Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read together with (i) the factors discussed in Item 1A "Risk Factors" of Part I of our Annual Report to the Securities and Exchange Commission on Form 10-K for the year ended December 31, 2011, (ii) the factors discussed in Part II, Item 1A "Risk Factors," if any, of this Quarterly Report on Form 10-Q and (iii) the Financial Statements, including the Notes thereto, and the other financial information appearing elsewhere in this Report. Period-to-period comparisons of financial data are not necessarily indicative, and therefore should not be relied upon as indicators, of the Trust's future performance. Words or phrases such as "does not believe" and "believes", or similar expressions, when used in this Form 10-Q or other filings with the Securities and Exchange Commission, are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.

Results of Operations for the Quarter Ended March 31, 2012 Compared to the Quarter Ended March 31, 2011

Earnings per Sub-share certificate were $.65 for the first quarter of 2012 compared to $.35 for the first quarter of 2011. Total operating and investing revenues for the first quarter of 2012 were $9,580,079 compared to $5,720,108 for the first quarter of 2011, an increase of 67.5%. This increase in revenue and earnings was due primarily to increases in land sales, easement and sundry income and oil royalty revenue, which were partially offset by decreases in gas royalty revenue and interest income from notes receivable.

In the first quarter of 2012 the Trust sold approximately 5,460 acres for a total of $3,567,000, or approximately $653 per acre. In the first quarter of 2011 the Trust sold approximately 68 acres for a total of $511,500, or approximately $7,500 per acre.

Rentals, royalties and sundry income were $5,825,521 during the first quarter of 2012 compared to $4,955,256 during the first quarter of 2011, an increase of 17.6%. This increase resulted primarily from increases in easement and sundry income and oil royalty revenue.

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Oil and gas royalty revenue was $3,433,826 for the first quarter of 2012, compared to $3,476,221 for the first quarter of 2011, a decrease of 1.2%. Oil royalty revenue was $2,846,572 for the first quarter of 2012, an increase of 4.8% from the first quarter of 2011 when oil royalty revenue was $2,716,166. The average price per royalty barrel of crude oil during the first quarter of 2012 was 14.5% higher than the average price prevailing during the first quarter of 2011. This price increase more than offset a decrease of 8.49% in the volume of crude oil production subject to the Trust's royalty interest in the first quarter of 2012 compared to the first quarter of 2011. Gas royalty revenue was $587,254 for the first quarter of 2012, a decrease of 22.7% from the first quarter of 2011 when gas royalty revenue was $760,055. This decrease in gas royalty revenue resulted from a volume decrease of 0.2% and a price decrease of 22.6% in the 2012 first quarter compared to the first quarter of 2011.

Easement and sundry income was $2,295,908 for the first quarter of 2012, an increase of 65.9% compared to the first quarter of 2011 when easement and sundry income was $1,383,516. This increase resulted primarily from increases in sundry income and sundry lease rental income caused by an increase in drilling and exploration activity on land owned by the Trust. This category of income is unpredictable and may vary significantly from quarter to quarter.

Interest income, including interest on investments, was $187,558 for the first quarter of 2012 compared to $253,352 for the first quarter of 2011, a decrease of 26.0%. Interest on notes receivable for the first quarter of 2012 was $182,361, a decrease of 26.8% compared to the first quarter of 2011 when interest on notes receivable was $249,012. As of March 31, 2012 notes receivable for land sales were $10,047,886 compared to $12,913,933 at March 31, 2011, a decrease of 22.2%. Interest income earned from investments was $5,197 for the first quarter of 2012, an increase of 19.7% from the first quarter of 2011. Interest on investments is affected by such variables as cash on hand for investment and the rate of interest on short-term investments.

Taxes, other than income taxes, increased 6.2% for the first quarter of 2012 compared to the first quarter of 2011. This increase is mainly attributable to an increase in ad valorem taxes, which were partially offset by a decrease in gas production taxes which resulted from the decrease in gas royalty revenue discussed above.

General and administrative expenses for the first quarter of 2012 were down 7.8% compared to the first quarter of 2011. This was primarily due to a decrease in legal expenses.

Liquidity and Capital Resources

The Trust's principal sources of liquidity are revenues from oil and gas royalties, lease rentals and receipts of interest and principal payments on the notes receivable arising from land sales. In the past, those sources have generated more than adequate amounts of cash to meet the Trust's needs and, in the opinion of management, should continue to do so in the foreseeable future.