Forward-Looking Information

Certain information included in this Quarterly Report on Form 10-Q 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 and Section 27A of the Securities Act of 1933. Such forward-looking statements may be or may concern, among other things, capital expenditures, drilling activity, development activities, production efforts and volumes, hydrocarbon prices, estimated future net revenues, estimates of reserves, the results of the Trust's activities, and regulatory matters. Such forward-looking statements generally are accompanied by words such as "may," "will," "estimate," "expect," "predict," "project," "anticipate," "goal," "should," "assume," "believe," "plan," "intend," or other words that convey the uncertainty of future events or outcomes. Such statements reflect the current view of Burlington Resources Oil & Gas Company LP ("BROG"), the working interest owner, with respect to future events; are based on an assessment of, and are subject to, a variety of factors deemed relevant by the Trustee and BROG; and involve risks and uncertainties. These risks and uncertainties include volatility of oil and gas prices, product supply and demand, competition, regulation or government action, litigation and uncertainties about estimates of reserves. Should one or more of these risks or uncertainties occur, actual results may vary materially and adversely from those anticipated.

Business Overview

The Trust is an express trust created under the laws of the state of Texas by the San Juan Basin Royalty Trust Indenture (the "Original Indenture") entered into on November 3, 1980 between Southland Royalty Company ("Southland Royalty") and The Fort Worth National Bank. Effective as of September 30, 2002, the Original Indenture was amended and restated (the Original Indenture, as amended and restated, the "First Restated Indenture") and, effective as of December 12, 2007 the First Restated Indenture was amended and restated (the First Restated Indenture, as amended and restated, the "Indenture"). The Trustee of the Trust is Compass Bank (as a result of the merger discussed below).

On October 23, 1980, the stockholders of Southland Royalty approved and authorized that company's conveyance of a 75% net overriding royalty interest (equivalent to a net profits interest) to the Trust for the benefit of the stockholders of Southland Royalty of record at the close of business on the date of the conveyance (the "Royalty") carved out of that company's oil and gas leasehold and royalty interests (the "Underlying Properties") in properties located in the San Juan Basin of northwestern New Mexico. Pursuant to the Net Overriding Royalty Conveyance (the "Conveyance") the Royalty was transferred to the Trust on November 3, 1980 effective as to production from and after November 1, 1980 at 7:00 a.m.

As a result of a merger on March 24, 2006, Compass Bank succeeded TexasBank as Trustee of the Trust. On September 7, 2007, Compass Bank's parent company, Compass Bancshares, Inc., was acquired by and is now a wholly-owned subsidiary of Banco Bilbao Vizcaya Argentaria, S.A.

The Royalty constitutes the principal asset of the Trust. The beneficial interests in the Royalty are divided into that number of Units of Beneficial Interest (the "Units") of the Trust equal to the number of shares of the common stock of Southland Royalty outstanding as of the close of business on November 3, 1980. Each stockholder of Southland Royalty of record at the close of business on November 3, 1980 received one freely tradable Unit for each share of the common stock of Southland Royalty then held. Holders of Units are referred to herein as "Unit Holders." Subsequent to the Conveyance of the Royalty, through a series of assignments and mergers, Southland Royalty's successor became BROG. On March 31, 2006, a subsidiary of ConocoPhillips completed its acquisition of Burlington Resources, Inc., BROG's parent. As a result, ConocoPhillips became the parent of Burlington Resources, Inc., which in turn, is the parent of BROG.

The function of the Trustee is to collect the net proceeds attributable to the Royalty ("Royalty Income"), to pay all expenses and charges of the Trust and distribute the remaining available income to the Unit Holders. The Trust does not operate the Underlying Properties and, in fact, is not empowered to carry on any business activity. The Trust has no employees, officers or directors. All administrative functions of the Trust are performed by the Trustee.

BROG is the principal operator of the Underlying Properties. A very high percentage of the Royalty Income is attributable to the production and sale by BROG of natural gas from the Underlying Properties. Accordingly, the market price for natural gas produced and sold from the San Juan Basin heavily influences the amount of Royalty Income distributed by the Trust and, by extension, the price of the Units.

