SECURITIES AND EXCHANGE COMMISSION
                       Washington, D.C. 20549
                    ----------------------------
                             FORM 10-K
       (Mark One)
     [X]         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                   SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2005      Commission File No. 1-10437

                                  OR

   [  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                   SECURITIES EXCHANGE ACT OF 1934

For the transition period from    to     Commission File No. 1-10437

                     TEXAS VANGUARD OIL COMPANY
       (Exact  name of registrant as specified in its charter)
          Texas                                             74-2075344
(State or other jurisdiction of                            (IRS Employer
 incorporation or organization)                          Identification No.)

9811 Anderson Mill Rd., Suite 202
     Austin, Texas                                            78750
(Address of Principal Executive Offices)                    (Zip Code)

  Registrant's telephone number, including area code (512)  331-6781

    Securities Registered Pursuant to Section 12(b) of the Act:

                           Title of each class: None

        Name of each exchange of which registered: Not applicable

     Securities registered pursuant to Section 12(b) of the Act:

                     Common Stock, $.05 Par Value
                            (Title of class)

Indicate by check mark whether the registrant (1) has  filed all reports
required to be filed by  Section 13 or 15(d) of  the Securities Exchange
Act of  1934 during the  preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X or No ___.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation  S-K is not  contained herein, and will not be contained, to the
best of registrant's knowledge,  in definitive proxy or information statements
incorporated by reference in Part III  of this Form 10-K or any amendment to
this Form 10-K. [X]

As of March 3, 2006, there were 1,416,587 shares of the registrant's Common
Stock outstanding; the aggregate  market value of the share of Common Stock
held by non-affiliates of the  registrant (314,347 shares), based on average
bid and asked prices on the aforesaid date, was $2,703,384.

                 DOCUMENTS INCORPORATED BY REFERENCE

The registrant's definitive proxy statement regarding the election of directors
at the registrant's 2005 Annual Stockholders' Meeting filed or to be filed with
the Commission  on or before April 30, 2006, has been incorporated by reference
in Part III of this report.


                                PART I


ITEM  1.  BUSINESS

General

   Texas Vanguard Oil Company (the "Company" or "Registrant") was incorporated
under  the laws of the state of Texas on December 4, 1979. The business of the
Company  is  to  engage  in the  acquisition,  exploration,  development,  and
operation of onshore oil and gas  properties in the United States, principally
in  Texas.   In  April 1980,  the Company  completed a  public offering of its
securities netting  approximately $1,250,000 from the sale of 1,500,000 shares
of common stock to the public.

  The Company engages in oil and natural gas exploration, development and
production  in Texas, New Mexico,  and  Wyoming.  Generally, the  Company
acquires  operated  working interests  in producing oil  and natural  gas
properties which it further develops.

   The executive offices of the Company are located at 9811 Anderson Mill Rd.,
Suite 202, Austin, Texas 78750 and its telephone number is (512) 331-6781.

Markets for Oil and Gas

   The market for the Company's primary products, oil and gas, depends upon a
number of factors, including the availability of other domestic production,
crude oil imports, the proximity and size of oil and gas pipelines and general
fluctuations in the supply and demand for oil and gas. At present, the Company
sells all of its production to traditional industry purchasers, such as
pipeline and crude oil companies, who have the facilities to transport the
oil and gas from the well site. The Company has recorded revenues in excess
of 10% of total revenue from  ETC Texas Pipeline (10% in 2003), Duke Energy
(27% in 2005, 30% in 2004 and 36% in 2003), and Plains Marketing (49% in 2005,
45% in 2004 and 43% in 2003). The Company does not believe that the loss of
a major purchaser would have a materially adverse effect on the Company
because oil production can be sold to  other oil purchasers at a comparable
price. Oil sales are made under a written contract generally not
more than 6 months in length. The nature of the Company's business
is not seasonal except to the extent that adverse weather conditions
could affect oil and gas exploration and production activities. The
Company currently has no intention of refining or marketing its own oil
and gas.  Since the Company engages independent contractors for the
drilling of any wells, it does not plan to own any significant amount
of drilling equipment. The Company does not contemplate any material
product research and development, any material acquisition of plants
or equipment, or any material changes in its number of employees in
the near future.

Competition

   The oil and gas industry is highly competitive in all aspects. The Company
competes with major oil companies, numerous independent oil and gas producers,
individual proprietors, and investment programs. Many of these competitors
possess financial and personnel resources substantially in excess of those which
are available to the Company and may, therefore, be able to pay greater amounts
for desirable leases and to define, evaluate, bid for, and purchase a greater
number of potential producing prospects than the Company's own resources permit.
The Company's ability to generate resources will depend not only on its ability
to develop existing properties, but also on its ability to identify and acquire
proven and unproven acreage and prospects for future exploration.

Environmental Matters

   The Company's operations are subject to numerous federal, state and local
laws and regulations controlling the discharge of materials into the environment
or otherwise relating to the protection of the environment. Such matters have
not had a material effect on operations of the Company to date, but the Company
cannot predict whether such matters will have any material effect on its capital
expenditures, earnings or competitive position in the future.

Regulations

  The production and sale of crude oil and natural gas are currently subject
to extensive regulation of both federal and state authorities. At the federal
level  there are price regulations and income tax laws. At the state level,
there are severance taxes, proration of production, spacing of wells,
prevention and clean-up of pollution and permits to drill and produce oil
and gas. Although compliance with their laws and regulations has not had a
materially adverse effect on the Company's operations, the Company cannot
predict whether its future operations will be adversely affected thereby.

