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<SEC-DOCUMENT>0000950134-06-005135.txt : 20060315
<SEC-HEADER>0000950134-06-005135.hdr.sgml : 20060315
<ACCEPTANCE-DATETIME>20060315115611
ACCESSION NUMBER:		0000950134-06-005135
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20051231
FILED AS OF DATE:		20060315
DATE AS OF CHANGE:		20060315

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:		06687267

	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>d33406e10vk.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" style="font-size: 1pt;color: #000000; background: #ffffff;">
<FONT style="font-size: 10pt">
<DIV style="width: 100%; border-top: 0.3pt solid black; font-size: 1pt">&nbsp;</DIV>
</FONT>
</DIV>

<DIV align="left" style="font-size: 2pt;color: #000000; background: #ffffff;">
<DIV style="width: 100%; border-top: 0.3pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 12pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
UNITED STATES
</DIV>

<DIV align="center" style="font-size: 12pt;color: #000000; background: #ffffff;">
SECURITIES AND EXCHANGE COMMISSION
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">
Washington, D.C. 20549
</DIV>

<DIV align="center" style="font-size: 18pt;color: #000000; background: #ffffff; margin-top: 4pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Form <FONT style="white-space: nowrap">10-K</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 3pt; ">

<TR style="font-size: 1pt;">
    <TD width="13%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="84%">&nbsp;</TD>
</TR>

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

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

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

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <B>For the fiscal year ended December&nbsp;31, 2005</B></TD>
</TR>

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

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

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

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

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 4pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Commission File Number: 1-8424</B>
</DIV>

<DIV align="center" style="font-size: 18pt;color: #000000; background: #ffffff; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Sabine Royalty Trust</B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">
(Exact name of registrant as specified in its charter)
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="57%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>

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

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

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

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 4pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Registrant&#146;s telephone number, including area code:
<B>(214)&nbsp;209-2400</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Securities registered pursuant to Section 12(b) of the Act:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="56%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="41%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Name of Each Exchange</B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B>Title of Each Class</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>on Which Registered</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

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

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 7pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Securities registered pursuant to Section&nbsp;12(g) of the Act:
<B>None</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in
Rule&nbsp;405 of the Securities
Act.&nbsp;Yes&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;No&nbsp;<FONT face="wingdings">&#120;</FONT>&nbsp;&nbsp;&nbsp;
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark if the
registrant is not required to file reports pursuant to
Section&nbsp;13 or Section&nbsp;15 (d)&nbsp;of the
Act.&nbsp;Yes&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;No&nbsp;<FONT face="wingdings">&#120;</FONT>&nbsp;&nbsp;&nbsp;
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
&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>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark if
disclosure of delinquent filers pursuant to Item&nbsp;405 of
Regulation&nbsp;<FONT style="white-space: nowrap">S-K</FONT> 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;<FONT style="white-space: nowrap">10-K</FONT> or any
amendment to this
Form&nbsp;<FONT style="white-space: nowrap">10-K.&nbsp;</FONT>
<FONT face="wingdings">&#120;
</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of &#147;accelerated
filer and large accelerated filer&#148; in Rule&nbsp;12b-2 of
the Exchange Act (check one):
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Large accelerated
filer&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accelerated
filer&nbsp;<FONT face="wingdings">&#120;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-accelerated
filer&nbsp;<FONT face="wingdings">&#111;
</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the
registrant is a shell company (as defined in Rule&nbsp;b-2 of
the
Act).&nbsp;Yes&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;No&nbsp;<FONT face="wingdings">&#120;</FONT>&nbsp;&nbsp;&nbsp;
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
&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 $617&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At March&nbsp;6, 2006, there were
14,579,345 units of beneficial interest outstanding.
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>DOCUMENTS INCORPORATED BY REFERENCE</B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">
None
</DIV>

<DIV align="left" style="font-size: 12pt;color: #000000; background: #ffffff;">
<DIV style="width: 100%; border-top: 0.3pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 2pt;color: #000000; background: #ffffff;">
<DIV style="width: 100%; border-top: 0.3pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">

</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<!-- TOC -->
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name="tocpage"></A>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>TABLE OF CONTENTS</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="17%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Page</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;&nbsp;<A HREF='#119'>Prices</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#143'>Item&nbsp;1A.</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;<A HREF='#143'>Risk Factors</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#144'>Item&nbsp;1B.</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;<A HREF='#144'>Unresolved Staff Comments</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#120'>Item&nbsp;2.</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;<A HREF='#120'>Properties</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;&nbsp;<A HREF='#121'>Title</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;&nbsp;<A HREF='#122'>Reserves</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#123'>Item&nbsp;3.</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;<A HREF='#123'>Legal Proceedings</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#124'>Item&nbsp;4.</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;<A HREF='#124'>Submission of Matters to a Vote of Security
    Holders</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20</TD>
    <TD>&nbsp;</TD>
</TR>

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

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#125'>Item&nbsp;5.</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;<A HREF='#125'>Market for Registrant&#146;s Common Equity
    and Related Stockholder Matters and Issuer Purchases of Equity
    Securities</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#126'>Item&nbsp;6.</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;<A HREF='#126'>Selected Financial Data</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#127'>Item&nbsp;7.</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;<A HREF='#127'>Trustee&#146;s Discussion and Analysis of
    Financial Condition and Results of Operations</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#128'>Item&nbsp;7A.</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;<A HREF='#128'>Quantitative and Qualitative Disclosures
    About Market Risk</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#129'>Item&nbsp;8.</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;<A HREF='#129'>Financial Statements and Supplementary
    Data</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#130'>Item&nbsp;9.</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;<A HREF='#130'>Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#141'>Item&nbsp;9A.</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;<A HREF='#141'>Controls and Procedures</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#142'>Item&nbsp;9B.</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;<A HREF='#142'>Other Information</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42</TD>
    <TD>&nbsp;</TD>
</TR>

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

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#131'>Item&nbsp;10.</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;<A HREF='#131'>Directors and Executive Officers of the
    Registrant</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#132'>Item&nbsp;11.</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;<A HREF='#132'>Executive Compensation</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#133'>Item&nbsp;12.</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;<A HREF='#133'>Security Ownership of Certain Beneficial
    Owners and Management</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#134'>Item&nbsp;13.</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;<A HREF='#134'>Certain Relationships and Related
    Transactions</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#135'>Item&nbsp;14.</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;<A HREF='#135'>Principal Accounting Fees and Services</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42</TD>
    <TD>&nbsp;</TD>
</TR>

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

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#136'>Item&nbsp;15.</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    &nbsp;<A HREF='#136'>Exhibits, Financial Statement Schedules</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="d33406exv23.htm">Consent of DeGolyer and MacNaughton</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="d33406exv31.htm">Rule 13a-14(a)(15d-14(a)) Certification</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="d33406exv32.htm">Certification Pursuant to Section 906</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="d33406exv99.txt">Report - Interim Tax Information</A></FONT></TD></TR>
</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
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</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">i
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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='137'></A>
</DIV>

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

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>PART I</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='101'></A>
</DIV>

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

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<B>Item&nbsp;1.&nbsp;<I>Business.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='102'></A>
</DIV>

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

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">
<B>DESCRIPTION OF THE TRUST</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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;<FONT style="white-space: nowrap">209-2400.
</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Trust maintains an Internet website, and as a result,
reports such as its annual reports on
Form&nbsp;<FONT style="white-space: nowrap">10-K,</FONT>
quarterly reports on
Form&nbsp;<FONT style="white-space: nowrap">10-Q,</FONT> current
reports on
Form&nbsp;<FONT style="white-space: nowrap">8-K,</FONT> 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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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;
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">1

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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) (&#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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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;<FONT style="white-space: nowrap">10-K</FONT> 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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='103'></A>
</DIV>

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Assets of the Trust</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='104'></A>
</DIV>

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Liabilities of the Trust</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 2005 were $2,089,547 of which,
pursuant to the terms of the Trust Agreement, $297,187 was paid
to Bank of America, as Trustee, and $891,548 was paid to Bank of
America, as escrow agent.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='105'></A>
</DIV>

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

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Duties and Limited Powers of Trustee</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Trust has no employees. Administrative functions of the
Trust are performed by the Trustee.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">2

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
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;
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='106'></A>
</DIV>

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

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Liabilities of Trustee</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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;
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='107'></A>
</DIV>

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

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Duration of Trust</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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;
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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
<FONT style="white-space: nowrap">non-cash</FONT> consideration,
in which event the Trustee may, but is not obligated to,
consummate such
<FONT style="white-space: nowrap">non-cash</FONT> 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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='108'></A>
</DIV>

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

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Voting Rights of Unit Holders</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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
</DIV>

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='109'></A>
</DIV>

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

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>DESCRIPTION OF UNITS</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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;6, 2006, there were 14,579,345 Units
outstanding.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='110'></A>
</DIV>

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

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Distributions of Net Income</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='111'></A>
</DIV>

<!-- link1 "Transfer" -->

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Transfer</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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
</DIV>

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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;
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mellon Investor Services&nbsp;LLC serves as transfer agent and
registrar for the Units.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='112'></A>
</DIV>

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

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Reports to Unit Holders</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='113'></A>
</DIV>

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

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Liability of Unit Holders</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='114'></A>
</DIV>

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

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Possible Divestiture of Units</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    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</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">5

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    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 <FONT style="white-space: nowrap">90-day</FONT> period
    following the termination of the
    <FONT style="white-space: nowrap">30-day</FONT> 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
    <FONT style="white-space: nowrap">30-day</FONT> period stated in
    the notice.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='115'></A>
</DIV>

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

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>FEDERAL TAXATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>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.</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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;<FONT style="white-space: nowrap">1.1254-1</FONT>
through&nbsp;<FONT style="white-space: nowrap">1.1254-6</FONT>
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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
</DIV>

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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
arrangements. 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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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
</DIV>

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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. Unit holders itemizing deductions
will also be subject to limitations on taking such deductions if
the Unit holder&#146;s adjusted gross income exceeds a threshold
amount, which is $145,950 for 2005 and $150,500 for 2006 (if
married, filing jointly).
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='116'></A>
</DIV>

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

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>STATE TAX CONSIDERATIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>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.</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Texas. </I>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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Louisiana. </I>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 decedents&#146; estates located in
areas impacted by Hurricanes Katrina and Rita of 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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Florida, Mississippi, New Mexico and Oklahoma. </I>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 and limited liability
companies, depending on their treatment for federal tax
purposes), which will be applicable to royalty income allocable
to a Unit holder
</DIV>

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
New Mexico imposes a withholding tax on payments of oil and gas
proceeds derived from royalty interests. To reduce the
administrative burden imposed by these rules, the Trustee has
opted to allow the payors of oil and gas proceeds to withhold on
royalty payments made to the Trust. The Trust will then file a
New Mexico tax return, obtain a refund, and distribute that
refund to Unit holders.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Withholding at the Trust level reduces the amount of cash
available for distribution to Unit holders. Unit holders who
transfer their Units before the New Mexico tax refund is
received by the Trust or after the refund is received but before
the next Monthly Record Date will not receive any portion of the
refund. As a result, such Unit holders may incur a double
tax&nbsp;&#151; first through the reduced distribution received
from the Trust and second by the tax payment made directly to
New Mexico with the filing of their New Mexico income tax
returns.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='117'></A>
</DIV>

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<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>REGULATION AND PRICES</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='118'></A>
</DIV>

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Regulation</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>&nbsp;&nbsp;</B><I>General</I>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>&nbsp;&nbsp;</B><I>Natural Gas</I>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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
</DIV>

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='119'></A>
</DIV>

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Prices</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>&nbsp;&nbsp;</B><I>Oil</I>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Trust&#146;s average per barrel oil price increased from
$33.78 in 2004 to $40.47 in 2005. The Trustee believes that the
international instability all year coupled with increasing
global demand and supply shortage concerns led to an increase in
the price of oil. This increase was magnified by reduced
production as a result of the tropical storms in the Gulf of
Mexico in late August and early September. Afterwards oil prices
soared to record levels, reaching over $69&nbsp;per barrel.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>&nbsp;&nbsp;Natural Gas</I>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 2005
on natural gas volumes sold of $6.84&nbsp;per Mcf represented a
significant increase from the $4.80&nbsp;per Mcf received in
2004, due largely to international instability and the tropical
storms in the Gulf of Mexico in late August and early September.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>&nbsp;&nbsp;</B><I>Environmental Regulation</I>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>General. </I>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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Superfund. </I>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
</DIV>

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
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;
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Solid and Hazardous Waste. </I>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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>New Events</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;
<I>Proxy Solicitation</I>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On January&nbsp;4, 2006, proxy solicitation materials were
mailed to unitholders of record and unitholders who hold the
units through brokerage accounts. The solicitation received by
unitholders concerns an initiative created by Sabine Production
Partners, LP.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Despite the similarity of the name of Sabine Production
Partners, LP (&#147;SPP&#148;), it is not an entity that is
affiliated with Sabine Royalty Trust (&#147;SRT&#148; or the
&#147;Trust&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the proposals SPP sets forth in its proxy solicitation, SPP
seeks to gain control of the assets of Sabine Royalty Trust by
liquidating the Trust in a manner whereby the assets of the
Trust are sold to SPP in exchange for partnership interests in
SPP that would be distributed to unitholders of the Trust upon
its liquidation.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On January&nbsp;31, 2006, Sabine Production Partners, LP
(&#147;SPP&#148;) announced that it is suspending indefinitely
its previously-announced solicitation of proxies from
unitholders of Sabine Royalty Trust. SPP is not withdrawing or
abandoning its Registration Statement or Proxy Statement/
Prospectus. No recommencement of the solicitation will occur
without a public announcement to that effect by SPP and the
making of appropriate filings with the SEC. Until such
announcement and filings, SPP has stated that it will not
attempt to call a meeting of SBR unitholders using any proxies
that have been submitted prior to recommencement.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='143'></A>
</DIV>

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Item&nbsp;1A.&nbsp;<I>Risk Factors</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Crude oil and natural gas prices are volatile and fluctuate
in response to a number of factors; Lower prices could reduce
the net proceeds payable to the Trust and Trust
distributions.</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Trust&#146;s monthly distributions are highly dependent upon
the prices realized from the sale of crude oil and natural gas
and a material decrease in such prices could reduce the amount
of cash distributions paid to Unit holders. Crude oil and
natural gas prices can fluctuate widely on a
<FONT style="white-space: nowrap">month-to</FONT>-month basis in
response to a variety of factors that are beyond the control of
the Trust. Factors that contribute to price fluctuation include,
among others:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    political conditions in major oil producing regions, especially
    in the Middle East;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    worldwide economic conditions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    weather conditions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the supply and price of domestic and foreign crude oil or
    natural gas;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the level of consumer demand;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the price and availability of alternative fuels;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the proximity to, and capacity of, transportation facilities;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">11