Three Months Ended June 30, 2009 and 2008

The Trust received Royalty income of $2,474,109 and interest income of $806 during the second quarter of 2009. There was no change in cash reserves. After deducting administrative expenses of $686,688, distributable income for the quarter was $1,788,227 ($0.038367 per Unit). In the second quarter of 2008, Royalty income was $35,612,146, interest income was $19,733, there was no change in cash reserves, administrative expenses were $592,778 and distributable income was $35,039,101 ($0.751770 per Unit). Based on 46,608,796 Units outstanding, the per-Unit distributions during the second quarter of 2009 were as follows:

                            April           $ .006145
                            May               .026271
                            June              .005951

                            Quarter Total   $ .038367

The Royalty income distributed in the second quarter of 2009 was lower than that distributed in the second quarter of 2008, primarily due to a decrease in the average gas price from $8.51 per Mcf for the second quarter of 2008 to $2.82 per Mcf for the second quarter of 2009. Gas volumes, however, increased in the quarter ended June 30, 2009 as compared to the quarter ended June 30, 2008. Interest income was lower for the quarter ended June 30, 2009 as compared to the quarter ended June 30, 2008, primarily due to a decrease in funds available for investment and to lower interest rates. Administrative expenses were higher in 2009 primarily as a result of differences in timing in the receipt and payment of these expenses and also to increased costs associated with the litigation described below.

The capital costs attributable to the Underlying Properties for the second quarter of 2009 and deducted by BROG in calculating Royalty income were approximately $11 million. BROG has informed the Trust that the 2009 budget for capital expenditures for the Underlying Properties is $25.2 million. In addition, BROG estimates that during 2009 it will incur capital expenses in the amount of approximately $12.1 million attributable to the capital budgets for 2008 and prior years. Approximately 12% of the planned expenditures attributable to the 2009 budget will be on Fruitland Coal formation projects with the remainder to be spent on conventional projects. BROG reports that based on its actual capital requirements, the pace of regulatory approvals, the mix of projects and swings in the price of natural gas, the actual capital expenditures for 2009 could range from $10 million to $45 million.

BROG anticipates 431 projects in 2009 at an estimated cost of $25.2 million. Approximately $6 million of that budget is allocable to 49 new wells, including 39 wells scheduled to be dually completed in the Mesaverde and Dakota formations and four wells projected to be drilled to formations producing coal seam gas. Approximately $7.1 million will be spent on workovers and facilities projects. Of the $12.1 million attributable to the budgets for prior years, approximately $6.9 million is allocable to new wells, and the $5.2 million balance will be applied to miscellaneous capital projects such as workovers and operated facility projects. BROG also anticipates that the possible implementation of new rules minimizing surface disturbances, requiring the implementation of closed-loop systems for the disposal of drilling fluids and cuttings, and restricting the use of open reserve pits could reduce the number of projects due to increased compliance costs.

BROG has informed the Trust that lease operating expenses and property taxes were $7,813,298 and $213,289, respectively, for the second quarter of 2009, as compared to $7,736,102 and $276,732, respectively, for the second quarter of 2008. BROG reports that lease operating expenses were higher in the second quarter of 2009 compared to the second quarter of 2008 primarily because demand-related increases in the cost of contract services and materials have not yet been mitigated by the decline in natural gas sales prices. New drilling results in increases in salt water disposal as well as compression and other operating costs. In addition, many joint operating agreements call for the increase or decrease in rates charged for the drilling and operation of wells based upon an overhead adjustment factor published annually by the Council for Petroleum Accountants Societies. That factor was set at +7.5% effective as of April 1, 2009.

BROG has reported to the Trustee that during the second quarter of 2009, eight gross (5.71 net) coal seam wells and 19 gross (4.93 net) conventional wells were completed on the Underlying Properties. Eight gross (4.03 net) coal seam wells and 20 gross (4.83 net) conventional wells were in progress at June 30, 2009.

There were, based on recently revised information from BROG, 15 gross (6.84 net) coal seam wells and 25 gross (1.88 net) conventional wells completed on the Underlying Properties as of June 30, 2008. As revised by BROG, one gross (0.84 net) coal seam well and 11 gross (0.96 net) conventional wells were in progress as of June 30, 2008.