Employees

   At December 31, 2005, the executive officers and directors were as follows:

                    Name                         Offices Held

               Linda R. Watson                   Chairman of the Board
                                                 and Director

               William G. Watson                 President, Chief Executive
                                                 Officer and Director

               Teresa N. Nuckols                 Secretary

               Robert L. Patterson               Director



   William G. Watson, (age 57), received his B.A. degree from Texas Tech
University in 1970 and his M.S. degree from The University of Texas at
Arlington in 1974. He has been a director of Robert Watson, Inc., and is
a director and President of William Watson, Inc., an independent geological
consulting firm, which he founded in 1983, for more than the last five years.
He was a director and Vice President of the Company from 1982 until 1997.  He
was elected President of the Company on September 27, 2002, after the untimely
death of the Company's President and CEO, Robert N. Watson, Jr.

   Linda R. Watson (age 62), received her B.A. degree from The University of
Texas at Austin in 1966. She has been a director and Secretary-Treasurer of
Robert Watson, Inc. for more than the last five years and is now President
of Robert Watson, Inc. She has been a Director of the Company since 1982.
Also, she was the wife of Robert N. Watson, Jr.

   Teresa N. Nuckols (age 46), received her B.B.A. degree from Saint Edwards
University in 1988.  She has been an employee of the Company since 1989. She
was elected Secretary of the Company in 2002.

    Robert L. Patterson (age 66), received his B.S. and M.S. degrees from The
University of Texas at Austin in 1963 and 1964. He was employed by Union Oil
Company of California from 1965 through 1975, serving in various engineering
capacities. He was a Vice President of Argonaut Energy Corporation from 1976
through 1982. He was the President of Medallion Equipment Corporation  and
President of Argonaut Energy Corporation from July, 1985 through January, 1989.
He has also been an independent consulting petroleum engineer since 1983.

  The Company's officers actively manage the Company's activities. There are
no employment contracts with any officers. At December 31, 2005, the Company
had two full-time salaried employees. From time to time the Company engages
independent petroleum engineers, geologists and landmen on a fee basis.
Both William Watson and Linda Watson are directors of companies as previously
described which have oil and gas interests.Due to this situation a conflict of
interest may arise. However, there have been no such conflicts in the past
five years.

ITEM 2. PROPERTIES

  The Company owns no significant properties other than oil and gas properties.
It leases approximately 2,000 square feet of space for its executive offices at
9811 Anderson Mill Rd., Suite 202, Austin, Texas 78750. The Company  currently
has a month-to-month lease with a company owned by the Chairman of the Company
for these  facilities.  The rent for these facilities is $2,050 per  month.

Well Activity

   All of the Company's oil and gas working and royalty interests, reserves and
activities are located onshore in the continental United States. The following
table sets forth the  acquisition activity of the Company, for the years ended
December 31, 2001 through 2005.

Fiscal years         Oil                      Gas                   Dry
  ended
December 31,   Gross    Net            Gross        Net      Gross       Net

2001             3      9.46              2        2.31       ---       ---
2002             5      7.08              2        2.00       ---       ---
2003             4      7.45              2        0.35        1        0.1
2004             4      6.60              1        1.22       ---       ---
2005            10      6.73             16        3.55       ---       ---

(1)   A gross well is a well in which the Company has an interest.

(2)   A net well is made up of 100% of the working interest in a well. If the
      Company has a 12.5% working interest in a well, .125 is shown in the net
      well column.

(3)   A dry well is a well found to be incapable of producing oil or gas in
      sufficient quantities to justify completion of the well.

(4)   In four of the last five years, the net oil interest and/or the net gas
      interest is larger than the gross oil interest or gross gas interest
      because the Company purchased additional interests in oil and/or gas
      wells in which it already owned an interest.

(5)   In 2002, the Company participated in the drilling of 5 new wells.  All
      5 wells are classified as oil wells (5 gross oil, 2.45 net oil).

(6)   In 2003, the Company participated in the drilling of one new well.  The
      well was deemed non-commercial and was plugged.

(7)   In 2005, the Company participated in the drilling of 3 new wells.  At
      year end, all three wells were in the process of being tested and/or
      evaluated.

   The Company is not obligated to provide a fixed and determinable quantity of
oil or gas in the future under existing contracts or agreements.

Significant Properties

   Over the past five years, the Company has made  investments in proven oil
and gas properties that in the aggregate have been significant to the Company.
None  of the  individual properties  has cost  more  than 15%  of the average
balance in oil and gas properties at the time of purchase.  These investments
have been made in different fields and areas, primarily in south, central and
west Texas. At December 31,2005, the Company does not have any single property
that is significant enough to materially affect its operations.

   As of December 31, 2005, the Company has pledged its interest in certain
properties  and  well  equipment  against bank notes payable.   None of the
individual properties  are significant.  Copies of  the loan documents have
been included as an exhibit to the Form 10-K.

 Productive Wells and Acreage

   The following table sets forth by Texas, Wyoming, New Mexico and Nebraska
counties the Company's gross and net productive wells and developed acreage
as of December 31, 2005.

                       Producing Wells (a)                    Developed
                       Oil            Gas                     Acreage (a)
County          Gross   Net     Gross        Net          Gross           Net

Bastrop (b)      85    65.38      46       39.02       3,208.46       2,637.98
Bee             ---      ---      18        1.55         725.70          62.52
Burleson          2     1.33     ---         ---         320.00         168.57
Chaves (c)      ---      ---       1         .50         160.00          80.00
Crane (b)        12    11.00       1         .02         160.00         109.98
Crockett        ---      ---       2        2.00         160.00         160.00
DeWitt (b)      ---      ---       2         .16         160.00          12.43
Eastland (b)    ---      ---       4         .09         122.00           1.30
Eddy (c)        ---      ---       2         .04         640.71          14.08
Fayette (b)      12    11.04     ---         ---       1,568.48       1,491.61
Garza (b)         3      .05     ---         ---          30.00            .47
Grimes            1     1.00     ---         ---         652.85         652.85
Hidalgo         ---      ---       2         .25         417.86           0.00
Kent (b)         27      .67     ---         ---       1,411.65          29.49
Kimball (d)       1      .05     ---         ---          40.00           2.00
Lea (b)(c)        2      ---       1         .07         400.00          22.25
Lee (b)         112    91.87       5        4.52       2,953.40       2,175.02
Lipscomb          1      .03     ---         ---          80.00           2.50
Martin            3     2.82     ---         ---         240.19         225.74
Midland           1      .02     ---         ---          80.00           1.67
Nolan (b)         1      .03     ---         ---          40.00           1.25
Parker (b)      ---      ---       1         .01         136.91            .83
Ward (b)          1      .03       1         .13         720.00          19.20
Washington (b)    3      .21     ---         ---       1,032.92         103.29
Weston (e)        3      .94     ---         ---         120.00          37.42
Wilson            1      .95     ---         ---          80.00          76.00
Woodward (f)      1      .01     ---         ---         640.00           3.32
             ------   -------  -----       -----       --------       --------
                272   187.43      86       48.36      16,301.13       8,091.77