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<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the effect of worldwide energy conservation measures;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the nature and extent of governmental regulation and taxation.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
When crude oil and natural gas prices decline, the Trust is
affected in two ways. First, net income from the Royalty
Properties is reduced. Second, exploration and development
activity by operators on the Royalty Properties may decline as
some projects may become uneconomic and are either delayed or
eliminated. It is impossible to predict future crude oil and
natural gas price movements, and this reduces the predictability
of future cash distributions to Unit holders.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Trust reserve estimates depend on many assumptions that may
prove to be inaccurate, which could cause both estimated
reserves and estimated future net revenues to be too high,
leading to write-downs of estimated reserves.</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The value of the Units will depend upon, among other things, the
reserves attributable to the Royalty Properties. The
calculations of proved reserves and estimating reserves is
inherently uncertain. In addition, the estimates of future net
revenues are based upon various assumptions regarding future
production levels, prices and costs that may prove to be
incorrect over time.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The accuracy of any reserve estimate is a function of the
quality of available data, engineering interpretation and
judgment, and the assumptions used regarding the quantities of
recoverable crude oil and natural gas and the future prices of
crude oil and natural gas. Petroleum engineers consider many
factors and make many assumptions in estimating reserves. Those
factors and assumptions include:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    historical production from the area compared with production
    rates from similar producing areas;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the effects of governmental regulation;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    assumptions about future commodity prices, production and taxes;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the availability of enhanced recovery techniques;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    relationships with landowners, working interest partners,
    pipeline companies and others.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Changes in any of these factors and assumptions can materially
change reserve and future net revenue estimates. The
Trust&#146;s estimate of reserves and future net revenues is
further complicated because the Trust holds an interest in net
royalties and overriding royalties and does not own a specific
percentage of the crude oil or natural gas reserves. Ultimately,
actual production, revenues and expenditures for the Royalty
Properties, and therefore actual net proceeds payable to the
Trust, will vary from estimates and those variations could be
material. Results of drilling, testing and production after the
date of those estimates may require substantial downward
revisions or write-downs of reserves.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>The assets of the Trust are depleting assets and, if the
operators developing the Royalty Properties do not perform
additional development projects, the assets may deplete faster
than expected. Eventually, the assets of the Trust will cease to
produce in commercial quantities and the Trust will cease to
receive proceeds from such assets. In addition, a reduction in
depletion tax benefits may reduce the market value of the
Units.</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The net proceeds payable to the Trust are derived from the sale
of depleting assets. The reduction in proved reserve quantities
is a common measure of depletion. Projects, which are determined
solely by the operator, on the Royalty Properties will affect
the quantity of proved reserves and can offset the reduction in
proved reserves. If the operators developing the Royalty
Properties do not implement additional maintenance and
development projects, the future rate of production decline of
proved reserves may be higher than the rate currently expected
by the Trust.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Because the net proceeds payable to the Trust are derived from
the sale of depleting assets, the portion of distributions to
Unit holders attributable to depletion may be considered a
return of capital as opposed to a return on investment.
Distributions that are a return of capital will ultimately
diminish the depletion tax
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">12

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
benefits available to the Unit holders, which could reduce the
market value of the Units over time. Eventually, the Royalty
Properties will cease to produce in commercial quantities and
the Trust will, therefore, cease to receive any distributions of
net proceeds therefrom.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>The market price for the Units may not reflect the value of
the royalty interests held by the Trust.</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The public trading price for the Units tends to be tied to the
recent and expected levels of cash distribution on the Units.
The amounts available for distribution by the Trust vary in
response to numerous factors outside the control of the Trust,
including prevailing prices for crude oil and natural gas
produced from the Royalty Properties. The market price is not
necessarily indicative of the value that the Trust would realize
if it sold those Royalty Properties to a third party buyer. In
addition, such market price is not necessarily reflective of the
fact that since the assets of the Trust are depleting assets, a
portion of each cash distribution paid on the Units should be
considered by investors as a return of capital, with the
remainder being considered as a return on investment. There is
no guarantee that distributions made to a Unit holder over the
life of these depleting assets will equal or exceed the purchase
price paid by the Unit holder.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Terrorism and continued hostilities in the Middle East could
decrease Trust distributions or the market price of the
Units.</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Terrorist attacks and the threat of terrorist attacks, whether
domestic or foreign, as well as the military or other actions
taken in response, cause instability in the global financial and
energy markets. Terrorism, the war in Iraq and other sustained
military campaigns could adversely affect Trust distributions or
the market price of the Units in unpredictable ways, including
through the disruption of fuel supplies and markets, increased
volatility in crude oil and natural gas prices, or the
possibility that the infrastructure on which the operators
developing the Royalty Properties rely could be a direct target
or an indirect casualty of an act of terror.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Unit holders and the Trustee have no influence over the
operations on, or future development of, the Royalty
Properties.</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Neither the Trustee nor the Unit holders can influence or
control the operations on, or future development of, the Royalty
Properties. The failure of an operator to conduct its
operations, discharge its obligations, deal with regulatory
agencies or comply with laws, rules and regulations, including
environmental laws and regulations, in a proper manner could
have an adverse effect on the net proceeds payable to the Trust.
The current operators developing the Royalty Properties are
under no obligation to continue operations on the Royalty
Properties. Neither the Trustee nor the Unit holders have the
right to replace an operator.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>The operator developing any Royalty Property may abandon the
property, thereby terminating the royalties payable to the
Trust.</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The operators developing the Royalty Properties, or any
transferee thereof, may abandon any well or property without the
consent of the Trust or the Unit holders if they reasonably
believe that the well or property can no longer produce in
commercially economic quantities. This could result in the
termination of the royalties relating to the abandoned well or
property.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>The Royalty Properties can be sold and the Trust would be
terminated.</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Trustee must sell the Royalty Properties if Unit holders
approve the sale or vote to terminate the Trust as described
under &#147;Item&nbsp;1&nbsp;&#151; Description of the
Trust&nbsp;&#151; Voting Rights of Unit Holders&#148; above. The
Trustee must also sell the Royalty Properties if they fail to
generate net revenue for the Trust of at least
$2,000,000&nbsp;per year over any consecutive two-year period.
Sale of all of the Royalty Properties will terminate the Trust.
The net proceeds of any sale will be distributed to the Unit
holders.
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">13

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Unit holders have limited voting rights and have limited
ability to enforce the Trust&#146;s rights against the current
or future operators developing the Royalty Properties.</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The voting rights of a Unit holder are more limited than those
of stockholders of most public corporations. For example, there
is no requirement for annual meetings of Unit holders or for an
annual or other periodic re-election of the Trustee.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Trust Agreement and related trust law permit the Trustee and
the Trust to take appropriate action against the operators
developing the Royalty Properties to compel them to fulfill the
terms of the conveyance of the Royalty Properties. If the
Trustee does not take appropriate action to enforce provisions
of the conveyance, the recourse of the Unit holders would likely
be limited to bringing a lawsuit against the Trustee to compel
the Trustee to take specified actions. Unit holders probably
would not be able to sue any of the operators developing the
Royalty Properties.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Financial information of the Trust is not prepared in
accordance with GAAP.</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The financial statements of the Trust are 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, or GAAP. Although this basis of accounting
is permitted for royalty trusts by the U.S.&nbsp;Securities and
Exchange Commission, the financial statements of the Trust
differ from GAAP financial statements because revenues are not
accrued in the month of production and cash reserves may be
established for specified contingencies and deducted which could
not be accrued in GAAP financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>The limited liability of the Unit holders in uncertain.</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Unit holders are not protected from the liabilities of the
Trust to the same extent that a shareholder would be protected
from a corporation&#146;s liabilities. The structure of the
Trust does not include the interposition of a limited liability
entity such as a corporation or limited partnership which would
provide further limited liability protection to Unit holders.
While the Trustee is liable for any excess liabilities incurred
if the Trustee fails to insure that such liabilities are to be
satisfied only out of Trust assets, under the laws of Texas,
which are unsettled on this point, a holder of Units 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 the Trust and the
Trustee are not adequate to satisfy such liability. As a result,
Unit holders may be exposed to personal liability.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='144'></A>
</DIV>

<!-- link1 "Item 1B. Unresolved Staff Comments" -->

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Item&nbsp;1B.&nbsp;<I>Unresolved Staff Comments</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Trust has not received any written comments from the
Securities and Commission staff regarding its periodic or
current reports under the Act within the 180&nbsp;days preceding
December&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='120'></A>
</DIV>

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

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Item&nbsp;2.&nbsp;<I>Properties.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">14

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table summarizes total developed and proved
undeveloped acreage represented by the Royalty Properties at
December&nbsp;31, 2005.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B>Mineral and Royalty</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="left" nowrap><B>State</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Gross Acres</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Net Acres</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

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

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

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

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

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

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

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

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

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='121'></A>
</DIV>

<!-- link1 "Title" -->

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Title</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='122'></A>
</DIV>

<!-- link1 "Reserves" -->

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Reserves</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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,
2006 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.
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">15
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<DIV align="center" style="font-size: 11pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><FONT style="font-variant:SMALL-CAPS">DeGolyer and
MacNaughton</FONT></B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">
<B><FONT style="font-variant:SMALL-CAPS">5001 Spring Valley
Road</FONT></B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">
<B><FONT style="font-variant:SMALL-CAPS">Suite&nbsp;800
East</FONT></B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">
<B><FONT style="font-variant:SMALL-CAPS">Dallas, Texas
75244</FONT></B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
March&nbsp;7, 2006
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Bank of America, N.A.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
P. O. Box&nbsp;830650
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
Dallas, Texas 75283-0650
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Gentlemen:
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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, 2006, 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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 2006 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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 41&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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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, 2005. 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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">16

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
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 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;<FONT style="white-space: nowrap">4-10(a)</FONT>
<FONT style="white-space: nowrap">(1)-(13)</FONT> of
Regulation&nbsp;<FONT style="white-space: nowrap">S-X</FONT> of
the Securities and Exchange Commission (SEC)&nbsp;of the United
States. The petroleum reserves are classified as follows:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

<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>Proved oil and gas reserves</I>&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.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (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.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

<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>Proved developed oil and gas reserves</I>&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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>Proved undeveloped reserves</I>&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.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">17

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The development status shown herein represents the status
applicable on January&nbsp;1, 2006. In the preparation of this
study, data available from wells drilled on the appraised
properties through October&nbsp;31, 2005, were used in
estimating gross ultimate recovery. When applicable, gross
production estimated to January&nbsp;1, 2006, was deducted from
gross ultimate recovery to arrive at the estimates of gross
reserves as of January&nbsp;1, 2006. 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 2005.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Estimated net proved reserves, as of January&nbsp;1, 2006,
attributable to the Trust from the properties appraised are
summarized in thousands of barrels (Mbbl) or millions of cubic
feet (MMcf) as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="38%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B>Proved Developed Reserves</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B>Proved Undeveloped Reserves</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Oil, Condensate,</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Oil, Condensate,</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>and NGL</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Sales Gas</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>and NGL</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Sales Gas</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>State</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>(Mbbl)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>(MMcf)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>(Mbbl)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>(MMcf)</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Florida</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Louisiana</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>505</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Mississippi</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,134</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>228</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    New Mexico</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>470</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,469</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oklahoma</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>559</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,969</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Texas</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,840</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,075</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36,172</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>230</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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, 2006. 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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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, 2006, based on receipts by the Trust in December
2005. The assumptions used for estimating future prices and
expenses are as follows:
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Oil, Condensate, NGL, and Natural Gas Prices</I></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Oil, condensate, NGL, and natural gas prices, based on receipts
    by the Trust in December 2005, were furnished by Bank of
    America. These prices were adjusted to the NYMEX posted prices
    for oil of $60.32&nbsp;per barrel and for gas of $10.06&nbsp;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 $53.65&nbsp;per barrel of oil and
    $8.64&nbsp;per thousand cubic feet.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Expenses</I></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">18
<!-- 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" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A projection of the estimated future net revenue from the
properties appraised, as of January&nbsp;1, 2006, based on the
aforementioned assumptions concerning prices and expenses is
summarized as follows, expressed in thousands of dollars (M$):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="82%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Future Net</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Revenue</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Year Ending December&nbsp;31</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>(M$)</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57,555</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50,429</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2008</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44,812</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Subtotal</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>152,796</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Remaining</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>413,281</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>566,077</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The present worth, at a discount rate of 10&nbsp;percent, of
future net revenue, as of January&nbsp;1, 2006, is estimated to
be M$287,777.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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&nbsp;<FONT style="white-space: nowrap">10-13,</FONT>
15 and <FONT style="white-space: nowrap">30(a)-(b)</FONT> of
Statement of Financial Accounting Standards No.&nbsp;69
(November 1982) of the FASB and
Rules&nbsp;<FONT style="white-space: nowrap">4-10(a)</FONT>
<FONT style="white-space: nowrap">(1)-(13)</FONT> of
Regulation&nbsp;<FONT style="white-space: nowrap">S-X</FONT> and
Rule&nbsp;302(b) of
Regulation&nbsp;<FONT style="white-space: nowrap">S-K</FONT> 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 41&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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV style="margin-top: 15pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

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

<TR>
    <TD style="font-size: 24pt">&nbsp;</TD>
</TR>

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

<TR>
    <TD style="font-size: 24pt">&nbsp;</TD>
</TR>

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

<TR valign="top"  style="font-size: 3pt;color: #000000; background: #ffffff;">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid black; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

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

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

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

</TABLE>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">19
<!-- 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" style="font-size: 4pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 26%; border-top: 0.3pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 2006 will be
approximately $2,280,000.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The present value of future net revenue of the Trust&#146;s
proved developed reserves <U>in</U>creased from $194,229,373 at
January&nbsp;1, 2005 to $289,141,236 at January&nbsp;1, 2006.
This <U>in</U>crease resulted primarily from the gas prices used
in the calculation of such amount, from $5.66&nbsp;per Mcf of
gas at January&nbsp;1, 2005 to $8.64&nbsp;per Mcf of gas at
January&nbsp;1, 2006, as well as an increase in the price of oil
from $39.14&nbsp;per barrel of oil at January&nbsp;1, 2005 to
$53.65&nbsp;per barrel of oil at January&nbsp;1, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 March&nbsp;6, 2006, the NYMEX posted oil price was
approximately $62.41&nbsp;per barrel, which compared to the
posted price of $60.32&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 March&nbsp;6,
2006, the NYMEX posted gas price was $6.49&nbsp;per million
British thermal units. The use of such price, as compared to the
posted price of $10.06 per million British thermal units, used
to calculate the future net revenue to the Trust&#146;s proved
developed reserves would result in a smaller standardized
measure of discounted future net cash flows for gas.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='123'></A>
</DIV>

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

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Item&nbsp;3.&nbsp;<I>Legal Proceedings.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There are no material pending legal proceedings to which the
Registrant is a party or of which any of its property is the
subject.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='124'></A>
</DIV>

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

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Item&nbsp;4.&nbsp;<I>Submission of Matters to a Vote of
Security Holders.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">20

<!-- 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" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='138'></A>
</DIV>

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

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>PART&nbsp;II</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='125'></A>
</DIV>

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

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Item&nbsp;5.&nbsp;<I>Market for Registrant&#146;s Common
Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Sales Price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Distributions</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>High</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Low</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>per Unit</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>42.97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>34.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.69653</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.83104</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Third Quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>51.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.90890</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fourth Quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52.49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.99533</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Sales Price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Distributions</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>High</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Low</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>per Unit</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

