Forward Looking Information
Certain information included in this report contains, and other materials filed or to be filed by the Trust with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by the Trust) may contain or include, forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Such forward looking statements may be or may concern, among other things, capital expenditures, drilling activity, development activities, production efforts and volumes, hydrocarbon prices and the results thereof, and regulatory matters. 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's control, that may cause such expectations not to be realized, including, among other things, factors such as actual oil and gas prices and the recoverability of reserves, capital expenditures, general economic conditions, actions and policies of petroleum-producing nations and other changes in the domestic and international energy 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 June 30, 2009 Compared to Three Months Ended June 30, 2008 For the quarter ended June 30, 2009 royalty income received by the Trust amounted to $6,725,240 compared to royalty income of $27,260,526 during the second 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 June 30, 2009, was $447 compared to $21,520 during the second 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 second quarter of 2009 amounted to $487,556 compared to $359,490 during the second quarter of 2008. The increase in general and administrative expenses can be primarily attributed to increased printing expenses and other professional expenses.
These transactions resulted in distributable income for the quarter ended June 30, 2009 of $6,238,130 or $.133840 per Unit of beneficial interest. Distributions of $.036633, $.050173 and $.047032 per Unit were made to Unit holders of record as of April 30, 2009, May 29, 2009 and

June 30, 2009, respectively. For the second quarter of 2008, distributable income was $26,922,556, or $.58 per Unit of beneficial interest. Royalty income for the Trust for the second quarter of the calendar year is associated with actual oil and gas production for the period of February, March and April of 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:

                                                               Second Quarter
                                                            2009            2008
  Royalties:
  Oil sales (Bbls)                                          127,053         194,164
  Gas sales (Mcf)                                           480,941         945,837

  Product Sales From Which The Royalties Were Carved:
  Oil:
  Total oil sales (Bbls)                                    262,962         272,317
  Average per day (Bbls)                                      2,955           3,026
  Average price per Bbl                                 $     39.47     $     97.94

  Gas:
  Total gas sales (Mcf)                                   1,320,596       1,464,597
  Average per day (Mcf)                                      14,838          16,273
  Average price per Mcf                                 $      3.90     $     10.17

The average received price of oil decreased to an average price per barrel of $39.47 per Bbl in the second quarter of 2009 compared to $97.94 per Bbl in the second quarter of 2008 due to worldwide market variables. The Trustee has been advised by ConocoPhillips that for the period of August 1, 1993, through June 30, 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 $10.17 per Mcf in the second quarter of 2008 to $3.90 per Mcf in the second 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 increased and gas sales volumes increased 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 second quarter of 2009 totaled $1.9 million as compared to $1.4 million to the Trust for the second quarter of 2008. ConocoPhillips has informed the Trustee that the 2009 capital expenditures budget has been revised to $27.1 million (gross) for the Waddell Ranch

properties. The total amount of capital expenditures for 2008 was $24.1 million. Through the second quarter of 2009, capital expenditures of $11.4 million
(gross) have been expended. The Trustee has been advised that there was 1 well completed and 2 wells in progress, and 11 workover wells completed and 10 workover wells in progress, during the three months ended June 30, 2009 as compared to 0 wells completed, 2 wells in progress, 8 workover wells completed and 10 workover wells in progress for the three months ended June 30, 2008 on the Waddell Ranch properties. There were no facility projects completed and three projects in progress for the second quarter of 2009. Lease operating expenses and property taxes totaled $4.5 million for the second quarter of 2009, compared to $3.9 million in the second quarter of 2008 on the Waddell Ranch properties. This increase is primarily attributable to increased ad valorem taxes and an increase in the project management fee. Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008 For the six months ended June 30, 2009, royalty income received by the Trust amounted to $14,438,626 compared to royalty income of $53,684,924 for the six months ended June 30, 2008. The decrease in royalty income is primarily due to a substantial decrease in oil and gas prices in the first six months of 2009, compared to the first six months in 2008. Interest income for the six months ended June 30, 2009 was $2,682 compared to $55,214 for the six months ended June 30, 2008. The decrease in interest income is attributable primarily to lower interest rates. General and administrative expenses for the six months ended June 30, 2009 were $929,972. During the six months ended June 30, 2008, general and administrative expenses were $714,246. The increase in general and administrative expenses is primarily due to enhanced Unit holder reporting and other professional expenses.
These transactions resulted in distributable income for the six months ended June 30, 2009 of $13,511,336, or $.289888, per Unit. For the six months ended June 30, 2008, distributable income was $53,025,892, or $1.14, per Unit. Royalty income for the Trust for the six months ended June 30, 2009 is associated with actual oil and gas production for the period November 2008 through April 2009 from the properties from which the Royalties were carved. Oil and gas production attributable to the Royalties and the properties from which the Royalties were carved are as follows:

                                                             Six Months Ended
                                                           2009            2008
    Royalties:
    Oil sales (Bbls)                                       252,355         399,045
    Gas sales (Mcf)                                        991,023       1,965,643

    Properties From Which The Royalties Were Carved:
    Oil:
    Total oil sales (Bbls)                                 546,714         557,907
    Average per day (Bbls)                                   3,021           3,065
    Average price per Bbl                              $     40.31     $     92.75

    Gas:
    Total gas sales (Mcf)                                2,826,763       3,013,388
    Average per day (Mcf)                                   15,617          16,557
    Average price per Mcf                              $      4.42     $      9.82

The average received price of oil decreased during the six months ended June 30, 2009 to $40.31 per barrel compared to $92.75 per barrel for the same period in 2008. The decrease in the average price of oil is primarily due to decreased worldwide market demand in 2009. The decrease in the average price of gas from $9.82 per Mcf for the six months ended June 30, 2008 to $4.42 per Mcf for the six months ended June 30, 2009 is primarily the result of a decrease in the spot prices of natural gas.
Since the oil and gas sales volumes 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. The oil and gas sales volumes from the properties from which the Royalties are carved have declined for the applicable period of 2009 compared to 2008.
Capital expenditures for the Waddell Ranch properties for the six months ended June 30, 2009 totaled $5.5 million compared to $1.7 million net to the Trust for the same period in 2008. ConocoPhillips has previously advised the Trust that the remaining 2009 capital expenditures budget for the Waddell Ranch properties is $15.7 million (gross).
The Trustee has been advised that 6 wells were drilled and completed and 2 wells to be completed on the Waddell Ranch properties during the six months ended June 30, 2009, as compared to no wells drilled and completed and 2 wells to be completed on the Waddell Ranch properties during the six months ended June 30, 2008. Approximately 13 workover wells were completed and approximately 10 workover wells were in progress as of June 30, 2009.
Lease operating expense and property taxes totaled $9.0 million for the six months ended June 30, 2009 compared to $8.0 million for the same period in 2008. The increase in lease operating expense is primarily attributable to the increase in the project management fee.

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 June 30, 2009 and 2008,
respectively, were computed as shown in the table below:

                                                                   Three Months Ended June 30,
                                                           2009                                   2008
                                                Waddell              Texas             Waddell              Texas
                                                 Ranch              Royalty             Ranch              Royalty
                                               Properties         Properties          Properties         Properties
Gross proceeds of sales from the
Underlying Properties
Oil proceeds                                  $  7,214,806        $ 3,164,894        $ 18,469,698        $ 8,200,052
Gas proceeds                                     4,347,466            803,528          13,142,139          1,752,905

Total                                           11,562,272          3,968,422          31,611,837          9,952,957


Less:
Severance tax:
Oil                                                273,978            119,771             787,842            315,386
Gas                                                216,299             49,470             765,357            118,635
Lease operating expenses and property
tax:
Oil and gas                                      4,520,015            360,000           3,891,813            330,000
Other                                               37,775                  -              70,016                  -
Capital expenditures                             1,903,516                  -           1,388,760                  -

Total                                            6,951,583            529,240           6,903,788            764,021

Net profits                                      4,610,689          3,439,182          24,708,049          9,188,936
Net overriding royalty interests                        75 %               95 %                75 %               95 %

Royalty income                                   3,458,017          3,267,223          18,531,037          8,729,489

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 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 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 a material 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 a material 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 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.
In April 2009, the FASB issued FSP FAS 107-1, Interim Disclosures about Fair Value of Financial Instruments. This FSP amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. The adoption of this statement did not have an effect on the Trust's financial statements.

In May 2009, the FASB issued SFAS No. 165, Subsequent Events, which establishes accounting and reporting standards for events that occur after the balance sheet date but before financial statements are issued or are available to be issued and requires the disclosure of the date through which a company has evaluated subsequent events. This statement is effective for the Trust for the period ended June 30, 2009 and the adoption did not have an impact on the financial statements. Refer to footnote 4 for required disclosures.
In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assets, which changes the way entities account for securitizations. The new standard is effective for the Trust on January 1, 2010 and the adoption is not expected to have a significant impact on the financial statements. In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R), which changes the way entities account for special-purpose entities. The new standard is effective for the Trust on January 1, 2010 and the adoption is not expected to have a significant impact on the financial statements. In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles-a replacement of FASB Statement No. 162. The Codification is effective July 1, 2009 at which point all then-existing non-SEC accounting and reporting standards will be superseded. The references to the Codification will be reflected in the Trust's third quarter 2009 financial statements. This will not have an impact to the 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 second quarter of 2009 generally reflects the proceeds associated with actual oil and gas production for the period of February 2008 through April 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 June 30, 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 recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Trust in the reports that it files or submits under the Securities Exchange Act of 1934 and are effective in ensuring that information required to be disclosed by the Trust in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the Trustee to allow timely decisions regarding required disclosure. 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.