There were 3,903 gross (1,137 net) producing wells being operated subject to the Royalty as of December 31, 2008, calculated on a well bore basis and not including multiple completions as separate wells.

"Gross" acres or wells, for purposes of this discussion, means the entire ownership interest of all parties in such properties, and BROG's interest therein is referred to as the "net" acres or wells. A "payadd" is the completion of an additional productive interval in an existing completed zone in a well.

Royalty income for the quarter ended June 30, 2009 is associated with actual gas and oil production during February 2009 through April 2009 from the Underlying Properties. Gas and oil sales from the Underlying Properties for the three months ended June 30, 2009 and 2008 were as follows:

                                              Three Months Ended
                                                   June 30,
                                             2009            2008

                Gas:
                Total sales (Mcf)           8,511,072       7,837,532
                Mcf per day                    95,630          87,084
                Average price (per Mcf)   $      2.82     $      8.51
                Oil:
                Total sales (Bbls)             15,293          10,677
                Bbls per day                      172             119
                Average price (per Bbl)   $     36.58     $     94.81

Gas and oil sales attributable to the Royalty for the quarters ended June 30, 2009 and 2008 were as follows:

                                           Three Months Ended
                                                June 30,
                                          2009           2008

                     Gas sales (Mcf)      949,249       4,529,496
                     Oil sales (Bbls)       1,514           6,141

Sales volumes attributable to the Royalty are determined by dividing the net profits received by the Trust and attributable to oil and gas, respectively, by the prices received for sales volumes from the Underlying Properties, taking into consideration production taxes attributable to the Underlying Properties. Since the oil and gas sales attributable to the Royalty are based on an allocation formula that is dependent on such factors as price and cost, including capital expenditures, the aggregate production volumes from the Underlying Properties may not provide a meaningful comparison to volumes attributable to the Royalty.

During the second quarter of 2009, average gas prices were $5.69 per Mcf lower than the average prices reported during the second quarter of 2008 due in part to the global economic contraction which has depressed energy demand and contributed to lower natural gas wellhead prices, including the posted index prices applicable to gas sold from the San Juan Basin. The average price per barrel of oil during the second quarter of 2009 was $58.23 per barrel lower than that received for the second quarter of 2008.

BROG previously entered into three contracts for the sale of all volumes of gas produced from the Underlying Properties to ChevronTexaco Natural Gas, a division of Chevron U.S.A. Inc. ("ChevronTexaco"), Coral Energy Resources, L.P. ("Coral"), and PNM Gas Services ("PNM"), respectively. In March 2008, both ChevronTexaco and Coral notified BROG of their election to terminate their respective contracts effective March 31, 2009. Requests for

proposal were circulated to potential purchasers of the packages of gas covered by the expiring contracts. Neither BROG nor PNM gave notice of termination with respect to the PNM contract and, by agreement of the parties, the term of that contract has been extended through at least March 31, 2011. On December 11, 2008, the New Mexico Public Regulatory Commission approved the sale of the gas utility assets of PNM to New Mexico Gas Company, Inc. ("NMGC") and, effective as of January 30, 2009, the PNM contract was assigned to and assumed by NMGC.

BROG has now entered into four new contracts effective April 1, 2009, for the sale of all gas produced from the Underlying Properties other than the gas covered by the NMGC contract. The new purchasers are Chevron Natural Gas, a division of Chevron USA, Inc., Pacific Gas and Electric Company, BP Energy Company and Macquarie Cook Energy LLC. All four of the new contracts and the pre-existing NMGC contract provide for (i) the delivery of such gas at various delivery points through March 31, 2011 and from year-to-year thereafter, until terminated by either party on 12 months' notice; and (ii) the sale of such gas at prices which fluctuate in accordance with the published indices for gas sold in the San Juan Basin of northwestern New Mexico. Although the primary term of the Chevron contract continues until March 31, 2011, a portion of that contract will be remarketed for sale after March 2010.

Confidentiality agreements with purchasers of gas produced from the Underlying Properties prohibit public disclosure of certain terms and conditions of gas sales contracts with those entities, including specific pricing terms and gas receipt points. Such disclosure could compromise the ability to compete effectively in the marketplace for the sale of gas produced from the Underlying Properties.