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

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

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

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

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At March&nbsp;7, 2006, there were 14,579,345&nbsp;Units
outstanding and approximately 2,047&nbsp;Unit holders of record.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Trust does not maintain any equity compensation plans.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Trust did not repurchase any Units during the period covered
by this report.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='126'></A>
</DIV>

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

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Item&nbsp;6.&nbsp;<I>Selected Financial Data.</I></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="35%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Years Ended December&nbsp;31</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2001</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Royalty Income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>54,594,978</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>42,338,724</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>38,761,739</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>28,134,458</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>44,222,701</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Distributable Income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52,680,811</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40,587,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37,060,003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,539,751</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42,805,378</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Distributable Income per Unit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.94</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Assets at Year End</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,371,124</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,912,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,555,045</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,391,280</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,855,378</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Distributions per Unit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.86</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='127'></A>
</DIV>

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

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Item&nbsp;7.&nbsp;<I>Trustee&#146;s Discussion and Analysis
of Financial Condition and Results of Operations.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Liquidity and Capital Resources</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">21

<!-- 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" style="font-size: 10pt;color: #000000; background: #ffffff;">
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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
through and including the next succeeding monthly record date)
attributable to the Royalty Properties, 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. 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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Results of Operations</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 2004 and 2005.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Net royalty income during 2005 increased approximately
$12,256,000, or 28.9&nbsp;percent, compared to 2004 net royalty
income, which had increased approximately $3,577,000, or
9.2&nbsp;percent, from 2003 net royalty income.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Revenues generated by sales of oil and gas increased in 2005
from 2004 as a result of higher gas and oil prices along with
increased oil volumes. These increases were tempered by a
decrease in natural gas volumes. Gas volumes decreased from
6,029,402 thousand cubic feet (&#147;Mcf&#148;) in 2004 to
5,255,624&nbsp;Mcf in 2005 after decreasing from
6,532,013&nbsp;Mcf in 2003. The average price per Mcf of gas
received by the Trust increased from $4.80&nbsp;per Mcf in 2004
to $6.84&nbsp;per Mcf in 2005, after increasing from
$4.39&nbsp;per Mcf in 2003. The Trustee believes that normal
market forces, international instability, and the tropical
storms in late August and early September, 2005 resulted in the
higher gas prices.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Oil volumes sold increased to 603,616&nbsp;barrels in 2005 from
525,862&nbsp;barrels in 2004, having decreased from
577,087&nbsp;barrels in 2003. The effect of this volume increase
was enhanced by an increase in the average price per barrel
received by the Trust to $40.47 in 2005 from $33.78 in 2004,
which was an increase from $26.17 in 2003. The Trustee believes
that international instability along with tropical storms in
late August and early September resulted in the increase in
price for 2005.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest income increased to $175,000 in 2005 from $51,000 in
2004, which increased from $47,000 in 2003. Changes in interest
income are the result of changes in interest rates and funds
available for investment. General and administrative expenses
increased to $2,090,000 in 2005 compared to $1,802,000 in 2004
due primarily to increases in professional fees for
Sarbanes-Oxley compliance, increased tax reporting to
unitholders, and costs to upgrade the financial reporting of
approximately $67,000, $56,000 and $37,000, respectively. Other
increases included an increase in the trustee/escrow agent fees,
legal fees, auditing expenses and printing fees of $23,000,
$24,000, $13,000, and $27,000, respectively. General and
administrative expenses increased to $1,802,000 in 2004 compared
to $1,749,000 in 2003 due mainly 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 unitholder information services and
tax reporting services of approximately $24,000 and $15,000,
respectively.
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">22

<!-- 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" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Contractual Obligations</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="46%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Less than</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>More than</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Contractual Obligations</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>1&nbsp;Year</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>1-3&nbsp;Years</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>3-5&nbsp;Years</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>5&nbsp;Years</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

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

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

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

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

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

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

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

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Critical Accounting Policies and Estimates</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basis of Accounting</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

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

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">23

<!-- 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" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue Recognition</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reserve Disclosure</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contingencies</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>New Accounting Pronouncements</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In May 2005, the FASB issued Statement of Financial Accounting
Standards No.&nbsp;154, &#147;Accounting Changes and Error
Corrections&nbsp;&#151; A Replacement of APB Opinion No.&nbsp;20
and FASB Statement No.&nbsp;3.&#148; SFAS&nbsp;No.&nbsp;154
requires retrospective application, or application on the latest
practical date, as the preferred method to report a change in
accounting principle or correction of an error.
SFAS&nbsp;No.&nbsp;154 is effective for accounting changes and
corrections of errors made in fiscal years beginning after
December&nbsp;15, 2005. This new standard has no impact on the
financial statements of the Trust.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In March 2005, the FASB issued FASB Interpretation No.&nbsp;47,
&#147;Accounting for Conditional Asset Retirement
Obligations,&#148; (&#147;FIN&nbsp;47&#148;). FIN&nbsp;47
clarifies the term conditional asset retirement obligation and
requires a liability to be recorded if the fair value of the
obligation can be reasonably estimated. The types of asset
retirement obligations that are covered by FIN&nbsp;47 are those
for which an entity has a legal obligation to perform an asset
retirement activity; however the timing and/or method of
settling the obligation are conditional on a future event that
may or may not be within the control of the entity. FIN&nbsp;47
is effective for fiscal years ending after December&nbsp;15,
2005. This new standard has no impact on the financial
statements of the Trust.
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">24
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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Off-Balance Sheet Arrangements</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Inflation</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 2003 and 2005. The following table presents
the weighted average prices received per year by the Trust:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Oil</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gas</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Per BBL</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Per Mcf</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>40.47</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.84</TD>
    <TD>&nbsp;</TD>
</TR>

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

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

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Forward-Looking Statements</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 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), the recoverability of
reserves, general economic conditions, actions and policies of
petroleum-producing nations and other changes in the domestic
and international energy markets and the factors identified in
Item&nbsp;1A, &#147;Risk Factors&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='128'></A>
</DIV>

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

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Item 7A.&nbsp;<I>Quantitative and Qualitative Disclosures
About Market Risk.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">25

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='129'></A>
</DIV>

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

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Item&nbsp;8.&nbsp;<I>Financial Statements and Supplementary
Data.</I></B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Unit Holders of Sabine Royalty Trust and
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
Bank of America, N.A., Trustee
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have audited the accompanying condensed statement of assets,
liabilities and trust corpus of Sabine Royalty Trust (the
&#147;Trust&#148;) as of December&nbsp;31, 2005 and 2004, 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, 2005. These financial statements are the
responsibility of the Trustee. Our responsibility is to express
an opinion on these financial statements based on our audits.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As described in Note 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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In our opinion, such consolidated financial statements present
fairly, in all material respects, the assets, liabilities and
trust corpus of the Trust at December&nbsp;31, 2005 and 2004,
and the distributable income and changes in trust corpus for
each of the three years in the period ended December&nbsp;31,
2005, on the basis of accounting described in Note 2.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
effectiveness of the Trust&#146;s internal control over
financial reporting as of December&nbsp;31, 2005, based on the
criteria established in <I>Internal Control&nbsp;&#151;
Integrated Framework </I>issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated
March&nbsp;10, 2006 expressed an unqualified opinion on
Trustee&#146;s assessment of the effectiveness of the
Trust&#146;s internal control over financial reporting and an
unqualified opinion on the effectiveness of the Trust&#146;s
internal control over financial reporting.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
/s/ DELOITTE &#38; TOUCHE LLP
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Dallas, Texas
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
March&nbsp;10, 2006
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">26

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<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>SABINE ROYALTY TRUST</B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Statements of Assets, Liabilities and Trust Corpus</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="71%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

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

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and short-term investments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6,335,822</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,753,282</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Royalty interests in oil and gas properties less accumulated
    amortization of $21,359,883 (2005)&nbsp;and $21,235,652 (2004)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,035,302</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,159,533</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,371,124</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,912,815</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="9">&nbsp;</TD>
</TR>

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

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Trust expenses payable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>148,696</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>249,308</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other payables (Note&nbsp;4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>176,176</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>140,432</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>324,872</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>389,740</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Trust Corpus (14,579,345&nbsp;units of beneficial interest
    authorized and outstanding)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,046,252</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,523,075</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,371,124</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,912,815</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Statements of Distributable Income</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="55%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Year Ended December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Royalty Income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>54,594,978</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>42,338,724</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>38,761,739</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest Income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>175,380</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47,417</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>54,770,358</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42,389,509</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38,809,156</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    General and administrative expenses (Note&nbsp;6)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,089,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,801,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,749,153</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Distributable income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>52,680,811</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>40,587,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>37,060,003</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Distributable income per unit (Basic and Assuming Dilution)
    (14,579,345&nbsp;units) (Note&nbsp;1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3.61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2.54</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Distributions per unit (Note&nbsp;3)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3.43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2.79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2.52</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Statements of Changes in Trust Corpus</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="52%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

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

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Amortization of royalty interests</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(124,231</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(148,418</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(184,950</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Distributable income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52,680,811</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40,587,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37,060,003</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Distributions to unit holders (Note&nbsp;3)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(50,033,403</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(40,617,185</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(36,777,279</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Trust corpus, end of year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,046,252</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,523,075</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,700,993</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
The accompanying notes are an integral part of these financial
statements.
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">27

<!-- 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" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>SABINE ROYALTY TRUST</B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 2pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>1.&nbsp;Trust Organization and Provisions</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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;Royalty Properties&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with the transfer of the Royalty Properties 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 Royalty Properties, and Pacific
(USA)&#146;s ownership of such rights was not affected by the
sale.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The wells on the properties conveyed to the Trust are operated
by many companies including large, established companies such as
BP Amoco, Chevron, ConocoPhillips and Exxon Mobil. The Trustee
believes these operators utilize the recovery methods best
suited for the particular formations on which the properties are
located.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">28

<!-- 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" style="font-size: 10pt;color: #000000; background: #ffffff;">
<B>SABINE ROYALTY TRUST</B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 2pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO FINANCIAL STATEMENTS&nbsp;&#151; (Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The proceeds of production from the Royalty Properties 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 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 and the initial trustee of the Trust, in its
capacities as trustee of the Trust and as escrow agent. The
conveyances by Sabine of the Royalty Properties 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
Royalty Properties 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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the terms of the escrow agreement and the
conveyances of the properties by Sabine, 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. 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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>2.&nbsp;Accounting Policies</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Basis of Accounting</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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:
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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

</TABLE>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">29

<!-- 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" style="font-size: 10pt;color: #000000; background: #ffffff;">
<B>SABINE ROYALTY TRUST</B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 2pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO FINANCIAL STATEMENTS&nbsp;&#151; (Continued)</B>
</DIV>

<DIV style="margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

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

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

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

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

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

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Use of Estimates</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Impairment</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>New Accounting Standards</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In May 2005, the FASB issued Statement of Financial Accounting
Standards No.&nbsp;154, &#147;Accounting Changes and Error
Corrections&nbsp;&#151; A Replacement of APB Opinion No.&nbsp;20
and FASB Statement No.&nbsp;3.&#148; SFAS&nbsp;No.&nbsp;154
requires retrospective application, or application on the latest
practical date, as the preferred method to report a change in
accounting principle or correction of an error.
SFAS&nbsp;No.&nbsp;154 is effective for accounting changes and
corrections of errors made in fiscal years beginning after
December&nbsp;15, 2005. This new standard has no impact on the
financial statements of the Trust.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In March 2005, the FASB issued FASB Interpretation No.&nbsp;47,
&#147;Accounting for Conditional Asset Retirement
Obligations,&#148; (&#147;FIN&nbsp;47&#148;). FIN&nbsp;47
clarifies the term conditional asset retirement obligation
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">30
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">
<B>SABINE ROYALTY TRUST</B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 2pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO FINANCIAL STATEMENTS&nbsp;&#151; (Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
and requires a liability to be recorded if the fair value of the
obligation can be reasonably estimated. The types of asset
retirement obligations that are covered by FIN&nbsp;47 are those
for which an entity has a legal obligation to perform an asset
retirement activity; however the timing and/or method of
settling the obligation are conditional on a future event that
may or may not be within the control of the entity. FIN&nbsp;47
is effective for fiscal years ending after December&nbsp;15,
2005. This new standard has no impact on the financial
statements of the Trust.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Distributable Income Per Unit</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Federal Income Taxes</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>3.&nbsp;Distributions to Unit Holders</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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
through and including the next succeeding monthly record date)
attributable to the Royalty Properties, 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&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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 Royalty Properties 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.
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">31

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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="center" style="font-size: 10pt;color: #000000; background: #ffffff;">
<B>SABINE ROYALTY TRUST</B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 2pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO FINANCIAL STATEMENTS&nbsp;&#151; (Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>4.&nbsp;Other Payables</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other payables consist of the following:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="71%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="left" nowrap><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Royalty receipts in suspense pending verification of ownership
    interest or&nbsp;title</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>176,176</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>140,432</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>176,176</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>140,432</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>5.&nbsp;Subsequent Events</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Distributions</I>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Subsequent to December&nbsp;31, 2005, the Trust declared the
following distributions:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="34%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="26%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Monthly Record Date</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Payment Date</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Distribution per Unit</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    January&nbsp;17, 2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    January&nbsp;31, 2006</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>.41419</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    February&nbsp;15, 2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    February&nbsp;28, 2006</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>.43431</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    March&nbsp;15, 2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    March&nbsp;29, 2006</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>.28242</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Proxy Solicitation</I>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On January&nbsp;4, 2006, proxy solicitation materials were
mailed to unitholders of record and unitholders who hold the
units through brokerage accounts. The solicitation received by
unitholders concerns an initiative created by Sabine Production
Partners, LP.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Despite the similarity of the name of Sabine Production
Partners, LP (&#147;SPP&#148;), it is not an entity that is
affiliated with Sabine Royalty Trust (&#147;SRT&#148; or the
&#147;Trust&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the proposals SPP sets forth in its proxy solicitation, SPP
seeks to gain control of the assets of Sabine Royalty Trust by
liquidating the Trust in a manner whereby the assets of the
Trust are sold to SPP in exchange for partnership interests in
SPP that would be distributed to unitholders of the Trust upon
its liquidation.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On January&nbsp;31, 2006, Sabine Production Partners, LP
(&#147;SPP&#148;) announced that it is suspending indefinitely
its previously-announced solicitation of proxies from
unitholders of Sabine Royalty Trust. SPP is not withdrawing or
abandoning its Registration Statement or Proxy Statement/
Prospectus. No recommencement of the solicitation will occur
without a public announcement to that effect by SPP and the
making of appropriate filings with the SEC. Until such
announcement and filings, SPP has stated that it will not
attempt to call a meeting of SBR unitholders using any proxies
that have been submitted prior to recommencement.
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">32
<!-- 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" style="font-size: 10pt;color: #000000; background: #ffffff;">
<B>SABINE ROYALTY TRUST</B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 2pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO FINANCIAL STATEMENTS&nbsp;&#151; (Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>6.&nbsp;General and Administrative Expenses</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
General and administrative expenses for the years ended
December&nbsp;31, were as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Trustee&#146;s fee (Bank of America, N.A.)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>297,187</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>291,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>288,221</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Escrow agent&#146;s fee (Bank of America, N.A.)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>891,548</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>874,438</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>864,652</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Professional fees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>377,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>264,216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>182,745</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unit holders&#146; services fees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>344,259</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>244,970</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>267,427</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>179,339</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>126,720</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>146,108</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total General and Administrative Expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,089,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,801,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,749,153</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>7.&nbsp;Quarterly Financial Data (Unaudited)</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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, 2005 and 2004 (in
thousands, except per&nbsp;Unit amounts):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="53%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Calender</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Royalty</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Distributable</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Distributable</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Quarter</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Income</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Income</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Income per&nbsp;Unit</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>12,354</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>11,718</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.80</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,769</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.78</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Third Quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,303</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.91</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fourth Quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,778</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.12</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>54,595</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>52,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3.61</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

