of the other states in which the Properties are
located imposes an income tax applicable to both resident and nonresident
individuals and corporations. Generally, the state income tax in these states is
computed as a percentage of taxable income attributable to the particular state.
Even though there are variances from state to state, taxable income for state
purposes is often computed in a manner similar to the computation of taxable
income for Federal income tax purposes.

      All states have not adopted Federal law with respect to the percentage
method of computing depletion nor are such methods consistent among the various
states. It should be noted, however, that cost depletion generally is allowed by
those states indicated above (Unit holders should note that a special depletion
rule applies in Oklahoma). Included previously within this booklet is
information to assist you in determining the respective allowable cost depletion
deductions by state.

      Unit holders should consult their own tax advisors concerning the type of
state income tax returns that may be required and their applicable due dates.

(SRT 2004 TAX)

                                       A-5

<PAGE>

      Following is a list of names and addresses of the various state taxing
authorities from which you may obtain additional information:

<TABLE>
<S>               <C>                <C>
Florida                              Florida Department of Revenue
                                     5050 W. Tennessee Street
                                     Tallahassee, Florida 32399-0100
                                     (850) 488-6800
                                     www.myflorida.com/dor/taxes

New Mexico        Individuals:       State of New Mexico
                                     Taxation and Revenue Department
                                     1100 Saint Francis Drive
                                     P.O. Box 630
                                     Santa Fe, New Mexico 87504-0630
                                     (505) 827-0700, (505) 827-0822
                                     www.state.nm.us/tax

                  Corporations:      New Mexico Taxation and Revenue Department
                                     Attention: Corporate Income and Franchise Tax
                                     P.O Box 25127
                                     Santa Fe, New Mexico 87504-5127
                                     (505) 827-0825
                                     www.state.nm.us/tax

Mississippi                          Mississippi State Tax Commission
                                     Bureau of Revenue
                                     P.O. Box 1033
                                     Jackson, Mississippi 39215-1033
                                     (601) 923-7000
                                     www.mstc.state.ms.us

Louisiana         Individuals:       Department of Revenue and Taxation
                                     State of Louisiana
                                     P.O Box 201
                                     Baton Rouge, Louisiana 70821
                                     (225) 219-0102
                                     www.rev.state.la.us

                  Corporations:      Secretary of Revenue and Taxation
                                     State of Louisiana
                                     P.O. Box 201
                                     Baton Rouge, Louisiana 70821
                                     (225) 219-0067
                                     www.rev.state.la.us

Oklahoma          Individuals:       Oklahoma Tax Commission
                                     P.O. Box 26800
                                     Oklahoma City, OK 73126-0800
                                     (405) 521-3160
                                     www.oktax.state.ok.us

                  Corporations:      Oklahoma Tax Commission
                                     P.O. Box 26800
                                     Oklahoma City, Oklahoma 73126-0800
                                     (405) 521-3126
                                     www.oktax.state.ok.us

Texas                                Texas Comptroller of Public Accounts
                                     P.O. Box 13528, Capitol Station
                                     Austin, Texas 78711-3528
                                     (800) 252-5555
                                     www.window.state.tx.us
</TABLE>

(SRT 2004 TAX)

                                       A-6
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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