(a)   A gross well is a well in which the Company owns either a working
      interest or a royalty interest. A net well is the fractional interest
      owned by the Company. Gross acres are the total acres in a lease. Net
      acres are the gross acres multiplied by the Company's interest.
(b)   The Company owns overriding royalty interest in these counties.
(c)   Chaves, Eddy and Lea Counties are located in New Mexico.
(d)   Kimball County is located in Nebraska.
(e)   Weston County is located in Wyoming.
(f)   Woodward County is located in Oklahoma.

Reserve Quantity Information

   For information required by Statement of Financial Accounting Standards No.
69, "Disclosures About Oil and Gas Producing Activities," see the "Supplemental
Oil and Gas Information" section included in Item 8. This section also includes
estimates of proven oil and gas reserves.

OIL AND GAS STATISTICS

  The following summarizes the net oil and gas production, average sales prices
and production costs per unit for the years ended December 31, 2005, 2004
and 2003.


                                             2005       2004           2003
  Oil:
     Production volume (barrels)            64,011     67,252         63,058
     Average sales price per barrel         $53.47     $38.44         $28.88
  Gas:
     Production volume (MCF)               385,157    413,250        395,234
     Average sales price per MCF            $ 6.72     $ 5.04         $ 4.47

  Average production costs per
     equivalent barrel                      $31.31     $23.55         $18.75


   The worldwide crude oil prices of 2005 continue to fluctuate in 2006.
The Company cannot predict how prices will vary during 2006 and what
effect they will ultimately have on the Company.

UNDEVELOPED ACREAGE


   The following table sets forth by county the Company's gross and net
undeveloped acreage as of December 31, 2005.

           County               Gross                Net

          Andrews               384.00              192.00
          Bastrop             2,326.18            1,829.25
          Colorado              115.70              105.70
          Crane                 593.64              563.57
          Crosby              1,118.77              559.38
          DeWitt                308.00                4.43
          Eastland              199.30                2.37
          Eddy (a)              210.00               23.13
          Fayette               334.99              244.90
          Garza               2,771.10              548.51
          Kent                3,377.89            1,201.53
          Kimble                869.60               86.96
          Lea (a)             2,029.60              440.52
          Lee                 1,930.11            1,603.27
          Midland               133.33                2.78
          Weston (b)            840.00              379.75
          Wilson                129.51              123.03
                             ---------            --------
                             17,671.72            7,911.08
                             =========            ========

Of the 7,911.08 net undeveloped acres under lease, 7,698.42 net acres
are being held by production.

a) Eddy and Lea Counties are located in New Mexico
b) Weston County is located in Wyoming.

ITEM 3. LEGAL PROCEEDINGS

   The Company knows of no material litigation pending, threatening or
contemplated, or unsatisfied judgments against it, or any other proceeding in
which  the Company is a party. The Company knows of no material legal actions
pending or threatening or judgments entered against any officers on the board
of directors of the Company in their capacity as such.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

   No matters were submitted to a vote of the security holders during the
quarter ended December 31, 2005.

                               PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
        STOCKHOLDER MATTERS

   The Company's common stock is quoted on the OTC Bulletin Board with the
symbol (TVOC.OB). The range of high and low sales price for each quarterly
period during the past two years is as follows:

                                           Sales Price
                                     High                Low
      Fiscal 2005

        First Quarter               4.650               3.250
        Second Quarter              8.750               3.750
        Third Quarter               8.140               5.000
        Fourth Quarter              7.300               5.100

      Fiscal 2004

        First Quarter               3.400               2.750
        Second Quarter              3.000               2.200
        Third Quarter               3.000               2.300
        Fourth Quarter              4.000               2.400


   At December 31, 2005, the approximate number of holders of record of the
Company's common stock was 468.  The Company has not paid any dividends and has
no plans to do so in the immediate future.

ITEM 6. SELECTED FINANCIAL DATA

                                       Years ended December 31,
                       2005        2004        2003         2002        2001

Oil and gas sales   $6,220,984   5,035,532   3,757,649   3,086,950   4,395,458
Total revenue        6,587,376   5,422,624   4,366,554   3,557,542   4,849,022
Total expenses      (5,035,378) (4,122,888) (3,403,567) (3,775,572) (5,210,533)
Net earnings (loss)  1,024,319     853,980     692,971    (143,900)   (238,597)
Net earnings (loss)
   per share             .72         .60         .49       (.10)       (.17)
Total assets         8,635,942   7,808,400   7,165,170  5,169,673    6,690,772
Short-term debt        407,510     618,166     874,094    939,664    4,138,411
Long-term debt       2,757,022   3,014,569   2,832,579  2,000,000      239,640
Total liabilities    4,220,996   4,417,770   4,628,520  3,325,994    4,701,693
Stockholders equity $4,414,946   3,390,630   2,536,650  1,843,679    1,989,079

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

ANALYSIS OF FINANCIAL CONDITION

During the years ended December 31, 2005, 2004 and 2003 cash increased
by $246,418, $738,749 and $1,742,641 respectively. The cash flow from
operating activities in 2005 was approximately $1,613,599, an increase of
$638,395 from 2004. The cash flow from operating activities in 2004 was
approximately $975,204, a decrease of $653,054 from 2003. The
significant use of cash, other than for operating expenses, has been
investments in oil and gas properties of $897,894, $120,739,
and $707,793 in 2005, 2004 and 2003, respectively. In each of the last
three years, the Company's investment in producing oil and gas properties
was  provided by cash flow from operating activities, sales of other oil
and gas properties, and from borrowings on notes payable to banks.