Six Months Ended June 30, 2009 and 2008

For the six months ended June 30, 2009, the Trust received Royalty income of $12,024,685 and interest income of $3,411. There was no change in cash reserves. After deducting administrative expenses of $1,270,433, distributable income was $10,757,663 ($0.230807 per Unit) for the six months ended June 30, 2009. For the six months ended June 30, 2008, the Trust received Royalty income of $61,188,564 and interest income of $184,112. There was no change in cash reserves. After deducting administrative expenses of $1,202,852, distributable income was $60,169,824 ($1.290954 per Unit) for the six months ended June 30, 2008.

The decrease in distributable income from 2008 to 2009 resulted primarily from lower gas prices during the first half of 2009. Gas volumes, however, increased in the six months ended June 30, 2009. Interest earnings were lower for the six months ended June 30, 2009, as compared to the six months ended June 30, 2008, primarily due to a decrease in funds available for investment and lower interest rates. General and administrative expenses were higher for the six months ended June 30, 2009, as compared to the same period in 2008, primarily as a result of differences in timing in the receipt and payment of the expenses and also to increased costs associated with the litigation described below.

During the first six months of 2009, $241,000 was included in calculating net proceeds paid to the Trust as a result of the ongoing compliance audit process. All of this amount was paid during the first quarter of 2009. During the first six months of 2008, as part of the negotiations between the Trust and BROG concerning a number of revenue and expense items, a net of $128,827 was paid to the Trust by BROG as interest on the late payment of gross proceeds. All of this amount was paid during the first quarter of 2008.

Capital expenditures incurred by BROG, attributable to the Underlying Properties, for the first six months of 2009 amounted to approximately $20.9 million. Capital expenditures were approximately $12.3 million for the first six months of 2008. For the first six months of 2009, lease operating expenses and property taxes totaled $16,806,125 and $490,021, respectively, as compared to $15,820,090 and $522,028, respectively, for the first six months of 2008.

BROG has reported to the Trustee that during the six months ended June 30, 2009, 20 gross (11.32 net) coal seam wells and 46 gross (8.70 net) conventional wells were completed on the Underlying Properties. There were 18 gross (7.66 net) coal seam wells and 48 gross (2.29 net) conventional wells completed on the Underlying Properties in the six months ending June 30, 2008.

Royalty income for the six months ended June 30, 2009 is associated with actual gas and oil production during November 2008 through April 2009 from the Underlying Properties. Gas and oil sales from the Underlying Properties for the six months ended June 30, 2009 and 2008 were as follows:

                                               Six Months Ended
                                                   June 30,
                                             2009             2008

               Gas:
               Total sales (Mcf)           17,069,622       16,396,649
               Mcf per day                     94,307           90,091
               Average price (per Mcf)   $       3.43     $       7.71
               Oil:
               Total Sales (Bbls)              26,275           23,375
               Bbls per day                       145              128
               Average price (per Bbl)   $      38.22     $      91.43

Gas and oil sales attributable to the Royalty for the six months ended June 30, 2009 and 2008 were as follows:

                                            Six Months Ended
                                                June 30,
                                          2009            2008

                    Gas sales (Mcf)      3,471,332       9,253,319
                    Oil sales (Bbls)         4,816          13,063

During the first six months of 2009 gas and oil prices were lower than during the first six months of 2008. Since the oil and gas sales attributable to the Royalty are based on an allocation formula that is dependant on such factors as price and cost, including capital expenditures, the aggregate sales amounts from the Underlying Properties may not provide a meaningful comparison to sales attributable to the Royalty.

Calculation of Royalty Income

Royalty income received by the Trust for the three months and six months ended June 30, 2009 and 2008, respectively, was computed as shown in the following table:

                         CALCULATION OF ROYALTY INCOME


                                         Three Months Ended                   Six Months Ended
                                              June 30,                            June 30,
                                       2009              2008              2009              2008

Gross proceeds of sales from the
Underlying Properties:
Gas proceeds                       $ 24,014,580      $ 66,685,312      $ 58,609,441      $ 119,793,526 (1)
Oil proceeds                            559,382         1,012,317         1,004,117          2,137,110