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

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

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

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

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

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

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

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>8.&nbsp;Supplemental Oil and Gas Information (Unaudited)</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Reserve Quantities</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">33
<!-- 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" style="font-size: 10pt;color: #000000; background: #ffffff;">
<B>SABINE ROYALTY TRUST</B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 2pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO FINANCIAL STATEMENTS&nbsp;&#151; (Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
differ substantially from original estimates. The following
schedule presents changes in the Trust&#146;s total proved
reserves (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Oil</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gas</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Barrels)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Mcf)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    January&nbsp;1, 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,085</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36,332</TD>
    <TD>&nbsp;</TD>
</TR>

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

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

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

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

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

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

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

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

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revisions of previous statements</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,152</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,359</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Production</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(569</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,566</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    December&nbsp;31, 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,268</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36,402</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Estimated quantities of proved developed reserves of oil and gas
as of the dates indicated were as follows (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="71%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Oil</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gas</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Barrels)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Mcf)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

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

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    January&nbsp;1, 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36,239</TD>
    <TD>&nbsp;</TD>
</TR>

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

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

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    December&nbsp;31, 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36,172</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Disclosure of a Standardized Measure of Discounted Future Net
Cash Flows</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 ($53.65&nbsp;per&nbsp;bbl and
$8.64&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.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="62%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>December&nbsp;31,</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future net cash inflows</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>566,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>382,852</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>324,013</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discount of future net cash flows @ 10%</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(278,300</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(188,623</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(155,206</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Standardized measure of discounted future net cash inflows</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>287,777</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>194,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>168,807</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">34

<!-- 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" style="font-size: 10pt;color: #000000; background: #ffffff;">
<B>SABINE ROYALTY TRUST</B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 2pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO FINANCIAL STATEMENTS&nbsp;&#151; (Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The change in the standardized measure of discounted future net
cash flows for the years ended December&nbsp;31, 2005, 2004 and
2003 is as follows (in&nbsp;thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="62%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Standardized measure of discounted future net cash flows,
    January&nbsp;1,</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>194,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>168,807</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>138,455</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Royalty income, net of severance and ad valorem taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(54,595</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(42,339</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(38,762</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Changes in prices, net of related costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>85,699</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,279</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revisions of previous estimates and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43,021</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>31,989</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accretion of discount</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,423</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,881</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,846</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Standardized measure of discounted future net cash flows,
    December&nbsp;31,</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>287,777</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>194,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>168,807</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 March&nbsp;6, 2006, the NYMEX posted oil price was
approximately $62.41 per barrel, which compared to the posted
price of $60.32 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 March&nbsp;6,
2006, the NYMEX posted gas price was $6.49 per million British
thermal units. The use of such price, as compared to the posted
price of $10.06 per million British thermal units, used to
calculate the future net revenue of the Trust&#146;s proved
developed reserves would result in a smaller standardized
measure of discounted future net cash flows for gas.
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">35

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<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
To the Trustee on Behalf of Unit holders of Sabine Royalty Trust:
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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, 2005, 2004
and 2003. 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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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, 2005, 2004 and 2003, on the basis of
accounting described in Note&nbsp;3.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
/s/ PRICEWATERHOUSECOOPERS LLP
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
PricewaterhouseCoopers LLP
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
Dallas, Texas
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
March&nbsp;10, 2006
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">36

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<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>STATEMENTS OF FEES AND EXPENSES</B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">
<B>PAID BY SABINE ROYALTY TRUST TO</B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">
<B>BANK OF AMERICA, N.A., AS</B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">
<B>TRUSTEE AND ESCROW AGENT, FOR EACH OF THE THREE</B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">
<B>YEARS IN THE PERIOD ENDED DECEMBER&nbsp;31, 2005</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 18pt; ">

<TR style="font-size: 1pt;">
    <TD width="61%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Trustee&#146;s fee</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>297,187</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>291,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>288,221</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Escrow agent&#146;s fee</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>891,548</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>874,438</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>864,652</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total fees and expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,188,735</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,165,918</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,152,873</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
The accompanying notes are an integral part of these statements.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Notes</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>1.&nbsp;</B>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;).
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 $61,261, $34,082 and $22,118 in 2005, 2004 and 2003,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>2.&nbsp;</B>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.
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">37

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>3.</B>&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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">38

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='130'></A>
</DIV>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="7%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;9.&nbsp;</B></TD>
    <TD>
    <B><I>Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
None.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='141'></A>
</DIV>

<!-- link1 "Item 9A. Controls and Procedures." -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;9A.</B></TD>
    <TD>
    <B><I>Controls and Procedures.</I></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Conclusion Regarding the Effectiveness of Disclosure Controls
    and Procedures</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Trustee conducted an evaluation of the Trust&#146;s
disclosure controls and procedures, as such term is defined
under
Rule&nbsp;<FONT style="white-space: nowrap">13a-15(e)</FONT>
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.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Changes in Internal Control Over Financial Reporting</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Trustee&#146;s Report on Internal Control Over Financial
    Reporting</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Trustee is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term
is defined in
Rule&nbsp;<FONT style="white-space: nowrap">13a-15(f)</FONT>
promulgated under the Securities and Exchange Act of 1934, as
amended. The Trustee conducted an evaluation of the
effectiveness of the Trust&#146;s internal control over
financial reporting&nbsp;&#151; modified cash basis
(&#147;internal control over financial reporting&#148;) based on
the criteria established in <I>Internal Control&nbsp;&#151;
Integrated Framework </I>issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on the
Trustee&#146;s evaluation under the framework in <I>Internal
Control&nbsp;&#151; Integrated Framework,</I> the Trustee
concluded that the Trust&#146;s internal control over financial
reporting was effective as of December&nbsp;31, 2004. The
Trustee&#146;s assessment of the effectiveness of the
Trust&#146;s internal control over financial reporting as of
December&nbsp;31, 2004 has been audited by Deloitte&nbsp;&#38;
Touche LLP, an independent registered public accounting firm, as
stated in their report which is included herein.
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">39

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<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Report of Independent Registered Public Accounting Firm</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
UNIT HOLDERS OF SABINE ROYALTY TRUST AND BANK OF AMERICA, N.A.,
TRUSTEE
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have audited the Trustee&#146;s assessment, included in the
accompanying trustee&#146;s report on internal control over
financial reporting, that Sabine Royalty Trust (the
&#147;Trust&#148;) maintained effective internal control over
financial reporting as of December&nbsp;31, 2005, based on
criteria established in <I>Internal Control&nbsp;&#151;
Integrated Framework</I> issued by the Committee of Sponsoring
Organizations of the Treadway Commission. The Trustee is
responsible for maintaining effective internal control over
financial reporting&nbsp;&#151; modified cash basis
(&#147;internal control over financial reporting&#148;) and for
its assessment of the effectiveness of internal control over
financial reporting. Our responsibility is to express an opinion
on the Trustee&#146;s assessment and an opinion on the
effectiveness of the Trust&#146;s internal control over
financial reporting based on our audit.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United&nbsp;States).
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of
internal control over financial reporting, evaluating
management&#146;s assessment, testing and evaluating the design
and operating effectiveness of internal control, and performing
such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable
basis for our opinions.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Trust&#146;s internal control over financial reporting is a
process designed by, or under the supervision of, the Trustee,
or persons performing similar functions, and effected by the
Trustee to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
the modified cash basis of accounting, which is a comprehensive
basis of accounting other than accounting principles generally
accepted in the United States of America and is described in
Note&nbsp;3 to the Trust&#146;s financial statements. The
Trust&#146;s internal control over financial reporting includes
those policies and procedures that (1)&nbsp;pertain to the
maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the
assets of the Trust; (2)&nbsp;provide reasonable assurance that
transactions are recorded as necessary to permit preparation of
financial statements in accordance with the modified cash basis
of accounting discussed above, and that receipts and
expenditures of the Trust are being made only in accordance with
authorizations of the Trustee; and (3)&nbsp;provide reasonable
assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
Trust&#146;s assets that could have a material effect on the
financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Because of the inherent limitations of internal control over
financial reporting, including the possibility of collusion or
improper management override of controls, material misstatements
due to error or fraud may not be prevented or detected on a
timely basis. Also, projections of any evaluation of the
effectiveness of the internal control over financial reporting
to future periods are subject to the risk that the controls may
become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may
deteriorate.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In our opinion, the Trustee&#146;s assessment that the Trust
maintained effective internal control over financial reporting
as of December&nbsp;31, 2005, is fairly stated, in all material
respects, based on the criteria established in <I>Internal
Control&nbsp;&#151; Integrated Framework </I>issued by the
Committee of Sponsoring Organizations of the Treadway
Commission. Also in our opinion, the Trust maintained, in all
material respects, effective internal control over financial
reporting as of December&nbsp;31, 2005, based on the criteria
established in <I>Internal Control&nbsp;&#151; Integrated
Framework </I>issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">40
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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
statements of assets, liabilities and trust corpus of the Trust
as of December&nbsp;31, 2005 and 2004, 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, 2005, which financial statements have been
prepared on the modified cash basis of accounting as described
in Note&nbsp;2 to such financial statements, and our report
dated March&nbsp;10, 2006 expressed an unqualified opinion on
those financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
DELOITTE&nbsp;&#38; TOUCHE LLP
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Dallas, Texas
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
March&nbsp;10, 2006
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">41
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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='142'></A>
</DIV>

<!-- link1 "Item 9B. Other Information." -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;9B.&nbsp;</B></TD>
    <TD>
    <B><I>Other Information.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
None.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='139'></A>
</DIV>

<!-- link1 "PART III" -->

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>PART&nbsp;III</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='131'></A>
</DIV>

<!-- link1 "Item 10. Directors and Executive Officers of the Registrant." -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;10.&nbsp;</B></TD>
    <TD>
    <B><I>Directors and Executive Officers of the Registrant.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Directors and Executive Officers.</I> 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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Compliance with Section 16(a) of the Exchange Act.</I> 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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Code of Ethics. </I>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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Audit Committee. </I>The Trust has no directors and therefore
has no audit committee or audit committee financial expert.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Nominating Committee. </I>The Trust has no directors and
therefore has no nominating committee.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='132'></A>
</DIV>

<!-- link1 "Item 11. Executive Compensation." -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;11.&nbsp;</B></TD>
    <TD>
    <B><I>Executive Compensation.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='133'></A>
</DIV>

<!-- link1 "Item 12. Security Ownership of Certain Beneficial Owners and Management." -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;12.&nbsp;</B></TD>
    <TD>
    <B><I>Security Ownership of Certain Beneficial Owners and
    Management.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;<I>Security Ownership of Certain Beneficial Owners.
</I>As of March&nbsp;6, 2006 there were no Unit holders known to
the Trustee to be beneficial owners of more that 5% of the
outstanding Units.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(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 February&nbsp;16, 2006 an aggregate of
202,089&nbsp;Units in various fiduciary capacities, and it had
shared voting and investment power with respect to 23,359 of
such Units.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='134'></A>
</DIV>

<!-- link1 "Item 13. Certain Relationships and Related Transactions." -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;13.&nbsp;</B></TD>
    <TD>
    <B><I>Certain Relationships and Related Transactions.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='135'></A>
</DIV>

<!-- link1 "Item 14. Principal Accounting Fees and Services." -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;14.&nbsp;</B></TD>
    <TD>
    <B><I>Principal Accounting Fees and Services.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fees for services performed by Deloitte &#38; Touche LLP for the
years ended December&nbsp;31, 2005 and 2004 are:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="76%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Audit fees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>163,825</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>84,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Audit-related fees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Tax fees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>44,550</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>22,795</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All other fees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">42

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<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='140'></A>
</DIV>

<!-- link1 "PART IV" -->

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>PART IV</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
<A name='136'></A>
</DIV>

<!-- link1 "Item 15. Exhibits, Financial Statement Schedules." -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;15.&nbsp;</B></TD>
    <TD>
    <B><I>Exhibits, Financial Statement Schedules.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;The following documents are filed as a part of this
report:
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
1.&nbsp;<I>Financial Statements (included in Item&nbsp;8 of this
report)</I>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Report of Independent Registered Public Accounting Firm</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Statements of Assets, Liabilities and Trust Corpus at
    December&nbsp;31, 2005 and 2004</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Statements of Distributable Income for Each of the Three Years
    in the Period Ended December&nbsp;31, 2005</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Statements of Changes in Trust Corpus for Each of the Three
    Years in the Period Ended December&nbsp;31, 2005</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Notes to Financial Statements</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.&nbsp;<I>Financial Statement Schedules</I>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.&nbsp;<I>Exhibits</I>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>(4)(a)</TD>
    <TD align="left" valign="top" nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#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.</DIV>
    </TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>(b)</TD>
    <TD align="left" valign="top" nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#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.</DIV>
    </TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>(23)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151;&nbsp;Consent of DeGolyer and MacNaughton.</DIV>
    </TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151;&nbsp;Rule&nbsp;13a-14(a)(15d-14(a)) Certification.</DIV>
    </TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151;&nbsp;Certification by Bank of America, Trustee of Sabine
    Royalty Trust, dated March&nbsp;15, 2006 and submitted pursuant
    to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.
    Section 1350).</DIV>
    </TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>(99)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151;&nbsp;Report dated February&nbsp;10, 2006 of the Trustee
    containing interim tax information for each of the
    12&nbsp;months in the year ending December&nbsp;31, 2005.</DIV>
    </TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 1pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 18%; border-top: 0.3pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="2%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>*&nbsp;</TD>
    <TD align="left">
    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;<FONT style="white-space: nowrap">10-K</FONT> for the
    year ended December&nbsp;31, 1993.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">43
<!-- 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" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>SIGNATURES</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    SABINE ROYALTY TRUST</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="40%"></TD>
    <TD width="3%"></TD>
    <TD width="57%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>BY:&nbsp;</TD>
    <TD align="left">
    BANK OF AMERICA, N.A., Trustee</TD>
</TR>

</TABLE>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="left">
    /s/ <FONT style="font-variant:SMALL-CAPS">RON&nbsp;E. HOOPER
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid black; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;color: #000000; background: #ffffff;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Ron&nbsp;E. Hooper</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;color: #000000; background: #ffffff;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Senior Vice-President</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Date: March&nbsp;15, 2006
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 30pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>(The Registrant has no directors or executive officers.)</B>
</DIV>