   The Company sells selected properties when it is more economical to
sell rather than produce them. As of December 31, 2005, the Company had
a cash balance of $5,399,628 which represents approximately 170% of its
notes payable as compared to the December 31, 2004, cash balance of
$5,153,210 which represented approximately 142% of its notes payable.

   Working capital at December 31, 2005 decreased to 5.35 to 1 from 5.42 to 1
at December 31, 2004.  The Company continued its policy of making strategic
investments in  producing oil and gas properties in the same or similar fields
to  properties  already  operated by the Company, which are primarily financed
with short-term notes payable and cash from operations.

LIQUIDITY AND CAPITAL RESOURCES

   During the current fiscal year, the Company's liquidity has remained strong
enough to meet its short-term cash needs. The sources of liquidity and capital
resources are generated from cash on hand, cash provided by operations and from
credit available from financial institutions. Management believes the Company
will be able to meet its current operating needs through internally generated
cash from operations. Management believes that oil and gas  property investing
activities in 2006 can be financed through cash on hand, cash  from  operating
activities, and bank borrowings. The Company anticipates continued investments
in proven oil and gas properties in 2006 when they can be purchased  at prices
that will provide a short payback period. If bank credit is not available, the
Company may not be able to continue  its  policy  of continued  investment  in
strategic oil and gas  properties.  The Company cannot predict how oil and gas
prices will fluctuate during 2006 and what effect they will ultimately have on
the Company, but management believes that the Company will be able to generate
sufficient cash from  operations  to service  its bank  debt and  provide  for
maintaining current  production of its oil and gas properties. The Company had
no significant commitments for capital expenditures at December 31, 2005.

   As of December 31, 2005, the Company owed $250,208 and $2,750,000 to a bank
secured by producing oil and gas properties and well equipment purchased by
the Company. The notes are due in December 2006 and February 2007, respectively
(see note 2 of notes to financial statements for further explanation).

Reserve Estimates

	Estimates of oil and gas reserves, by necessity, are projections based
on geologic and engineering data, and there are uncertainties inherent in the
interpretation of such data as well as the projection of future rates of
production and the timing of development expenditures. Estimates of economically
recoverable oil and gas reserves and of future net cash flows depend upon a
number of variable factors and assumptions, such as future production, oil
and gas prices, operating costs, severance taxes, development costs and
workover costs, all of which may vary considerably from actual results.
Any significant variance in the assumptions could materially affect the
estimated quantity and value of the reserves.  Moreover, there can be no
assurance that our reserves will ultimately be produced or that any
undeveloped reserves will be developed.  For these reasons, estimates of
the economically recoverable quantities of oil and gas and estimates of
the future net cash flows expected therefrom may vary substantially.
Actual production, revenue and expenditures with respect to our reserves
will likely vary from estimates, and such variances may be material.
The estimated discounted future net cash flows from proved reserves are
generally based on prices and costs as of the date of the estimate, while
actual future prices and costs may be materially higher or lower.

ANALYSIS OF RESULTS OF OPERATIONS

  From 2002 to 2003 oil and gas sales revenue increased 22%, from 2003 to 2004
oil and gas sales revenue increased by 34%, and from 2004 to 2005 oil and
gas sales revenue increased by 24%. In 2003, oil production volume decreased
by 14% at the same time as the average price per barrel increased by 28% to
$28.88. Also, in 2003, the gas production volume decreased by 14% while the
average price per MCF increased by 82% to $4.47. In 2004, oil production
volume increased by 7% at the same time as the average price per barrel
increased by 33% to $38.44. Also, in 2004, the gas production volume
increased by 5% while the average price increased 13% to $5.04 per MCF.
In 2005, oil production volume decreased by 5% at the same time as
the average price per barrel increased by 39% to $53.47. Also, in 2005,
the gas production volume decreased by 7% at the same time as the average
price increased by 33% to $6.72 per MCF. The fluctuation in oil and gas
prices is solely attributable to changes in market prices.

   Oil and gas production expenses increased in 2005 and 2004 by 24% and 29%,
respectively while oil and gas production expenses decreased in 2003 by 8%.
Increased production expenses for 2005 and 2004 are largely associated with
workover activities and an increase in overall field expenses.

  Exploration costs in 2005 were $161,558. During the year the Company
participated in the drilling of three wells.  At year end, all three wells
were being tested or evaluated.  Subsequent to year-end two of the three
wells were completed and put on production.  The third well is shut in
for further evaluation.

  Interest expense increased by 20%in 2005 over 2004 due to higher average
outstanding balances as well as increased interest rates and decreased 52%
in 2004 over 2003 due to lower average outstanding balances and lower interest
rates.

   Depreciation, depletion and amortization varies from year to year because of
changes in reserve estimates, changes in quantities of oil and gas produced,
changes in price of oil and gas sold, as well as the  acquisition, discovery or
sale of producing properties. Depletion decreased 14% in 2005 as compared to
a 30% increase in depletion in 2004.

   Total general and administrative expenses increased $37,787 and $70,343 in
2005 and 2004, respectively while total general and administrative expenses
decreased $33,759 in 2003.

   In 2005, 2004, and 2003, the Company provided provisions of approximately
$21,889, $51,808 and $149,986, respectively, for the impairment of value
of oil and gas properties due to less than expected production history of
specific wells and for wells that were plugged and abandoned.

   Inflation is not anticipated to have a significant impact on the Company's
operations.

