markets. Such forward looking statements generally are accompanied by words such as "estimate," "expect," "predict," "anticipate," "goal," "should," "assume," "believe," or other words that convey the uncertainty of future events or outcomes.
Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008 For the quarter ended March 31, 2009, royalty income received by the Trust amounted to $7,713,387 compared to royalty income of $26,424,398 during the first quarter of 2008. The decrease in royalty income is primarily attributable to significant decreases in both oil and gas prices and related production. Interest income for the quarter ended March 31, 2009, was $2,235 compared to $33,694 during the first quarter of 2008. The decrease in interest income is primarily attributable to less funds available for investment and significantly lowered interest rates. General and administrative expenses during the first quarter of 2009 amounted to $442,416 compared to $354,756 during the first quarter of 2008. The increase in general and administrative expenses can be primarily attributed to increased printing expenses due to an overall increase in the number of unitholders.
These transactions resulted in distributable income for the quarter ended March 31, 2009 of $7,273,206 or $.16 per Unit of beneficial interest. Distributions of $.082862, $.043564 and $.029620 per Unit were made to Unit holders of record as of January 30, 2009, February 27, 2009 and March 31, 2009, respectively. For the first quarter of 2008, distributable income was $26,103,336, or $.56 per Unit of beneficial interest.

Royalty income for the Trust for the first quarter of the calendar year is associated with actual oil and gas production for the period of November and December 2008 and January 2009 from the properties from which the Trust's net overriding royalty interests ("Royalties") were carved. Oil and gas sales attributable to the Royalties and the properties from which the Royalties were carved are as follows:

                                                                First Quarter
                                                            2009            2008
  Production:
  Oil sales (Bbls)                                          125,302         204,881
  Gas sales (Mcf)                                           510,082       1,019,806

  Product Sales From Which The Royalties Were Carved:
  Oil:
  Total oil sales (Bbls)                                    283,752         285,590
  Average per day (Bbls)                                      3,084           3,104
  Average price per Bbl                                 $     41.10     $     87.80

  Gas:
  Total gas sales (Mcf)                                   1,506,867       1,548,791
  Average per day (Mcf)                                      16,371          16,835
  Average price per Mcf                                 $      4.87     $      9.49

The received price of oil decreased to an average price of $41.10 per Bbl in the first quarter of 2009, compared to $87.80 per Bbl in the first quarter of 2008 due to worldwide market variables. The Trustee has been advised by ConocoPhillips that for the period of August 1, 1993, through March 31, 2009, the oil from the Waddell Ranch properties was being sold under a competitive bid to a third party. The average price of gas decreased from $9.49 per Mcf in the first quarter of 2008 to $4.87 per Mcf in the first quarter of 2009 due to change in overall market variables.
Since the oil and gas sales attributable to the Royalties are based on an allocation formula that is dependent on such factors as price and cost (including capital expenditures), the production amounts in the Royalties section of the above table do not provide a meaningful comparison. Oil sales volumes decreased and gas sales volumes decreased from the Underlying Properties (as defined in the Trust's

Annual Report on Form 10-K for the year ended December 31, 2008) for the applicable period in 2009 compared to 2008.
Capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties during the first quarter of 2009 totaled $2.7 million as compared to $275,000 for the first quarter of 2008. ConocoPhillips has informed the Trustee that the 2009 capital expenditures budget has been revised to $43.5 million for the Waddell Ranch properties. The total amount of capital expenditures for 2008 was $24.1 million. Through the first quarter of 2009, capital expenditures of $2.7 million have been expended.
The Trustee has been advised that there were 1 workover well completed, 0 new wells completed, 0 new well in progress and 3 workover wells in progress during the three months ended March 31, 2009 as compared to 0 workover wells completed, 0 new wells completed, 1 new well in progress and 8 workover wells in progress for the three months ended March 31, 2008 on the Waddell Ranch properties. Lease operating expense and property taxes totaled $3.84 million for the first quarter of 2009, compared to $4.15 million in the first quarter of 2008 on the Waddell Ranch properties. This decrease is primarily attributable to normal operating fluctuations.
Calculation of Royalty Income
The Trust's royalty income is computed as a percentage of the net profit from the operation of the properties in which the Trust owns net overriding royalty interests. These percentages of net profits are 75% and 95% in the case of the Waddell Ranch properties and the Texas Royalty properties, respectively. Royalty income received by the Trust for the three months ended March 31, 2009 and 2008, respectively, were computed as shown in the table below:

                                                                   THREE MONTHS ENDED MARCH 31,
                                                           2009                                   2008
                                                WADDELL              TEXAS             WADDELL              TEXAS
                                                 RANCH              ROYALTY             RANCH              ROYALTY
                                               PROPERTIES         PROPERTIES          PROPERTIES         PROPERTIES
Gross proceeds of sales from the
Underlying Properties
Oil proceeds                                  $  8,114,430        $ 3,546,405        $ 17,663,910        $ 7,411,431
Gas proceeds                                     6,427,612            914,249          13,133,560          1,566,183

Total                                           14,542,043          4,460,655          30,797,470          8,977,614


Less:
Severance tax:
Oil                                                260,849            132,622             757,077            285,886
Gas                                                360,044             49,425             743,430            100,353
Other                                               49,063                  0              67,321
Lease operating expense and property
tax:
Oil and gas                                      4,514,171            737,998           4,145,222            362,645
Capital expenditures                             3,558,173                  -             274,948                  -

Total                                            8,742,300            920,045           5,987,998            748,884


Net profits                                      5,799,743          3,540,610          24,809,472          8,228,731
Net overriding royalty interests                        75 %               95 %                75 %               95 %

Royalty income                                $  4,349,807        $ 3,363,580        $ 18,607,104        $ 7,817,294

Critical Accounting Policies and Estimates The Trust'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 judgment areas in the application of accounting policies that currently affect the Trust's financial condition and results of operations.

Basis of Accounting
The financial statements of the Trust are prepared on a modified cash basis and are not intended to present financial positions and results of operations in conformity with accounting principles generally accepted in the United States of America ("GAAP"). Preparation of the Trust's financial statements on such basis includes the following:
• Royalty income and interest income are recorded in the period in which amounts are received by the Trust rather than in the period of production and accrual, respectively.

• General and administrative expenses recorded are based on liabilities paid and cash reserves established out of cash received.

• Amortization of the royalty interests is calculated on a unit-of-production basis and charged directly to trust corpus when revenues are received.

• Distributions to Unit holders are recorded when declared by the Trustee (see Note 1 to the Financial Statements).

The financial statements of the Trust differ from financial statements prepared in accordance with accounting principles generally accepted in the United States of America because royalty income is not accrued in the period of production, general and administrative expenses recorded are based on liabilities paid and cash reserves established rather than on accrual basis, and amortization of the royalty interests is not charged against operating results. 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. New Accounting Pronouncements
In July 2006, the FASB issued FASB Interpretation No. 48 ("FIN 48"), Accounting for Uncertainty in Income Taxes, which clarifies the accounting for uncertainty in income taxes recognized in the financial statements in accordance with SFAS No. 109, Accounting for Income Taxes. FIN 48 is effective for fiscal years beginning after December 15, 2006. The adoption of this statement did not have an effect on the Trust's financial statements.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles

(GAAP), and expands disclosures about fair value measurements. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007. The adoption of this statement did not have an effect on the Trust's financial statements.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities-Including an amendment of FASB Statement No. 115. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. This statement is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007. The adoption of this statement did not have an effect on the Trust's financial statements.
In December 2007 the FASB issued SFAS No. 141(R), Business Combinations. This statement requires the acquiring entity in a business combination to recognize the full fair value of assets acquired and liabilities assumed in the transaction (whether a full or partial acquisition); establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; requires expensing of most transaction and restructuring costs; and requires the acquirer to disclose to investors and other users all of the information needed to evaluate and understand the nature and financial effect of the business combination. This statement applies prospectively to business combinations for which the acquisition date is on or after January 1, 2009. The adoption of this statement did not have an effect on the Trust's financial statements.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements - an amendment of Accounting Research Bulletin No. 51. This statement requires reporting entities to present noncontrolling (minority) interests as equity (as opposed to as a liability or mezzanine equity) and provides guidance on the accounting for transactions between an entity and noncontrolling interests. This statement applies prospectively as of January 1, 2009, except for the presentation and disclosure requirements which will be applied retrospectively for all periods presented. The adoption of this statement did not have an effect on the Trust's financial statements. In March 2008, the FASB issued FASB Statement No. 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133" (SFAS No. 161), effective for fiscal years and interim periods beginning after November 15, 2008, with early adoption allowed. SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133 with the intent to provide users of financial statements with an enhanced understanding of an entity's use of derivative instruments and the effect of those derivative instruments on an entity's financial statements. The adoption of this statement did not have an effect on the Trust's financial statements.

In May 2008, the FASB issued Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles. This statement identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements in conformity with GAAP, and is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The Trustee does not believe that the adoption of this statement will have a material effect on the Trust's financial statements.
In April 2009, the FASB issued FSP FAS115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments. This FASB Staff Position (FSP) amends the other-than-temporary impairment guidance in GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. This FSP does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. This statement is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The adoption of these statements did not have a material effect on the Trust's financial statements. Revenue Recognition
Revenues from the royalty interests are recognized in the period in which amounts are received by the Trust. Royalty income received by the Trust in a given calendar year will generally reflect the proceeds, on an entitlement basis, from natural gas produced and sold for the twelve-month period ended October 31st in that calendar year. Royalty income received by the Trust in the first quarter of 2009 generally reflects the proceeds associated with actual oil and gas production for the period of November 2008 through January 2009. Reserve Disclosure
As of January 1, 2009, independent petroleum engineers estimated the net proved reserves attributable to the royalty interests. In accordance with Statement of Financial Standards No. 69, "Disclosures About Oil and Gas Producing Activities," 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 reserves estimates.
Contingencies
Contingencies related to the Underlying 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 March 31, 2009. Use of Estimates
The preparation of financial statements in conformity with the basis of accounting described above requires management to make estimates and assumptions that affect the reported amounts of certain

assets, liabilities, revenues and expenses as of and for the reporting period. Actual results may differ from such estimates. Pending Securities and Exchange Commission Rule In December 2008, the Securities and Exchange Commission (the "SEC") released Final Rule, Modernization of Oil and Gas Reporting. The new disclosure requirements include provisions that permit the use of new technologies to determine proved reserves if those technologies have been demonstrated empirically to lead to reliable conclusions about reserves volumes. The new requirements also will allow companies to disclose their probable and possible reserves to investors. In addition, the new disclosure requirements require companies to: (a) report the independence and qualifications of its reserves preparer or auditor; (b) file reports when a third party is relied upon to prepare reserves estimates or conducts a reserves audit; and (c) report oil and gas reserves using an average price based upon the prior 12-month period rather than year-end prices. The new disclosure requirements are effective for financial statements for fiscal years ending on or after December 31, 2009. The effect of adopting the SEC rules has not been determined, but it is not expected to have a significant effect on our reported financial position or distributable income.
Item 3. Qualitative and Quantitative Disclosures About Market Risk There have been no material changes in the Trust's market risk, as disclosed in the Trust's Annual Report on Form 10-K for the fiscal year ended December 31, 2008.
Item 4. Controls and Procedures
As of the end of the period covered by this report, the Trustee carried out an evaluation of the effectiveness of the design and operation of the Trust's disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. Based upon that evaluation, the Trustee concluded that the Trust's disclosure control and procedures are effective in timely alerting the Trustee to material information relating to the Trust required to be included in the Trust's periodic filings with the Securities and Exchange Commission. In its evaluation of disclosure controls and procedures, the Trustee has relied, to the extent considered reasonable, on information provided by Burlington Resources Oil & Gas Company LP, the owner of the Waddell Ranch properties, and Riverhill Energy Corporation, the owner of the Texas Royalty properties. There has not been any change in the Trust's internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Trust's internal control over financial reporting.