<P align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">44
<!-- 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" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>INDEX TO EXHIBITS</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Exhibit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>(4)(a)</TD>
    <TD align="left" valign="top" nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#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.</DIV>
    </TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>(b)</TD>
    <TD align="left" valign="top" nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#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.</DIV>
    </TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>(23)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151;&nbsp;Consent of DeGolyer and MacNaughton.</DIV>
    </TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151;&nbsp;Rule&nbsp;13a-14(a)(15d-14(a)) Certification.</DIV>
    </TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151;&nbsp;Certification by Bank of America, Trustee of Sabine
    Royalty Trust, dated March&nbsp;15, 2006 and submitted pursuant
    to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.
    Section 1350).</DIV>
    </TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>(99)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151;&nbsp;Report dated February&nbsp;10, 2006 of the Trustee
    containing interim tax information for each of the
    12&nbsp;months in the year ending December&nbsp;31, 2005.</DIV>
    </TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 1pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 18%; border-top: 0.3pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="2%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>*&nbsp;</TD>
    <TD align="left">
    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;<FONT style="white-space: nowrap">10-K</FONT> for the
    year ended December&nbsp;31, 1993.</TD>
</TR>

</TABLE>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>2
<FILENAME>d33406exv23.htm
<DESCRIPTION>CONSENT OF DEGOLYER AND MACNAUGHTON
<TEXT>
<HTML>
<HEAD>
<TITLE>exv23</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;23</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DeGolyer and MacNaughton</B><BR>
5001 Spring Valley Road<BR>
Suite&nbsp;800 East<BR>
Dallas, Texas 75244
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">March&nbsp;8, 2006
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Sabine Royalty Trust<BR>
Bank of America, N.A.<BR>
Bank of America Plaza &#151; 17th Floor<BR>
901 Main Street<BR>
Dallas, Texas 75202

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Gentlemen:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We hereby consent to the inclusion of our letter report dated March&nbsp;7, 2006, concerning the
reserves and revenue, as of January&nbsp;1, 2006, of certain royalty interests owned by Sabine Royalty
Trust in the Annual Report on Form&nbsp;10&#151;K for the year ended December&nbsp;31, 2005, of the Sabine
Royalty Trust to be filed with the Securities and Exchange Commission. We also consent to the
references to our firm under &#147;Properties&#151;Reserves&#148; in Item&nbsp;2 and under &#147;Supplemental Oil and Gas
Information (Unaudited)&#151;Reserve Quantities&#148; in Item&nbsp;8 of the Form&nbsp;10&#151;K.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 60%">Very truly yours,
&nbsp;<br>
&nbsp;<br>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 60%">DeGOLYER and MacNAUGHTON
</DIV>


<P align="center" style="font-size: 10pt">
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>3
<FILENAME>d33406exv31.htm
<DESCRIPTION>RULE 13A-14(A)(15D-14(A)) CERTIFICATION
<TEXT>
<HTML>
<HEAD>
<TITLE>exv31</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="right" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>EXHIBIT&nbsp;31</B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>CERTIFICATIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
I, Ron Hooper, certify that:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    1.&nbsp;I have reviewed this annual report on
    Form&nbsp;<FONT style="white-space: nowrap">10-K</FONT> of
    Sabine Royalty Trust, for which Bank of America, N.A. acts as
    Trustee;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    2.&nbsp;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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    3.&nbsp;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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    4.&nbsp;I am responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules&nbsp;<FONT style="white-space: nowrap">13a-15(e)</FONT>
    and <FONT style="white-space: nowrap">15d-15(e))</FONT> and
    internal control over financial reporting (as defined in
    Exchange Act Rules 13a-15(f) and 15d-15(f)), or for causing such
    controls and procedures to be established and maintained, for
    the registrant and I have:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    a)&nbsp;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;</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    b)&nbsp;designed such internal control over financial reporting,
    or caused such internal control over financial reporting to be
    designed under my supervision, to provide reasonable assurance
    regarding the reliability of financial reporting and the
    preparation of financial statements for external purposes;</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    c)&nbsp;evaluated the effectiveness of the registrant&#146;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;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    d)&nbsp;disclosed in this annual report any changes in the
    registrant&#146;s internal control over financial reporting that
    occurred during the registrant&#146;s most recent fiscal quarter
    (the registrant&#146;s fourth fiscal quarter in the case of an
    annual report) that has materially affected, or is reasonably
    likely to materially affect, the registrant&#146;s internal
    control over financial reporting;&nbsp;and</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    5.&nbsp;I have disclosed, based on my most recent evaluation of
    internal control over financial reporting, to the
    registrant&#146;s auditors:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    a)&nbsp;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&#146;s ability to record, process, summarize and
    report financial information;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    b)&nbsp;any fraud, whether or not material, that involves
    persons who have a significant role in the registrant&#146;s
    internal control over financial reporting.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Date: March&nbsp;15, 2006
</DIV>

<DIV style="margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="left">
    /s/ Ron Hooper</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid black; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;color: #000000; background: #ffffff;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Ron Hooper</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;color: #000000; background: #ffffff;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Senior Vice President and Trust&nbsp;Administrator</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;color: #000000; background: #ffffff;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Bank of America, N.A.</TD>
</TR>

</TABLE>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>4
<FILENAME>d33406exv32.htm
<DESCRIPTION>CERTIFICATION PURSUANT TO SECTION 906
<TEXT>
<HTML>
<HEAD>
<TITLE>exv32</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="right" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>EXHIBIT&nbsp;32</B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>CERTIFICATION PURSUANT TO 18&nbsp;U.S.C. SECTION&nbsp;1350,
AS ADOPTED PURSUANT</B>
</DIV>

<DIV align="center" style="font-size: 10pt;color: #000000; background: #ffffff;">
<B>TO SECTION&nbsp;906 OF THE SARBANES-OXLEY ACT OF 2002</B>
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with the Annual Report of Sabine Royalty Trust
(the &#147;Trust&#148;) on
Form&nbsp;<FONT style="white-space: nowrap">10-K</FONT> for the
annual period ended December&nbsp;31, 2005 as filed with the
Securities and Exchange Commission on the date hereof (the
&#147;Report&#148;), the undersigned, not in its individual
capacity but solely as the trustee of the Trust, certifies
pursuant to 18&nbsp;U.S.C. 1350, as adopted pursuant to
Section&nbsp;906 of the Sarbanes-Oxley Act of 2002, that to its
knowledge:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;The Report fully complies with the requirements of
    Section&nbsp;13(a) or 15(d) of the Securities Exchange Act of
    1934, as amended;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (2)&nbsp;The information contained in the Report fairly
    presents, in all material respects, the financial condition and
    results of operations of the Trust.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    BANK OF AMERICA, N.A., TRUSTEE FOR</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    SABINE ROYALTY TRUST</TD>
</TR>

</TABLE>

<DIV style="margin-top: 48pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="left">
    /s/ Ron E. Hooper</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;color: #000000; background: #ffffff;">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid black; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;color: #000000; background: #ffffff;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Ron E. Hooper,</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;color: #000000; background: #ffffff;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Senior Vice President, Royalty Management</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff;">
Date: March&nbsp;15, 2006
</DIV>

<DIV align="left" style="font-size: 10pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A signed original of this written statement required by
Section&nbsp;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.
</DIV>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>5
<FILENAME>d33406exv99.txt
<DESCRIPTION>REPORT - INTERIM TAX INFORMATION
<TEXT>
<PAGE>

                                                                      Exhibit 99

                           (SABINE ROYALTY TRUST LOGO)

                                 TAX INFORMATION

                                      2005

         This booklet contains tax information relevant to ownership of
             Units of Sabine Royalty Trust and should be retained.

<PAGE>

                              SABINE ROYALTY TRUST

                                FEBRUARY 10, 2006

TO UNIT HOLDERS:

     This booklet provides 2005 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 2005 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>
2005 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 2005 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 2005....................      7
  -- Form 1041, Grantor Trust for January 2005..........................      8
  -- Form 1041, Grantor Trust for February 2005.........................      9
  -- Form 1041, Grantor Trust for March 2005............................     10
  -- Form 1041, Grantor Trust for April 2005............................     11
  -- Form 1041, Grantor Trust for May 2005..............................     12
  -- Form 1041, Grantor Trust for June 2005.............................     13
  -- Form 1041, Grantor Trust for July 2005.............................     14
  -- Form 1041, Grantor Trust for August 2005...........................     15
  -- Form 1041, Grantor Trust for September 2005........................     16
  -- Form 1041, Grantor Trust for October 2005..........................     17
  -- Form 1041, Grantor Trust for November 2005.........................     18
  -- Form 1041, Grantor Trust for December 2005.........................     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..............................................     22
  -- Depletion Schedule III ............................................     23
- - Sample Tax Forms for Individual Unit Holders..........................     24
- - Comprehensive Examples................................................     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
</TABLE>

(SRT 2005 TAX)
<PAGE>

                              SABINE ROYALTY TRUST
                              2005 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 2005. 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, 2005,
which is the last distribution payment date for 2005, and separate noncumulative
schedules for the months of January through December 2005 are included. 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, 2005 and who still owned only those Units on
December 15, 2005 must use each of the separate monthly schedules for June
through December 2005 (located on pages 13-19), and Depletion Schedule II
(located on page 22) for such Units. However, Unit holders reporting on a
calendar year basis who became Unit holders of record prior to January 18, 2005
and who continued to own only those Units on December 15, 2005, must use only
the cumulative schedule for calendar year 2005 (located on page 7) and either
Depletion Schedule I or III (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 2005 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 2005 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 before 2005 use Depletion Schedule III
(located on page 23). The Federal depletion factors in Depletion Schedule III
are presented on a cumulative basis for 2005. Depletion Schedule III contains no
state-specific depletion factors. Unit holders should refer to Schedule II
(located on page 22) for the state-specific depletion factors.

     Unit holders who acquired Units in 2005 use Depletion Schedule I (located
on page 22). The Federal depletion factors in Depletion Schedule I are presented
on a cumulative and noncumulative basis for 2005. Depletion Schedule I contains
no state-specific depletion factors. Unit holders should refer to Schedule II
(located on page 22) for the state-specific depletion factors.

     Depletion Schedule II contains state-specific depletion factors, which are
presented on a noncumulative basis for all years. These factors are appropriate
for use in calculating the 2005 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 2005 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"). 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 2005 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 2005 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 2005 TAX)


                                        3
<PAGE>

TABLE OF 2005 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 2005. 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 18, 2005      January 31, 2005        0.23163
February 15, 2005     February 28, 2005       0.26140
March 15, 2005        March 29, 2005          0.20350
April 15, 2005        April 29, 2005          0.33910
May 16, 2005          May 27, 2005            0.23516
June 15, 2005         June 29, 2005           0.25678
July 15, 2005         July 29, 2005           0.28078
August 15, 2005       August 29, 2005         0.31653
September 15, 2005    September 29, 2005      0.31159
October 17, 2005      October 31, 2005        0.28446
November 15, 2005     November 29, 2005       0.34556
December 15, 2005     December 29, 2005       0.36531
</TABLE>

(SRT 2005 TAX)


                                        4

<PAGE>

                              SABINE ROYALTY TRUST
                            TAX COMPUTATION WORKSHEET

                                      2005

         (RETAIN THIS WORKPAPER AS PART OF YOUR PERMANENT TAX RECORDS)

                                     PART I

                               INCOME AND EXPENSE

<TABLE>
<CAPTION>
                                                  B
                                           INCOME/EXPENSE
                                 A            PER UNIT
                             NUMBER OF    FROM APPROPRIATE
                            UNITS OWNED      SCHEDULE(S)        C         WHERE TO REFLECT ON
           ITEM               (NOTE 1)        (NOTE 2)       TOTALS     2005 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 2005
                   CALENDAR YEARS       COST DEPLETION     COST DEPLETION FACTOR
ORIGINAL BASIS        (NOTE 5)             PURPOSES               (NOTE 4)         2005 COST DEPLETION*
- --------------   ------------------   ------------------   ---------------------   --------------------
<S>              <C>                  <C>                  <C>                     <C>

               -                    =                    x                       =
     _____              _____                _____                 _____                   _____
</TABLE>

*    Reflect cost depletion on 2005 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        2005 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 2005 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 2005 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 18, 2005 through December 15, 2005, then the amounts reflected on
     the cumulative schedule for 2005 (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 2005 TAX)


                                        5
<PAGE>

                              SABINE ROYALTY TRUST

                     SUPPLEMENT TO TAX COMPUTATION WORKSHEET

                                      2005

                    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 18, 2005 through December 15, 2005. 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.

(SRT 2005 TAX)


                                        6

<PAGE>

                                                                 CUMULATIVE 2005

                              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>
                        ROYALTY INCOME AND EXPENSE       OTHER INCOME AND EXPENSE
                    ---------------------------------   -------------------------
                                               NET
                      GROSS     SEVERANCE    ROYALTY    INTEREST   ADMINISTRATIVE
SOURCE                INCOME       TAX       PAYMENTS    INCOME        EXPENSE
- ------              ---------   ---------   ---------   --------   --------------
<S>                 <C>         <C>         <C>         <C>        <C>
Florida..........   $ .035654    $.002558   $ .033096   $       *     $.001396
Louisiana........     .140781     .009109     .131672           *      .005347
Mississippi......     .158428     .013266     .145162           *      .006215
New Mexico.......     .308240     .044446     .263794           *      .012103
Oklahoma.........     .741223     .099730     .641493           *      .029226
Texas............    2.490475     .135454    2.355021    .011804       .095963
                    ---------    --------   ---------   --------      --------
   TOTAL.........   $3.874801    $.304563   $3.570238   $.011804      $.150250
                    =========    ========   =========   ========      ========
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
ITEM                                      AMOUNT
- ----                                    ---------
<S>                                     <C>
1. Total Net Royalty Payments........   $3.570238
2. Interest Income*..................     .011804
3. Administrative Expense............    (.150250)
                                        ---------
4. Cash Distribution Per Unit**......   $3.431792
                                        =========
</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 Texas interest income.

**   Includes amounts withheld by the Trust from distributions to Foreign
     Taxpayers and pursuant to the backup withholding provisions. These amounts
     were remitted directly to the United States Treasury.

(SRT 2005 TAX)


                                        7
<PAGE>

                                                                FOR JANUARY 2005

                              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>
                    ROYALTY INCOME AND EXPENSE            OTHER INCOME
                 -------------------------------          AND EXPENSE
                                           NET     -------------------------
                   GROSS    SEVERANCE    ROYALTY   INTEREST   ADMINISTRATIVE
SOURCE            INCOME       TAX      PAYMENTS    INCOME        EXPENSE
- ------           --------   ---------   --------   --------   --------------
<S>              <C>        <C>         <C>        <C>        <C>
Florida ......   $.003163    $.000223   $.002940   $       *     $.000205
Louisiana ....    .008030     .000606    .007424           *      .000521
Mississippi ..    .012197     .000803    .011394           *      .000791
New Mexico ...    .018055     .002580    .015475           *      .001171
Oklahoma .....    .056691     .007307    .049384           *      .003676
Texas ........    .165693     .004130    .161563    .000556       .010743
                 --------    --------   --------   --------      --------
   TOTAL .....   $.263829    $.015649   $.248180   $.000556      $.017107
                 ========    ========   ========   ========      ========
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
ITEM                                   AMOUNT
- ----                                 ---------
<S>                                  <C>
1. Total Net Royalty Payments ....   $ .248180
2. Interest Income* ..............     .000556
3. Administrative Expense ........    (.017107)
                                     ---------
4. Cash Distribution Per Unit** ..   $ .231629
                                     =========
</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 Texas interest income.