CONTRACTUAL OBLIGATIONS OF COMPANY

The Companys contractual obligations as of December 31, 2005 are as follows:

Contractual Obligations:         2006      2007     Thereafter     Total

Long Term Debt Obligations   $ 407,510  2,757,022      ---      $3,164,532
                               =======  =========     =====      =========



FORWARD-LOOKING STATEMENTS

This annual report contains various forward-looking statements within
the meaning of the Section 27A of the Securities Exchange Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended.  All statements, other than statements of historical facts,
included in the Form 10-K  that address activities, events or developments
of the Company are forward-looking statements and represent managements
expectations or beliefs concerning future events, and may be signified by
the words expect, estimate, believe, anticipate, predict or other
similar expressions.  Forward-looking statements appear throughout this
Form 10-K with respect to, among other things: estimates of future oil and
gas production; estimates of future oil and gas prices; estimates of oil and
gas reserves; future drilling and operations; future capital expenditures;
future net cash flows; our future financial condition or results of operations;
and our business strategy and other plans and objectives for future operations.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements.  Accordingly, such forward-looking statements
do not purport to be predictions of future events or circumstances and
may not be realized.  For these reasons, you should not place undue reliance
on forward-looking statements.  We undertake no obligation to publicly update
or revise them.



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



                    INDEPENDENT AUDITORS' REPORT





The Board of Directors
Texas Vanguard Oil Company:


We have audited the accompanying balance sheets of Texas Vanguard Oil Company
(the Company) as of December 31, 2005 and 2004, and the related statements of
earnings, stockholders' equity and  cash flows  for the years ended December
31, 2005, 2004 and 2003. These financial statements  are  the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our  audits in accordance  with 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.

In  our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Texas Vanguard Oil Company as
of  December 31, 2005 and 2004, and the results of its operations and its cash
flows for the years ended December 31, 2005, 2004 and 2003 in conformity with
U.S. generally accepted accounting principles.


Sprouse & Anderson, L.L.P.
Austin, Texas

March 10, 2006



                        TEXAS VANGUARD OIL COMPANY

                                 Balance Sheets

                          December 31, 2005 and 2004

                                    ASSETS
                                                          2005          2004
Current assets:
    Cash (including certificate of deposit of
       $700,000 pledged in 2005 and 2004,
        respectively                                $  5,399,628  $ 5,153,210
    Trade accounts receivable, net of allowance
       for doubtful accounts of $0 and $0 in
       2005 and 2004, respectively                       202,230      203,391
                                                       ----------   ---------
            Total current assets                       5,601,858    5,356,601
                                                       ----------   ---------
Oil and gas properties, partially pledged,
    successful efforts method of accounting:
       Proven properties                               4,951,154    4,132,921
       Unproven properties                               171,774      166,630
Office furniture and equipment, partially pledged        208,953      207,873
                                                       ---------    ---------
                                                       5,331,881    4,507,424
Less accumulated depreciation, depletion and
    amortization                                      (2,298,797)  (2,056,625)
                                                       ---------    ---------
                                                       3,033,084    2,450,799
                                                       ---------    ---------
Other assets                                               1,000        1,000
                                                       ---------    ---------
TOTAL ASSETS                                        $  8,635,942  $ 7,808,400
                                                       =========    =========

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Trade accounts payable                          $    480,042  $   273,426
    Taxes payable                                        109,782       62,500
    Asset retirement obligation, current portion          49,872       34,720
    Notes payable and current installments of
       long-term debt                                    407,510      618,166
                                                       ---------    ---------
            Total current liabilities                  1,047,206      988,812
                                                       ---------    ---------
Deferred tax liability                                   284,310      251,249
Asset retirement obligation, less current portion        132,458      163,140
Long-term debt, excluding current installments         2,757,022    3,014,569
                                                       ---------    ---------
            Total Liabilities                          4,220,996    4,417,770

Commitments

Stockholders' equity:
    Common stock, par value $.05; authorized
     12,500,000 shares; 1,416,587 in 2005 and 2004,
     issued and outstanding                               70,828       70,829
    Additional paid-in capital                         1,888,528    1,888,530
    Retained earnings                                  2,455,590    1,431,271
                                                       ---------    ---------
            Total stockholders' equity                 4,414,946    3,390,630
                                                       ---------    ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          $  8,635,942  $ 7,808,400
                                                       =========    =========

See accompanying notes to financial statements.

                        TEXAS VANGUARD OIL COMPANY
                         Statements of Earnings

                Years ended December 31, 2005, 2004 and 2003

                                            2005        2004        2003

Revenues:
    Oil and gas sales                $  6,220,984 $ 5,035,532 $ 3,757,649
    Well operation fees                   130,670     142,541     156,544
    Other, net                            188,305     200,860     399,578
    Interest income                        47,417      43,691      52,783
                                        ---------   ---------   ---------
       Total revenues                   6,587,376   5,422,624   4,366,554
                                        ---------   ---------   ---------
Expenses:
  Production cost                       4,014,409   3,240,696   2,503,009
  Exploration                             161,558         ---         ---
  Depreciation, depletion
    and amortization                      251,520     293,139     225,477
  Interest expense                         64,531      53,561     111,754
  General and administrative              521,471     483,684     413,341
  Impairment in value of
    oil and gas property                   21,889      51,808     149,986
                                        ---------   ---------   ---------
       Total expenses                   5,035,378   4,122,888   3,403,567
                                        ---------   ---------   ---------
  Earnings before income tax            1,551,998   1,299,736     962,987

Income Taxes:
  Provision for income tax                527,679     445,756     263,275
                                         --------   ---------   ---------
  Earnings before change
    in accounting principle             1,024,319     853,980     699,712

Cumulative effect of change in
  accounting principle, net of tax            ---         ---      (6,741)
                                         --------   ---------   ---------
Net earnings                          $ 1,024,319 $   853,980 $   692,971
                                        =========   =========   =========
Weighted average number of
    shares outstanding                  1,416,587   1,416,587   1,416,587
                                        =========   =========   =========

Basic and diluted earnings
    per share                         $    .72    $   .60     $   .49
                                        =========   =========   =========

See accompanying notes to financial statements.