Total                                24,573,962        67,697,629        59,613,558        121,930,636
Less production costs:
Severance tax - gas                   2,178,181         6,028,156         5,304,435         11,464,632
Severance tax - oil                      56,179            99,567            98,975            217,479
Other                                     1,020                               1,020
Lease operating expense and
property tax                          8,026,587         8,012,834        17,296,146         16,342,118
Capital expenditures                 11,013,183         6,074,210        20,880,069         12,321,655

Total                                21,275,150        20,214,767        43,580,645         40,345,884

Net profits                           3,298,812        47,482,862        16,032,913         81,584,752
Net overriding royalty interest              75 %              75 %              75 %               75 %

Royalty income                     $  2,474,109      $ 35,612,146      $ 12,024,685      $  61,188,564

(1) In March 2008, gas proceeds were reduced by $6,562,104 as the amount BROG determined to be the Trust's portion of BROG's settlement of a legal matter with the Minerals Management Service and the Bureau of Indian Affairs.

Contractual Obligations

Under the Indenture governing the Trust, the Trustee is entitled to an administrative fee for its administrative services and the preparation of quarterly and annual statements of: (i) 1/20 of 1% of the first $100 million of the annual gross revenue of the Trust, and 1/30 of 1% of the annual gross revenue of the Trust in excess of $100 million and (ii) the Trustee's standard hourly rates for time in excess of 300 hours annually, provided that the administrative fee due under items (i) and (ii) above will not be less than $36,000 per year (as adjusted annually to reflect the increase (if any) in the Producers Price Index as published by the U.S. Department of Labor, Bureau of Labor Statistics, since December 31, 2003).

Effects of Securities Regulation

As a publicly-traded trust listed on the New York Stock Exchange (the "NYSE"), the Trust is and will continue to be subject to extensive regulation under, among others, the Securities Act of 1933, the Securities Exchange Act of 1934 (which contains many of the provisions of the Sarbanes-Oxley Act of 2002), and the rules and regulations of the NYSE. Issuers failing to comply with such authorities risk serious consequences, including criminal as well as civil and administrative penalties. In most instances, these laws, rules, and regulations do not specifically address their applicability to publicly-traded trusts, such as the Trust. In particular, the Sarbanes-Oxley Act of 2002 provides for the adoption by the Securities and Exchange Commission (the "Commission") and NYSE of certain rules and regulations that may be impossible for the Trust to literally satisfy because of its nature as a pass-through trust. It is

the Trustee's intention to follow the Commission's and NYSE's rulemaking closely, attempt to comply with such rules and regulations and, where appropriate, request relief from these rules and regulations. However, if the Trust is unable to comply with such rules and regulations or to obtain appropriate relief, the Trust may be required to expend presently unknown but potentially material costs to amend the Indenture that governs the Trust to allow for compliance with such rules and regulations. To date, the rules implementing the Sarbanes-Oxley Act of 2002 have generally made appropriate accommodation for passive entities such as the Trust.

Critical Accounting Policies

In accordance with the Commission's staff accounting bulletins and consistent with other royalty trusts, the financial statements of the Trust are prepared on the following basis:

• Royalty income recorded for a month is the amount computed and paid pursuant to the Conveyance by BROG to the Trustee for the Trust. Royalty income consists of the proceeds received by BROG from the sale of production from the Underlying Properties less accrued production costs, development and drilling costs, applicable taxes, operating charges, and other costs and deductions, multiplied by 75%. The calculation of net proceeds by BROG for any month includes adjustments to proceeds and costs for prior months and impacts the Royalty income paid to the Trust and the distribution to Unit Holders for that month.

• Trust expenses recorded are based on liabilities paid and cash reserves established from Royalty income for liabilities and contingencies.

• Distributions to Unit Holders are recorded when declared by the Trustee.

• The Conveyance which transferred the Royalty to the Trust provides that any excess of development and production costs applicable to the Underlying Properties over gross proceeds from such properties must be recovered from future net proceeds before Royalty income is again paid to the Trust.

The financial statements of the Trust differ from financial statements prepared in accordance with GAAP because revenues are not accrued in the month of production; certain cash reserves may be established for contingencies which would not be accrued in financial statements prepared in accordance with GAAP; expenses are recorded when paid instead of when incurred; and amortization of the Royalty calculated on a unit-of-production basis is charged directly to the Trust corpus instead of an expense.