**   Includes amounts withheld by the Trust from distributions to Foreign
     Taxpayers and pursuant to the backup withholding provisions. These amounts
     were remitted directly to the United States Treasury.

(SRT 2005 TAX)


                                        8

<PAGE>

                                                               FOR FEBRUARY 2005

                              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>
                    ROYALTY INCOME AND EXPENSE            OTHER INCOME
                 -------------------------------          AND EXPENSE
                                           NET     -------------------------
                   GROSS    SEVERANCE    ROYALTY   INTEREST   ADMINISTRATIVE
SOURCE            INCOME       TAX      PAYMENTS    INCOME        EXPENSE
- ------           --------   ---------   --------   --------   --------------
<S>              <C>        <C>         <C>        <C>        <C>
Florida ......   $.003145   $.000248    $.002897   $       *     $.000195
Louisiana ....    .009222    .000663     .008559           *      .000571
Mississippi ..    .009788    .000767     .009021           *      .000606
New Mexico ...    .027843    .003932     .023911           *      .001724
Oklahoma .....    .061813    .008041     .053772           *      .003828
Texas ........    .194002    .012449     .181553    .000624       .012015
                 --------   --------    --------   --------      --------
   TOTAL .....   $.305813   $.026100    $.279713   $.000624      $.018939
                 ========   ========    ========   ========      ========
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
ITEM                                   AMOUNT
- ----                                 ---------
<S>                                  <C>
1. Total Net Royalty Payments ....   $ .279713
2. Interest Income* ..............     .000624
3. Administrative Expense ........    (.018939)
                                     ---------
4. Cash Distribution Per Unit** ..   $ .261398
                                     =========
</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 Texas interest income.

**   Includes amounts withheld by the Trust from distributions to Foreign
     Taxpayers and pursuant to the backup withholding provisions. These amounts
     were remitted directly to the United States Treasury.

(SRT 2005 TAX)


                                        9
<PAGE>

                                                                  FOR MARCH 2005

                              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>
                    ROYALTY INCOME AND EXPENSE            OTHER INCOME
                 -------------------------------          AND EXPENSE
                                           NET     -------------------------
                   GROSS    SEVERANCE    ROYALTY   INTEREST   ADMINISTRATIVE
SOURCE            INCOME       TAX      PAYMENTS    INCOME       EXPENSE
- ------           --------   ---------   --------   --------   --------------
<S>              <C>        <C>         <C>        <C>        <C>
Florida ......   $.000649    $.000034   $.000615   $       *     $.000035
Louisiana ....    .010444     .000482    .009962           *      .000568
Mississippi ..    .011893     .000847    .011046           *      .000646
New Mexico ...    .021278     .003101    .018177           *      .001157
Oklahoma .....    .055479     .007399    .048080           *      .003016
Texas ........    .137324     .009461    .127863    .000645       .007465
                 --------    --------   --------   --------      --------
   TOTAL .....   $.237067    $.021324   $.215743   $.000645      $.012887
                 ========    ========   ========   ========      ========
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
ITEM                                    AMOUNT
- ----                                  ---------
<S>                                   <C>
1. Total Net Royalty Payments .....   $ .215743
2. Interest Income* ...............     .000645
3. Administrative Expense .........    (.012887)
                                      ---------
4. Cash Distribution Per Unit ** ..   $ .203501
                                      =========
</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 Texas interest income.

**   Includes amounts withheld by the Trust from distributions to Foreign
     Taxpayers and pursuant to the backup withholding provisions. These amounts
     were remitted directly to the United States Treasury.

(SRT 2005 TAX)


                                       10

<PAGE>

                                                                  FOR APRIL 2005

                              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>
                    ROYALTY INCOME AND EXPENSE             OTHER INCOME
                 -------------------------------           AND EXPENSE
                                           NET     -------------------------
                   GROSS    SEVERANCE    ROYALTY   INTEREST   ADMINISTRATIVE
SOURCE            INCOME       TAX      PAYMENTS    INCOME        EXPENSE
- ------           --------   ---------   --------   --------   --------------
<S>              <C>        <C>         <C>        <C>        <C>
Florida ......   $.005371    $.000372   $.004999   $       *     $.000211
Louisiana ....    .014228     .001033    .013195           *      .000558
Mississippi ..    .015460     .000916    .014544           *      .000606
New Mexico ...    .028053     .004078    .023975           *      .001100
Oklahoma          .071279     .011099    .060180           *      .002795
Texas ........    .248739     .012297    .236442    .000789       .009754
                 --------    --------   --------   --------      --------
   TOTAL .....   $.383130    $.029795   $.353335   $.000789      $.015024
                 ========    ========   ========   ========      ========
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
ITEM                                    AMOUNT
- ----                                  ---------
<S>                                   <C>
1. Total Net Royalty Payments .....   $ .353335
2. Interest Income* ...............     .000789
3. Administrative Expense .........    (.015024)
                                      ---------
4. Cash Distribution Per Unit ** ..   $ .339100
                                      =========
</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 Texas interest income.

**   Includes amounts withheld by the Trust from distributions to Foreign
     Taxpayers and pursuant to the backup withholding provisions. These amounts
     were remitted directly to the United States Treasury.

(SRT 2005 TAX)


                                       11
<PAGE>

                                                                    FOR MAY 2005

                              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>
                                    ROYALTY INCOME AND EXPENSE      OTHER INCOME AND EXPENSE
                                 -------------------------------   -------------------------
                                                           NET
                                   GROSS    SEVERANCE    ROYALTY   INTEREST   ADMINISTRATIVE
SOURCE                            INCOME       TAX      PAYMENTS    INCOME        EXPENSE
- ------                           --------   ---------   --------   --------   --------------
<S>                              <C>         <C>        <C>        <C>        <C>
Florida ......................   $.003681    $.000247   $.003434   $       *     $.000162
Louisiana ....................    .012684     .000800    .011884           *      .000558
Mississippi ..................    .013789     .001038    .012751           *      .000607
New Mexico ...................    .023647     .003461    .020186           *      .001040
Oklahoma .....................    .047782     .006015    .041767           *      .002102
Texas ........................    .166925     .010894    .156031    .000920       .007344
                                 --------    --------   --------   --------      --------
   TOTAL .....................   $.268508    $.022455   $.246053   $.000920      $.011813
                                 ========    ========   ========   ========      ========
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
ITEM                                     AMOUNT
- ----                                   ---------
<S>                                    <C>
1. Total Net Royalty Payments ......   $ .246053
2. Interest Income* ................     .000920
3. Administrative Expense ..........    (.011813)
                                       ---------
4. Cash Distribution Per Unit ** ...   $ .235160
                                       =========
</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 Texas interest income.

**   Includes amounts withheld by the Trust from distributions to Foreign
     Taxpayers and pursuant to the backup withholding provisions. These amounts
     were remitted directly to the United States Treasury.

(SRT 2005 TAX)


                                       12

<PAGE>

                                                                   FOR JUNE 2005

                              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>
                                    ROYALTY INCOME AND EXPENSE      OTHER INCOME AND EXPENSE
                                 -------------------------------   -------------------------
                                                           NET
                                   GROSS    SEVERANCE    ROYALTY   INTEREST   ADMINISTRATIVE
SOURCE                            INCOME       TAX      PAYMENTS    INCOME        EXPENSE
- ------                           --------   ---------   --------   --------   --------------
<S>                              <C>         <C>        <C>        <C>        <C>
Florida ......................   $.000808    $.000046   $.000762   $       *     $.000037
Louisiana ....................    .008139     .000660    .007479           *      .000375
Mississippi ..................    .011895     .001014    .010881           *      .000548
New Mexico ...................    .026676     .004026    .022650           *      .001229
Oklahoma .....................    .053511     .006785    .046726           *      .002465
Texas ........................    .192694     .011774    .180920    .000891       .008875
                                 --------    --------   --------   --------      --------
   TOTAL .....................   $.293723    $.024305   $.269418   $.000891      $.013529
                                 ========    ========   ========   ========      ========
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
ITEM                                     AMOUNT
- ----                                   ---------
<S>                                    <C>
1. Total Net Royalty Payments ......   $ .269418
2. Interest Income* ................     .000891
3. Administrative Expense ..........    (.013529)
                                       ---------
4. Cash Distribution Per Unit ** ...   $ .256780
                                       =========
</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 Texas interest income.

**   Includes amounts withheld by the Trust from distributions to Foreign
     Taxpayers and pursuant to the backup withholding provisions. These amounts
     were remitted directly to the United States Treasury.

(SRT 2005 TAX)


                                       13
<PAGE>

                                                                   FOR JULY 2005

                              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..................   $.003285    $.000225   $.003060   $       *     $.000122
Louisiana................    .009606     .000605    .009001           *      .000357
Mississippi..............    .013121     .001291    .011830           *      .000487
New Mexico...............    .024249     .003399    .020850           *      .000900
Oklahoma.................    .059379     .007760    .051619           *      .002205
Texas....................    .210365     .014988    .195377    .000926       .007812
                            --------    --------   --------   --------      --------
   TOTAL.................   $.320005    $.028268   $.291737   $.000926      $.011883
                            ========    ========   ========   ========      ========
</TABLE>

                                   SECTION II
                    RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
ITEM                                    AMOUNT
- ----                                  ---------
<S>                                   <C>
1. Total Net Royalty Payments......   $ .291737
2. Interest Income*................     .000926
3. Administrative Expense..........    (.011883)
                                      ---------
4. Cash Distribution Per Unit **...   $0.280780
                                      =========
</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 Texas interest income.

**   Includes amounts withheld by the Trust from distributions to Foreign
     Taxpayers and pursuant to the backup withholding provisions. These amounts
     were remitted directly to the United States Treasury.

(SRT 2005 TAX)


                                       14

<PAGE>

                                                                 FOR AUGUST 2005

                              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........   $.005606    $.000409   $.005197   $       *     $.000164
Louisiana......    .012444     .001102    .011342           *      .000364
Mississippi....    .017046     .001388    .015658           *      .000498
New Mexico.....    .023929     .003405    .020524           *      .000699
Oklahoma.......    .061429     .007992    .053437           *      .001795
Texas .........    .233890     .014242    .219648    .001076       .006833
                  --------    --------   --------   --------      --------
  TOTAL........   $.354344    $.028538   $.325806   $.001076      $.010353
                  ========    ========   ========   ========      ========
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
ITEM                                    AMOUNT
- ----                                  ---------
<S>                                   <C>
1. Total Net Royalty Payments......   $ .325806
2. Interest Income*................     .001076
3. Administrative Expense..........    (.010353)
                                      ---------
4. Cash Distribution Per Unit **...   $0.316529
                                      =========
</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 Texas interest income.

**   Includes amounts withheld by the Trust from distributions to Foreign
     Taxpayers and pursuant to the backup withholding provisions. These amounts
     were remitted directly to the United States Treasury.

(SRT 2005 TAX)


                                       15
<PAGE>

                                                              FOR SEPTEMBER 2005

                              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>
                     ROYALTY INCOME AND EXPENSE      OTHER INCOME AND EXPENSE
                  -------------------------------   -------------------------
                                            NET
                    GROSS    SEVERANCE    ROYALTY   INTEREST   ADMINISTRATIVE
SOURCE             INCOME       TAX      PAYMENTS    INCOME        EXPENSE
- ------            --------   ---------   --------   --------   --------------
<S>               <C>        <C>         <C>        <C>        <C>
Florida........   $.002051    $.000137   $.001914   $       *     $.000055
Louisiana......    .018325     .001050    .017275           *      .000495
Mississippi....    .013882     .001082    .012800           *      .000375
New Mexico.....    .029260     .004130    .025130           *      .000790
Oklahoma.......    .065005     .008605    .056400           *      .001755
Texas..........    .220081     .013813    .206268    .001212       .005943
                  --------    --------   --------   --------      --------
   TOTAL.......   $.348604    $.028817   $.319787   $.001212      $.009413
                  ========    ========   ========   ========      ========
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
ITEM                                        AMOUNT
- ----                                      ---------
<S>                                       <C>
1. Total Net Royalty Payments..........   $ .319787
2. Interest Income*....................     .001212
3. Administrative Expense..............    (.009413)
                                          ---------
4. Cash Distribution Per Unit**........   $0.311586
                                          =========
</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 Texas interest income.

**   Includes amounts withheld by the Trust from distributions to Foreign
     Taxpayers and pursuant to the backup withholding provisions. These amounts
     were remitted directly to the United States Treasury.

(SRT 2005 TAX)


                                       16

<PAGE>

                                                                FOR OCTOBER 2005

                              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>
                     ROYALTY INCOME AND EXPENSE      OTHER INCOME AND EXPENSE
                  -------------------------------   -------------------------
                                            NET
                    GROSS    SEVERANCE    ROYALTY   INTEREST   ADMINISTRATIVE
SOURCE             INCOME       TAX      PAYMENTS    INCOME        EXPENSE
- ------            --------   ---------   --------   --------   --------------
<S>               <C>        <C>         <C>        <C>        <C>
Florida........   $.002211    $.000155   $.002056   $       *     $.000072
Louisiana......    .007987     .000513    .007474           *      .000262
Mississippi....    .011862     .001202    .010660           *      .000388
New Mexico.....    .027315     .003783    .023532           *      .000895
Oklahoma.......    .063555     .008430    .055125           *      .002081
Texas..........    .206827     .011918    .194909    .001174       .006773
                  --------    --------   --------   --------      --------
   TOTAL.......   $.319757    $.026001   $.293756   $.001174      $.010471
                  ========    ========   ========   ========      ========
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
ITEM                                        AMOUNT
- ----                                      ---------
<S>                                       <C>
1. Total Net Royalty Payments..........   $ .293756
2. Interest Income*....................     .001174
3. Administrative Expense..............    (.010471)
                                          ---------
4. Cash Distribution Per Unit**........   $ .284459
                                          =========

</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 Texas interest income.

**   Includes amounts withheld by the Trust from distributions to Foreign
     Taxpayers and pursuant to the backup withholding provisions. These amounts
     were remitted directly to the United States Treasury.

(SRT 2005 TAX)


                                       17
<PAGE>

                                                               FOR NOVEMBER 2005

                              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>
                    ROYALTY INCOME AND EXPENSE            OTHER INCOME
                 -------------------------------          AND EXPENSE
                                           NET     -------------------------
                   GROSS    SEVERANCE    ROYALTY   INTEREST   ADMINISTRATIVE
SOURCE            INCOME       TAX      PAYMENTS    INCOME        EXPENSE
- ------           --------   ---------   --------   --------   --------------
<S>              <C>        <C>         <C>        <C>        <C>
Florida ......   $.002539   $.000206    $.002333   $       *     $.000060
Louisiana ....    .012875    .000870     .012005           *      .000303
Mississippi ..    .013841    .001603     .012238           *      .000325
New Mexico ...    .028524    .003996     .024528           *      .000671
Oklahoma .....    .069962    .009390     .060572           *      .001645
Texas ........    .249630    .008276     .241354    .001402       .005869
                 --------   --------    --------   --------      --------
   TOTAL .....   $.377371   $.024341    $.353030   $.001402      $.008873
                 ========   ========    ========   ========      ========
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
ITEM                                   AMOUNT
- ----                                 ---------
<S>                                  <C>
1. Total Net Royalty Payments ....   $ .353030
2. Interest Income* ..............     .001402
3. Administrative Expense ........    (.008873)
                                     ---------
4. Cash Distribution Per Unit** ..   $ .345559
                                     =========
</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 Texas interest income.