                             TEXAS VANGUARD OIL COMPANY
                         Statements of Stockholders' Equity

                    Years ended December 31, 2005, 2004 and 2003

                                                                        Total
                               Common Stock     Additional   Retained   Stock-
                             Shares     Amount    Paid-In    (Deficit) holders
                                                  Capital    Earnings   equity


Balances at Dec. 31, 2002   1,416,587 $ 70,829  $1,888,530 $ (115,680)$1,843,679

   Net earnings                   ---      ---         ---    692,971    692,971
                            --------- --------   ---------  --------- ---------
Balances at Dec. 31, 2003   1,416,587 $ 70,829  $1,888,530 $  577,291 $2,536,650


   Net earnings                   ---      ---         ---    853,980    853,980
                            --------- --------   ---------   --------  ---------
Balances at Dec. 31, 2004   1,416,587 $ 70,829  $1,888,530 $1,431,271 $3,390,630

 Repurchase and
 cancellation of common
 stock fractional shares            0       (1)         (2)      ---         (3)

   Net earnings                   ---      ---         ---  1,024,319 $1,024,319
                            ---------  -------   ---------   --------  ---------

Balances at Dec.31, 2005   1,416,587 $ 70,828  $1,888,528  $2,455,590 $4,414,946
                           ========= ========= ==========  ========== ==========


See accompanying notes to financial statements.

                           TEXAS VANGUARD OIL COMPANY

                            Statements of Cash Flows

                Years ended December 31, 2005, 2004 and 2003

                                               2005         2004         2003

Cash flows from operating activities:
 Net earnings                            $ 1,024,319   $  853,980  $   692,971
  Adjustments to reconcile net earnings
   to cash provided by operating
   activities:
    Depreciation, depletion
      and amortization                       251,520      293,139      225,477
    (Gain) loss on sale of equipment             ---       (3,173)         ---
    Impairment in value of oil and
      gas property                            21,889       51,808      149,986
  Changes in assets and liabilities:
    (Increase) decrease in receivables         1,160      (83,737)      24,307
    Increase (decrease) in payables
       and accrued expenses                  281,650     (118,094)     451,792
    Increase (decrease) in deferred
      federal income tax                      33,061      (18,719)      83,725
                                            ---------    ---------    ---------
Net cash provided by
  operating activities                     1,613,599      975,204    1,628,258
                                            ---------    ---------    ---------
Cash flows from investing activities:
 Proceeds from disposal of investments           ---          500      100,000
Additions to oil and gas properties         (897,894)    (120,739)    (707,793)
 Proceeds from sale of equipment                 ---       12,000       21,743
 Purchases of equipment                       (1,080)     (54,277)     (66,576)
                                            ---------    ---------    ---------
   Net cash used in investing activities    (898,974)    (162,516)    (652,626)
                                            ---------    ---------    ---------
Cash flows from financing activities:
 Borrowings on notes payable               2,850,000    3,872,514    3,763,489
 Repayments of notes payable              (3,318,204)  (3,946,453)  (2,996,480)
 Repurchase of common stock                       (3)         ---          ---
                                           ---------    ---------    ---------
   Net cash provided (used) by
     financing activities                   (468,207)     (73,939)     767,009
                                           ---------    ---------    ---------
   Net increase in cash                      246,418      738,749    1,742,641

   Cash and cash equivalents at
     beginning of year                     5,153,210    4,414,461    2,671,820
                                           ---------     --------     --------
   Cash and cash equivalents at
     end of year                         $ 5,399,628   $5,153,210   $4,414,461
                                          ==========   ==========   ==========
Supplemental disclosure of
  cash flow information:
 Interest paid                           $    64,531    $  53,561    $ 111,754
                                          ==========   ==========   ==========

  Cash paid for income taxes             $   531,417    $ 475,466    $     -0-
                                          ==========   ==========   ==========

See accompanying notes to financial statements.


                             TEXAS VANGUARD OIL COMPANY

                           Notes to Financial Statements

                          December 31, 2005, 2004 and 2003


(1) Significant Accounting Policies

Description of Business - Texas  Vanguard Oil Company  (the Company) engages in
the acquisition, exploration, development, and operation of onshore oil and gas
properties  in  the United  States,  principally  in Texas.   The  Company owns
interests in producing properties and undeveloped  oil and gas leases in Texas,
Wyoming and New Mexico.  The Company sells all of its production to traditional
industry  purchasers  who have the facilities to transport the oil and gas from
the well site.

Oil and Gas Properties - The Company follows the "successful efforts" method of
accounting  for oil and gas exploration and production operations. Accordingly,
costs incurred  in  the acquisition  and exploratory  drilling  of oil and gas
properties are initially capitalized and  either subsequently  expensed if the
properties are determined not  to have  proved  reserves, or reclassified as a
proven property if proved reserves are discovered.Costs of drilling development
wells are capitalized. Geological,  geophysical, carrying and production costs
are charged to expense as incurred.

Costs related to acquiring unproven lease and royalty acreage are periodically
assessed for possible impairment of value. If the assessment indicates impair-
ment, the costs are charged to expense.

Depreciation, depletion and amortization of proved oil and gas property costs,
including  related equipment and facilities, are provided using the units-of-
production method on a property by property basis.

Office Furniture and Equipment - Office furniture and equipment is stated at
cost.  Depreciation is computed using the straight-line method, based on the
following estimated useful lives:

          Office furniture and equipment         7 years
          Automotive equipment                   5 years

Revenue - The Company recognizes revenue from the sale of oil and gas in the
period of delivery.

Accounts Receivable - The Company provides for uncollectible accounts using
the allowance method of accounting for bad debts. Under this method of
accounting, a provision for uncollectible accounts is charged to earnings.
The allowance account is increased or decreased based on past collection
history and managements evaluation of accounts receivable. All amounts
considered uncollectible are charged against the allowance and recoveries
are added to the allowance.

Federal Income taxes - The Company uses the "asset  and liability method" of
income tax accounting which bases the  amount  of current  and  future taxes
payable on the events recognized in the financial statements and on tax laws
existing at the balance  sheet date.   The effect on deferred tax assets and
liabilities  of a  change in tax rates is recognized in income in the period
that includes enactment date.

The tax deduction allowed on qualified production as provided for in the
American Jobs Creation Act of 2004 (Jobs Act) is treated as a special
deduction.  The deduction allowance is effective for tax year 2005 and has
no material impact on the current financial statements.

Cash and Cash Equivalents - The Company considers cash and cash equivalents to
consist of demand deposits and certificates of deposit.

Concentration of Credit Risk -  The  Company  sells all  of  its production
to traditional industry purchasers. Oil sales are made under a written
contract, generally not more than 6 months in length. The Company has recorded
revenues in excess of 10% of total revenue from two purchasers in 2005, two
purchasers in 2004, and three purchasers in 2003 as follows: 2005 - 49%,
27%, 2004 - 45%, 30% and 2003 - 43%, 36%, 10%. The  Company does not believe
the loss of these purchasers would have a materially adverse effect on its
operations as it could sell its production to other gathering companies.

The Company maintains cash in depository institutions that are guaranteed by
the Federal Deposit Insurance Corporation (FDIC) up to $100,000. At December
31, 2005 and 2004, cash in banks exceeded FDIC limits. The Company has not
experienced any losses on deposits.

Use of Estimates - Consistent  with  the  requirements  of  generally  accepted
accounting principles, management of the Company has made a number of estimates
and assumptions relating to the reporting of assets and liabilities in order to
prepare  these  financial statements.   Actual  results could differ from those
estimates.

(2) Notes Payable and Long-term Debt

The Company had notes payable and long-term debt to banks as follows at
 December 31:
                                                           2005          2004


A note with a bank secured by oil and gas properties.
  The original value of the note was $622,514. Interest
  accrues at .5% above the prime rate, with monthly
  payments of $25,938.08 plus accrued interest.
  The note matures December 15, 2006.                 $   250,208  $   561,465


Line of credit with a bank under which it may borrow
  up to $3,000,000. Interest payable monthly at prime
  rate plus .5%, secured by oil and gas properties.
  The Company has issued a letter of credit in the
  amount of $250,000 to a third party which is secured
  by the line of credit. The line of credit matured on
  February 12, 2005. This line of credit was renewed
  with the same terms, secured by oil and gas
  properties and includes the letter of credit of
  $250,000. The line of credit matures on
  February 15, 2007.                                    2,750,000    2,750,000


 Line of credit with a bank under which it may borrow
  Up to $700,000. Interest payable quarterly at 3.50%,
  Secured by $700,000 in certificates of deposit. The
  Line of credit matured on April 23, 2005.                 ---        300,000

Line of credit with a bank under which it may borrow
  up to $700,000. Interest payable quarterly at 4.75%,
  secured by $700,000 in certificates of deposit. The
  line of credit matures on April 27, 2006.              150,000           ---

Note payable with a bank secured by a vehicle.
  The original value of the note was $28,415.
  Interest accrues at 4.6%.  The note matures
  on November 16, 2007.                                   14,324        21,270

                                                        ---------    ---------
    Total debt                                          3,164,532    3,632,735
Less current installments                                (407,510)    (618,166)
                                                        ---------    ---------
Long-term debt, excluding current installments       $  2,757,022  $ 3,014,569
                                                        =========    =========



Future maturities of long-term debt are as follows:

            2006           $  407,510
            2007            2,757,022
                            ---------
                  Total    $3,164,532
                            =========

The note payable with a $250,208 balance as of December 31, 2005 has a
restrictive covenant, among others, that requires the Company to maintain
a cash flow to debt service ratio of not less than 1.25 to 1.00. The bank
approved a variance of this covenant for the second quarter of 2005. The
Company was not in violation of the aforementioned, or other, restrictive
covenants for any other quarters in 2005 or for any quarter during the
year ended December 31, 2004.


(3) Related Party Transactions

The Company and an entity owned by the Chairman of the Company have an agree-
ment  whereby  the latter  provides  the  Company general corporate management
services. The affiliated company received $228,000, $222,000, and $222,000 as
compensation  for performance  of those services  during  the  years  ended
December 31, 2005, 2004 and 2003, respectively. Effective January 1, 2006
the agreement was continued with terms of $19,200 per month through December
31, 2006.

The Company leases office space from a company owned by the Chairman
of the Company under a month-to-month operating lease. Rent expense
incurred under this lease was $24,000, $22,800 and $22,800 for the years
ended December 31, 2005, 2004, and 2003, respectively.

Certain officers and directors of the Company  own small interests
in a number of the properties that the Company has interests in as well
as other similar properties in which the Company does not have an interest.
For the years ended December 31, 2005, 2004 and 2003 these individuals
received $58,111, $50,343, and $44,814, respectively.

During the years ended December 31, 2005, 2004 and 2003, a Director of the
Company received $66,000 $60,000 and $60,000, respectively for engineering
consultant work.

The Company purchases materials and services from two businesses
in which the Chairman of the Company owns an interest. These purchases
represent less than 10% of the Company's total oil field purchases.