**   Includes amounts withheld by the Trust from distributions to Foreign
     Taxpayers and pursuant to the backup withholding provisions. These amounts
     were remitted directly to the United States Treasury.

(SRT 2005 TAX)


                                       18

<PAGE>

                                                               FOR DECEMBER 2005

                              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>
                    ROYALTY INCOME AND EXPENSE            OTHER INCOME
                 -------------------------------          AND EXPENSE
                                           NET     -------------------------
                   GROSS    SEVERANCE    ROYALTY   INTEREST   ADMINISTRATIVE
SOURCE            INCOME       TAX      PAYMENTS    INCOME        EXPENSE
- ------           --------   ---------   --------   --------   --------------
<S>              <C>        <C>         <C>        <C>        <C>
Florida ......   $.003145   $.000256    $.002889   $       *     $.000078
Louisiana ....    .016797    .000725     .016072           *      .000415
Mississippi ..    .013654    .001315     .012339           *      .000338
New Mexico ...    .029411    .004555     .024856           *      .000727
Oklahoma .....    .075338    .010907     .064431           *      .001863
Texas ........    .264305    .011212     .253093    .001589       .006537
                 --------   --------    --------   --------      --------
   TOTAL .....   $.402650   $.028970    $.373680   $.001589      $.009958
                 ========   ========    ========   ========      ========
</TABLE>

                                   SECTION II
                  RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT

<TABLE>
<CAPTION>
ITEM                                   AMOUNT
- ----                                 ---------
<S>                                  <C>
1. Total Net Royalty Payments ....   $ .373680
2. Interest Income* ..............     .001589
3. Administrative Expense ........    (.009958)
                                     ---------
4. Cash Distribution Per Unit** ..   $ .365311
                                     =========
</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 Texas interest income.

**   Includes amounts withheld by the Trust from distributions to Foreign
     Taxpayers and pursuant to the backup withholding provisions. These amounts
     were remitted directly to the United States Treasury.

(SRT 2005 TAX)


                                       19
<PAGE>

                          SABINE ROYALTY TRUST FEDERAL

TABLE I: 2005 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:
                                                                2005
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 ...  0.263829  0.569642  0.806709  1.189839  1.458347  1.752070  2.072075  2.426419   2.775023  3.094780  3.472151  3.874801
February ..        --  0.305813  0.542880  0.926010  1.194518  1.488241  1.808246  2.162590   2.511194  2.830951  3.208322  3.610972
March .....        --        --  0.237067  0.620197  0.888705  1.182428  1.502433  1.856777   2.205381  2.525138  2.902509  3.305159
April .....        --        --        --  0.383130  0.651638  0.945361  1.265366  1.619710   1.968314  2.288071  2.665442  3.068092
May .......        --        --        --        --  0.268508  0.562231  0.882236  1.236580   1.585184  1.904941  2.282312  2.684962
June ......        --        --        --        --        --  0.293723  0.613728  0.968072   1.316676  1.636433  2.013804  2.416454
July ......        --        --        --        --        --        --  0.320005  0.674349   1.022953  1.342710  1.720081  2.122731
August ....        --        --        --        --        --        --        --  0.354344   0.702948  1.022705  1.400076  1.802726
September..        --        --        --        --        --        --        --        --   0.348604  0.668361  1.045732  1.448382
October ...        --        --        --        --        --        --        --        --         --  0.319757  0.697128  1.099778
November ..        --        --        --        --        --        --        --        --         --        --  0.377371  0.780021
December ..        --        --        --        --        --        --        --        --         --        --        --  0.402650
</TABLE>

TABLE II: 2005 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:
                                                                2005
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 ...  0.015649  0.041749  0.063073  0.092868  0.115323  0.139628  0.167896  0.196434   0.225251  0.251252  0.275593  0.304563
February ..        --  0.026100  0.047424  0.077219  0.099674  0.123979  0.152247  0.180785   0.209602  0.235603  0.259944  0.288914
March .....        --        --  0.021324  0.051119  0.073574  0.097879  0.126147  0.154685   0.183502  0.209503  0.233844  0.262814
April .....        --        --        --  0.029795  0.052250  0.076555  0.104823  0.133361   0.162178  0.188179  0.212520  0.241490
May .......        --        --        --        --  0.022455  0.046760  0.075028  0.103566   0.132383  0.158384  0.182725  0.211695
June ......        --        --        --        --        --  0.024305  0.052573  0.081111   0.109928  0.135929  0.160270  0.189240
July ......        --        --        --        --        --        --  0.028268  0.056806   0.085623  0.111624  0.135965  0.164935
August ....        --        --        --        --        --        --        --  0.028538   0.057355  0.083356  0.107697  0.136667
September..        --        --        --        --        --        --        --        --   0.028817  0.054818  0.079159  0.108129
October ...        --        --        --        --        --        --        --        --         --  0.026001  0.050342  0.079312
November ..        --        --        --        --        --        --        --        --         --        --  0.024341  0.053311
December ..        --        --        --        --        --        --        --        --         --        --        --  0.028970
</TABLE>

(SRT 2005 TAX)


                                       20

<PAGE>

                          SABINE ROYALTY TRUST FEDERAL

TABLE III: 2005 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:
                                                                2005
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 ...  0.000556  0.001180  0.001825  0.002614  0.003534  0.004425  0.005351  0.006427   0.007639  0.008813  0.010215  0.011804
February ..        --  0.000624  0.001269  0.002058  0.002978  0.003869  0.004795  0.005871   0.007083  0.008257  0.009659  0.011248
March .....        --        --  0.000645  0.001434  0.002354  0.003245  0.004171  0.005247   0.006459  0.007633  0.009035  0.010624
April .....        --        --        --  0.000789  0.001709  0.002600  0.003526  0.004602   0.005814  0.006988  0.008390  0.009979
May .......        --        --        --        --  0.000920  0.001811  0.002737  0.003813   0.005025  0.006199  0.007601  0.009190
June ......        --        --        --        --        --  0.000891  0.001817  0.002893   0.004105  0.005279  0.006681  0.008270
July ......        --        --        --        --        --        --  0.000926  0.002002   0.003214  0.004388  0.005790  0.007379
August ....        --        --        --        --        --        --        --  0.001076   0.002288  0.003462  0.004864  0.006453
September..        --        --        --        --        --        --        --        --   0.001212  0.002386  0.003788  0.005377
October ...        --        --        --        --        --        --        --        --         --  0.001174  0.002576  0.004165
November ..        --        --        --        --        --        --        --        --         --        --  0.001402  0.002991
December ..        --        --        --        --        --        --        --        --         --        --        --  0.001589
</TABLE>

TABLE IV: 2005 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:
                                                                2005
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 ...  0.017107  0.036046  0.048933  0.063957  0.075770  0.089299  0.101182  0.111535   0.120948  0.131419  0.140292  0.150250
February ..        --  0.018939  0.031826  0.046850  0.058663  0.072192  0.084075  0.094428   0.103841  0.114312  0.123185  0.133143
March .....        --        --  0.012887  0.027911  0.039724  0.053253  0.065136  0.075489   0.084902  0.095373  0.104246  0.114204
April .....        --        --        --  0.015024  0.026837  0.040366  0.052249  0.062602   0.072015  0.082486  0.091359  0.101317
May .......        --        --        --        --  0.011813  0.025342  0.037225  0.047578   0.056991  0.067462  0.076335  0.086293
June ......        --        --        --        --        --  0.013529  0.025412  0.035765   0.045178  0.055649  0.064522  0.074480
July ......        --        --        --        --        --        --  0.011883  0.022236   0.031649  0.042120  0.050993  0.060951
August ....        --        --        --        --        --        --        --  0.010353   0.019766  0.030237  0.039110  0.049068
September .        --        --        --        --        --        --        --        --   0.009413  0.019884  0.028757  0.038715
October ...        --        --        --        --        --        --        --        --         --  0.010471  0.019344  0.029302
November ..        --        --        --        --        --        --        --        --         --        --  0.008873  0.018831
December ..        --        --        --        --        --        --        --        --         --        --        --  0.009958
</TABLE>

(SRT 2005 TAX)


                                       21
<PAGE>

                              SABINE ROYALTY TRUST

                              DEPLETION SCHEDULE I

     The cumulative depletion factors reflected in this Depletion Schedule I
should be used to compute 2005 Federal depletion amounts attributable to Units
purchased for which the Unit holder initially became entitled to distributions
in 2005. The applicable number to use is the number related to the last month in
which Units were owned in 2005. 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 II (located
below). (See accompanying information for computation instructions.)

<TABLE>
<CAPTION>
FIRST MONTH IN
WHICH UNITS WERE
OWNED ON THE
MONTHLY RECORD DATE
IN 2005              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 ...........  .009383   .019746  .028101  .041408  .050450  .060432  .071175  .083005   .094550   .104312   .115027   .126136
February ..........       --   .010363  .018718  .032025  .041067  .051049  .061792  .073622   .085167   .094929   .105644   .116753
March .............       --        --  .008355  .021662  .030704  .040686  .051429  .063259   .074804   .084566   .095281   .106390
April .............       --        --       --  .013307  .022349  .032331  .043074  .054904   .066449   .076211   .086926   .098035
May ...............       --        --       --       --  .009042  .019024  .029767  .041597   .053142   .062904   .073619   .084728
June ..............       --        --       --       --       --  .009982  .020725  .032555   .044100   .053862   .064577   .075686
July ..............       --        --       --       --       --       --  .010743  .022573   .034118   .043880   .054595   .065704
August ............       --        --       --       --       --       --       --  .011830   .023375   .033137   .043852   .054961
September .........       --        --       --       --       --       --       --       --   .011545   .021307   .032022   .043131
October ...........       --        --       --       --       --       --       --       --        --   .009762   .020477   .031586
November ..........       --        --       --       --       --       --       --       --        --        --   .010715   .021824
December ..........       --        --       --       --       --       --       --       --        --        --        --   .011109
</TABLE>

                              DEPLETION SCHEDULE II

     The non-cumulative depletion factors reflected in this Depletion Schedule
II should be used to compute 2005 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 2005. (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 .......  .000071   .000080  .000024  .000157  .000108  .000026  .000084  .000136   .000053   .000049   .000049   .000064
Louisiana .....  .000395   .000335  .000595  .000649  .000607  .000347  .000440  .000550   .000841   .000319   .000453   .000754
Mississippi ...  .000508   .000355  .000395  .000486  .000508  .000473  .000462  .000514   .000470   .000407   .000431   .000400
New Mexico ....  .000606   .000945  .000606  .000843  .000705  .000809  .000642  .000749   .000847   .000698   .000728   .000835
Oklahoma ......  .002080   .002114  .002009  .002466  .001614  .001965  .001952  .001959   .002104   .001864   .001944   .002103
Texas .........  .005723   .006534  .004726  .008706  .005500  .006362  .007163  .007922   .007230   .006425   .007110   .006953
                 -------   -------  -------  -------  -------  -------  -------  -------   -------   -------   -------   -------
   TOTAL ......  .009383   .010363  .008355  .013307  .009042  .009982  .010743  .011830   .011545   .009762   .010715   .011109
                 =======   =======  =======  =======  =======  =======  =======  =======   =======   =======   =======   =======
</TABLE>

(SRT 2005 TAX)


                                       22

<PAGE>

                              SABINE ROYALTY TRUST

                             DEPLETION SCHEDULE III

     The cumulative Federal depletion factors reflected in this Depletion
Schedule III should be used to compute 2005 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 2005. 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 II (located on page 22). (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 2005
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 .....  .009301   .019420  .027432  .040613  .049417  .059358  .070179  .082037   .093298   .103089   .113831   .124629
1983 .............  .008573   .018223  .025491  .038124  .046252  .055615  .065964  .077336   .087946   .097294   .107585   .117808
1984 .............  .006690   .014209  .019878  .029761  .036113  .043416  .051514  .060416   .068715   .076017   .084064   .092058
1985 .............  .007871   .016737  .023386  .035006  .042480  .051091  .060618  .071096   .080844   .089448   .098921   .108310

BEFORE MARCH 17,
1986 .............  .006902   .014695  .020518  .030728  .037284  .044848  .053222  .062432   .070988   .078549   .086875   .095118

AFTER MARCH 17,
1986 .............  .005888   .012539  .017510  .026215  .031813  .038267  .045403  .053256   .060559   .067007   .074106   .081141
1987 .............  .007135   .015195  .021218  .031772  .038549  .046366  .055016  .064531   .073374   .081189   .089791   .098314
1988 .............  .007478   .015913  .022245  .033271  .040351  .048523  .057552  .067473   .076717   .084880   .093859   .102772
1989 .............  .007361   .015622  .021875  .032650  .039586  .047588  .056407  .066080   .075115   .083096   .091862   .100579
1990 .............  .007139   .015175  .021251  .031709  .038449  .046221  .054773  .064159   .072939   .080683   .089189   .097664
1991 .............  .006908   .014744  .020678  .030752  .037303  .044843  .053054  .062072   .070584   .078057   .086252   .094475
1992 .............  .007638   .016278  .022872  .033892  .041056  .049353  .058331  .068151   .077461   .085663   .094630   .103643
1993 .............  .007734   .016499  .023196  .034373  .041675  .050074  .059160  .069122   .078590   .086888   .095965   .105126
1994 .............  .007228   .015356  .021627  .032059  .038876  .046668  .055137  .064420   .073248   .080957   .089399   .097939
1995 .............  .007515   .015946  .022442  .033256  .040327  .048392  .057160  .066775   .075876   .083857   .092576   .101391
1996 .............  .007450   .015786  .022296  .032895  .039835  .047782  .056356  .065717   .074666   .082502   .091042   .099728
1997 .............  .008782   .018617  .026254  .038869  .047131  .056536  .066752  .077946   .088604   .097902   .108070   .118391
1998 .............  .009135   .019300  .027247  .040298  .048889  .058651  .069240  .080836   .091890   .101526   .112061   .122752
1999 .............  .009377   .019736  .028047  .041468  .050483  .060490  .071350  .083300   .094907   .104743   .115569   .126733
2000 .............  .009354   .019650  .027905  .041172  .050170  .060152  .070916  .082764   .094249   .104020   .114749   .125781
2001 .............  .009776   .020389  .029455  .043071  .052670  .062929  .073831  .085856   .098094   .107994   .118920   .130636
2002 .............  .009490   .020001  .028587  .042055  .051332  .061420  .072230  .084177   .096016   .105839   .116651   .128031
2003 .............  .009424   .019821  .028236  .041535  .050600  .060626  .071364  .083173   .094742   .104522   .115247   .126382
2004 .............  .009341   .019680  .028012  .041339  .050421  .060397  .071154  .083030   .094647   .104404   .115144   .126303
</TABLE>

(SRT 2005 TAX)


                                       23
<PAGE>

                  SAMPLE TAX FORMS FOR INDIVIDUAL UNIT HOLDERS

<TABLE>
<S>                                            <C>                                                                 <C>
                 SCHEDULE E                               SUPPLEMENTAL INCOME AND LOSS                             OMB No. 1545-0074
                 (FORM 1040)                   (FROM RENTAL REAL ESTATE, ROYALTIES, PARTNERSHIPS,                         2005
                                                 S CORPORATIONS, ESTATES, TRUSTS, REMICS, ETC.)                       Attachment
                 Department of the Treasury            > ATTACH TO FORM 1040 OR FORM 1041.                          Sequence No. 13
                 Internal Revenue Service (99)   > SEE INSTRUCTIONS FOR SCHEDULE E (FORM 1040).

                 Name(s) shown on return                                                                 YOUR SOCIAL SECURITY NUMBER
                                                                                                         _________-________-________

                 PART I   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.

                  1   List the type and location of each RENTAL REAL ESTATE        2   For each rental real estate        YES   NO
                      PROPERTY:                                                        property listed on line 1,         ---   --
                                                                                       did you or your family  use
                  A   _________________________________________________________        it during the tax year for     A
                                                                                       personal purposes for more
                  B   _________________________________________________________        than the greater of:           B
                                                                                       -    14 days or
                  C   _________________________________________________________        -    10% of the total days     C
                                                                                            rented at fair rental
                                                                                            value?
                                                                                            (See page E3)

                 INCOME:                                                                         PROPERTIES                TOTALS
                                                                                       ------------------------------   (Add columns
                                                                                          A          B          C        A, B AND 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 fees .......................   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-5 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-5 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. ....................................................................................   26
</TABLE>

FOR PAPERWORK REDUCTION ACT NOTICE,
SEE PAGE E-7 OF THE INSTRUCTIONS.    Cat. No. 11344L SCHEDULE E (FORM 1040) 2005


                                       24
<PAGE>

                  SAMPLE TAX FORMS FOR INDIVIDUAL UNIT HOLDERS

Schedules A&B (Form 1040) 2005                              OMB No.
                                                            1545-0074     Page 2

Name(s) shown on Form 1040.
Do not enter name and social security number if
shown on other side.                                 YOUR SOCIAL SECURITY NUMBER
                                                     _________-________-________


<TABLE>
<S>               <C>                  <C>                                                           <C>   <C>      <C>
                                                                                                       Attachment
                                     SCHEDULE B--INTEREST AND ORDINARY DIVIDENDS                       Sequence No. 08

                  PART I               1    List name of payer. If any interest is from a                  AMOUNT
                  INTEREST                  seller-financed mortgage and the buyer used the
                  (See page B-1             property as a personal residence, see page B-1
                  and the                   and list this interest first. Also, show that buyer's
                  instructions for          social security number and address >
INTEREST INCOME - Form 1040,                ______________________________________________________
                  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 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
                                       5    List name of payer >__________________________________
                  PART II                   ______________________________________________________
                  ORDINARY                  ______________________________________________________
                  DIVIDENDS                 ______________________________________________________
                  (See page B-1             ______________________________________________________
                  and the                   ______________________________________________________
                  instructions for          ______________________________________________________
                  Form 1040,                ______________________________________________________
                  line 9a.)                 ______________________________________________________
                                            ______________________________________________________
                                            ______________________________________________________
                                            ______________________________________________________    5
                  NOTE. If you              ______________________________________________________
                  received a Form           ______________________________________________________
                  1099-D.V or               ______________________________________________________
                  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
                                       You must complete this part if you (A) had over $1,500 of             YES    NO
                  PART III             taxable interest or ordinary dividends; or (B) had a
                  FOREIGN              foreign account; or (C) received a distribution from, or
                  ACCOUNTS             were a grantor of, or a transferor to, a foreign trust.
                  AND TRUSTS           7A   At any time during 2005, did you have an interest in
                  (See page B-2.)           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 2005, 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>

FOR PAPERWORK REDUCTION ACT NOTICE,
SEE FORM 1040 INSTRUCTIONS.                          SCHEDULE B (FORM 1040) 2005


                                       25
<PAGE>

                  SAMPLE TAX FORMS FOR INDIVIDUAL UNIT HOLDERS
<TABLE>
<S>                    <C>                                                                              <C>
     Form 4797                         SALES OF BUSINESS PROPERTY                                       OMB No. 1545-0184
 Department of the         (ALSO INVOLUNTARY CONVERSIONS AND RECAPTURE AMOUNTS                                 2005
 Treasury Internal                 UNDER SECTIONS 179 AND 280F(B)(2))                                       Attachment
Revenue Service (99)   - ATTACH TO YOUR TAX RETURN. - SEE SEPARATE INSTRUCTIONS.                         Sequence No. 27

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 __________________

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)

                                                                  (e) Depreciation  (f) Cost or other  (g) Gain or (loss)
                                                                     allowed or        basis, plus      subtract (f) from
(a) Description  (b) Date acquired   (c) Date sold    (d) Gross    allowable since   improvements and      the sum of
  of property     (mo., day, yr.)   (mo., day, yr.)  sales price     acquisition      expense of sale      (d) and (e)
- ---------------  -----------------  ---------------  -----------  ----------------  -----------------  ------------------
2 _____________  _________________  _______________  ___________  ________________  _________________  __________________

  _____________  _________________  _______________  ___________  ________________  _________________  __________________

  _____________  _________________  _______________  ___________  ________________  _________________  __________________

  _____________  _________________  _______________  ___________  ________________  _________________  __________________

3    Gain, if any, from Form 4684, line 42......................................................     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
     appropriate 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.

     INDIVIDUALS, PARTNERS, S CORPORATION SHAREHOLDERS, AND 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 long-term capital gain on the Schedule D
     filed with your return 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 long-term capital gain on the Schedule D
     filed with your return (see instructions)..................................................     9 __________________

PART II ORDINARY GAINS AND LOSSES (See Instructions)

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 34 and 41a........................................    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 38, 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 "Form 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 __________________

FOR PAPERWORK REDUCTION ACT NOTICE, SEE SEPARATE INSTRUCTIONS.              Cat. No. 13086I              Form 4797 (2005)
</TABLE>


                                       26
<PAGE>

                  SAMPLE TAX FORMS FOR INDIVIDUAL UNIT HOLDERS

Form 4797 (2005)

                                                                          Page 2


PART III GAIN FROM DISPOSITION OF PROPERTY UNDER SECTIONS 1245, 1250, 1252,
     1254, AND 1255 (see instructions)

        <TABLE>
        <CAPTION>
                                                                                       (b) Date acquired (mo.,   (c) Date sold (mo.,
                                                                                              day, yr.)               day, yr.)
                                                                                       -----------------------   -------------------
        <S>                                                                            <C>                       <C>
       -19     (a) Description of section 1245, 1250, 1252, 1254, or 1255
      |            property:
      |    A________________________________________________________________________   _______________________   ___________________
      |    B________________________________________________________________________   _______________________   ___________________
      |    C________________________________________________________________________   _______________________   ___________________
      |    D________________________________________________________________________   _______________________   ___________________
 GAIN |
  OR  |                                                                               PROPERTY A  PROPERTY B  PROPERTY C  PROPERTY D
 LOSS |                                                                               ----------  ----------  ----------  ----------
UNITS |      THESE COLUMNS RELATE TO THE PROPERTIES ON LINES 19A
 SOLD |      THROUGH 19D. >
 GAIN | 20   Gross sales price (NOTE: See line 1 before completing.)..........    20  __________  __________  __________  __________
      |
      | 21   Cost or 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 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 an 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 deposits, 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  __________  __________  __________  __________

        SUMMARY OF PART III GAINS. Complete property columns A through D through line 29b before going to line 30.

        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 36.
             Enter the portion from other than casualty or theft on Form 4797, line 6...............................    32 _________

        PART IV  RECAPTURE AMOUNTS UNDER SECTIONS 179 AND 280F(b)(2) WHEN BUSINESS USE DROPS TO 50% OR LESS
                 (see instructions)

                                                                                                           (A) SECTION   (B) SECTION
                                                                                                                179       280F(B)(2)
                                                                                                           -----------   -----------
        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 (2005)


                                       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 2005.

            COMPUTATION OF INCOME AND EXPENSE FOR UNITS OWNED ON ALL
                          MONTHLY RECORD DATES IN 2005

                              SABINE ROYALTY TRUST
                            TAX COMPUTATION WORKSHEET

                                      2005

          (RETAIN THIS WORKPAPER AS PART OF YOUR PERMANENT TAX RECORDS)

                                     PART I

                               INCOME AND EXPENSE

<TABLE>
<CAPTION>
                                                     B
                                 A        INCOME/EXPENSE PER UNIT
                             NUMBER OF        FROM APPROPRIATE
                            UNITS OWNED         SCHEDULE(S)             C         WHERE TO REFLECT ON
ITEM                          (NOTE 1)            (NOTE 2)           TOTALS     2005 FORM 1040 (NOTE 3)
- ----                        -----------   -----------------------   -------   ---------------------------
<S>                         <C>           <C>                       <C>       <C>
Gross Royalty Income ....       100     x        $3.874801        = $387.48   Line 4, Part I, Schedule E
                                ---              ---------          -------
Severance Tax ...........       100     x        $ .304563        = $ 30.46   Line 16, Part I, Schedule E
                                ---              ---------          -------
Interest Income .........       100     x        $ .011804        = $  1.18   Line 1, Part I, Schedule B
                                ---              ---------          -------
Administrative Expense ..       100     x        $ .150250        = $ 15.03   Line 18, Part I, Schedule E
                                ---              ---------          -------
</TABLE>

                                     PART II

                             COST DEPLETION (NOTE 4)

<TABLE>
<CAPTION>
                    COST DEPLETION                             APPROPRIATE 2005
                  ALLOWABLE IN PRIOR   ADJUSTED BASIS FOR   COST DEPLETION FACTOR
    ASSUMED         CALENDAR YEARS       COST DEPLETION         PER DEPLETION
ORIGINAL BASIS*        (NOTE 5)             PURPOSES             SCHEDULE III       2005 COST DEPLETION**
- ---------------   ------------------   ------------------   ---------------------   ---------------------
<S>               <C>                  <C>                  <C>                     <C>
$2,100.00       -      $2,003.39     =       $96.61       x        .092058        =         $8.89
- ---------              ---------             ------                -------                  -----
</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 2005 Form 1040, line 20, Part 1, Schedule E (Note
     3).

                        See Page 5 for Applicable Notes.

(SRT 2005 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 2005.

<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   04-2-05    100    $1,275.00
</TABLE>

            COMPUTATION OF INCOME AND EXPENSE FOR UNITS SOLD IN 2005

                              SABINE ROYALTY TRUST
                            TAX COMPUTATION WORKSHEET

                                      2005

          (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>
                                                 B
                                          INCOME/EXPENSE
                                 A         PER UNIT FROM
                             NUMBER OF      APPROPRIATE
                            UNITS OWNED     SCHEDULE(S)       C         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    $.806709    = $80.67   Line 4, Part I, Schedule E
                                ---          --------      ------
Severance Tax ...........       100     x    $.063073    = $ 6.31   Line 16, Part I, Schedule E
                                ---          --------      ------
Interest Income .........       100     x    $.001825    = $  .18   Line 1, Part I, Schedule B
                                ---          --------      ------
Administrative Expense ..       100     x    $.048933    = $ 4.89   Line 18, Part I, Schedule E
                                ---          --------      ------
</TABLE>

                                     PART II

                             COST DEPLETION (NOTE 4)

<TABLE>
<CAPTION>
                    COST DEPLETION                             APPROPRIATE 2005
                  ALLOWABLE IN PRIOR   ADJUSTED BASIS FOR   COST DEPLETION FACTOR
    ASSUMED         CALENDAR YEARS       COST DEPLETION         PER DEPLETION
ORIGINAL BASIS*        (NOTE 5)             PURPOSES             SCHEDULE III       2005 COST DEPLETION**
- ---------------   ------------------   ------------------   ---------------------   ----------------------
<S>               <C>                  <C>                  <C>                     <C>
$2,100.00       -      $2,003.39     =       $96.61       x        .029761        =         $2.88
- ---------              ---------             ------                -------                  -----
</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 2005 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         2005 FORM 1040
NET SALES PRICE      (NOTE 6)        (LOSS)           (NOTE 3)
- ---------------   --------------   ---------   ---------------------
<S>               <C>              <C>         <C>
                                                     Form 4797,
                                               Part III, Lines 19-24
$1,275.00       -     $93.73     = $1,181.27       and Schedule D
- ---------             ------       ---------
</TABLE>

                        See Page 5 for Applicable Notes.

(SRT 2005 TAX)


                                       29
<PAGE>

                             COMPREHENSIVE EXAMPLE 2
                                   (CONTINUED)

                              SABINE ROYALTY TRUST

                     SUPPLEMENT TO TAX COMPUTATION WORKSHEET

                                      2005

                    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 18, 2005 through December 15, 2005. 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 ........  .263829   .305813  .237067    --    --    --    --     --       --        --        --        --      .806709
                    -------   -------  -------   ---   ---   ---   ---    ---      ---       ---       ---       ---      -------
Severance Tax ....  .015649   .026100  .021324    --    --    --    --     --       --        --        --        --      .063073
                    -------   -------  -------   ---   ---   ---   ---    ---      ---       ---       ---       ---      -------
Interest Income ..  .000556   .000624  .000645    --    --    --    --     --       --        --        --        --      .001825
                    -------   -------  -------   ---   ---   ---   ---    ---      ---       ---       ---       ---      -------
Administrative
   Expense .......  .017107   .018939  .012887    --    --    --    --     --       --        --        --        --      .048933
                    -------   -------  -------   ---   ---   ---   ---    ---      ---       ---       ---       ---      -------
</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 2005 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
2005 ...   3.874801   0.000000    0.304563   3.570238   0.011804   0.150250    0.000000   3.431792
</TABLE>

(SRT 2005 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 all states except Louisiana
provided for the execution of an escrow agreement by Sabine. The Trustee now
serves 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. 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 2005 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 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
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, as escrow agent, is
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 2005 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 2005 should have received a Form
1042-S from the Trust. The Form 1042-S will reflect the total Federal income tax
withheld from distributions. The amount reported on the Form 1042-S 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 1042-S,
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. In the case of a Foreign Taxpayer that is a
foreign corporation, a "branch profits tax" may be imposed at a 30 percent rate,
or a lower rate under an applicable treaty. This election, once made, is
generally irrevocable unless an application for revocation is approved by the
Internal Revenue Service or 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. As above, the Federal income tax withheld under FIRPTA should be
considered a credit by the Foreign Taxpayer in computing any Federal income tax
liabilities.

(SRT 2005 TAX)


                                       A-3
<PAGE>

     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.

     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. For most corporations, there
is a substantial underpayment when the understatement exceeds the lesser of (a)
10 percent of the tax required to be shown on the return (or, if greater,
$10,000) or (b) $10,000,000. 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

(SRT 2005 TAX)


                                       A-4

<PAGE>

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.

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 2005 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:

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

(SRT 2005 TAX)


                                       A-6
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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