(4) Federal Income Taxes

The federal income tax expense for 2005, 2004, and 2003 does not differ from
the expected tax expense by applying the U.S. Federal corporate income tax
rate of 34% to earnings before income taxes.  The provision for income taxes
for the year ended December 31, 2005, 2004 and 2003 consists of:

                                                2005        2004      2003

Current  tax expense                     $    494,618   $464,475   $179,550
Deferred tax expense (benefit)                 33,061    (18,719)    83,725
                                            _________   ________   ________
                                         $    527,679   $445,756   $263,275
                                            =========   ========   ========


The tax effects of temporary differences that give rise to the deferred tax
assets and liabilities at December 31, 2005 and 2004 is presented below:

                                                            2005        2004
   Deferred tax asset:
     Net operating loss carryforward                $         ---         ---
                                                        ---------   ---------
     Net deferred tax asset                                   ---         ---
                                                        ---------   ---------

   Deferred tax liability:
     Office furniture and equipment and oil
      and gas property, due to differences in
      depreciation and abandonment                      (284,310)   (251,249)
                                                        ---------   ---------
   Total deferred tax liability                     $   (284,310)  $(251,249)
                                                        =========   =========


The Company has no accumulated losses for Federal income tax purposes as of
December 31, 2005, 2004 and 2003, which may be carried forward and used to
reduce taxable income in future years.

(5) Fair Value of Financial Instruments

Based on the borrowing rates currently available to the Company for bank loans
with  similar  terms and  average  maturities, the fair value of notes payable
approximates market value at December 31, 2005 and 2004.

(6) Asset Retirement Obligation

In June 2001, the FASB issued FAS 143,Accounting for Asset Retirement
Obligations. FAS 143 requires that an asset retirement obligation (ARO)
associated with the retirement of a tangible long-lived asset be recognized
as a liability in the period in which it is incurred or becomes determinable
(as defined by the standard), with an associated increase in the carrying
amount of the related long-lived asset.  The cost of the tangible asset,
including the initially recognized asset retirement cost, is depreciated
over the useful life of the asset.  The ARO is recorded at fair value, and
accretion expense will be recognized over time as the discounted liability
is accreted to its expected settlement value.  The fair value of the ARO
is measured using expected future cash outflows discounted at the Companys
credit-adjusted risk-free interest rate.  The provisions of this statement apply
to legal obligations associated with the retirement of long-lived assets that
result from the acquisition, development, and operation of a long-lived asset.

The Company adopted SFAS 143 as of January 1, 2003. The adoption of SFAS 143,
resulted in a January 1, 2003 cumulative effect adjustment to record a
$197,542 increase in the carrying values of proved properties and a $204,283
increase in non-current abandonment liabilities.  The net impact of these
items was to record $6,741, net of tax, as a cumulative effect adjustment
of a change in accounting principle in our Statement of Earnings for 2003.
The asset obligation relates to costs to plug and abandon oil and gas
properties of the Company.

           					               2005 	  2004        2003
      Asset retirement obligation
        Beginning of year	                 $ 197,860  $ 189,972   $ 204,283
        Liabilities incurred during the period    27,751     21,263	  2,383
        Settlements                                  ---        ---        ---
        Accretion expense		              11,379     11,170      11,379
        Revisions in estimated cash flow         (54,630)   (24,545)	(28,073)
                                                 -------    --------    --------
	Asset retirement obligation
	  End of year                            $ 182,330  $ 197,860   $ 189,972
                                                 =======    =======     =======


The Board of Directors
Texas Vanguard Oil Company:

INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTAL INFORMATION

Our report on our audit of the basic financial statements of Texas Vanguard
Oil Company for 2005 appears on page 13.  The audit was made for the purpose
of forming an opinion on those statements taken as a whole.  The supplemental
material presented in the following section of this report is presented for
purposes of additional analysis and is not a required part of the basic
financial statements.  We have applied certain limited procedures, which
consisted principally of inquiries of management regarding the methods of
measurement and presentation of the required supplementary information.
However, we did not audit the information and express no opinion on it.


Sprouse & Anderson, L.L.P.
March 10, 2006


                      TEXAS VANGUARD OIL COMPANY

                 SUPPLEMENTAL OIL AND GAS INFORMATION

             Years ended December 31, 2005, 2004 and 2003
                             (Unaudited)

Reserve Quantity Information  (Unaudited)

The  following  reserve related information is based on estimates prepared by
management of the Company. Reserve estimates are inherently imprecise and are
continually subject  to  revisions  based on  production  history, results of
additional exploration and development, price of oil and gas and other factors.
All of the Company's oil and gas reserves are located in the United States.

                           2005                   2004                2003
                      Oil       Gas         Oil        Gas       Oil      Gas
                     BBLS       MCF        BBLS        MCF      BBLS      MCF

Proved developed
 and undeveloped
 reserves:
Beginning of year  934,364  5,975,427  989,011  6,539,396    922,877  6,341,396
Revisions of
 previous
estimate          (257,672)(2,572,908) (11,277)  (291,648)    88,500    252,675
Extensions
 and Discoveries       ---        ---      ---        ---        ---        ---
Purchase of
 minerals in place  36,377    437,536   23,882    140,929     40,692    340,559
Sale of minerals       ---        ---      ---        ---        ---        ---
Production         (64,011)  (385,157) (67,252)  (413,250)   (63,058)  (395,234)
                 ---------  ---------  --------  ---------  --------  ---------
End of year        649,058  3,454,898  934,364   5,975,427   989,011  6,539,396
                 =========  =========  ========  ========= =========  =========
Proved developed
   reserves:
Beginning of year  934,364  5,975,427  989,011   6,539,396   922,877 6,341,396
End of year        649,058  3,454,898  934,364   5,975,427   989,011 6,539,396

Standardized Measure of Discounted Future Net Cash Flows (Unaudited)

The following is a standardized measure of discounted future net cash flows and
changes therein relating to proved  oil and gas reserves. Future net cash flows
were computed using year-end prices and costs and relate to existing proved oil
and gas reserves in which the enterprise has  mineral  interests.  The Company
cannot predict  price  fluctuations  which may  occur in the future. Future
income tax expenses were provided  after  estimated  utilization of any
available Federal income tax loss carryforwards.

                                                          December 31,
                                         2005           2004           2003

Future cash inflows                 $ 70,247,211  $  61,338,070  $  53,100,051
Future production
  and development costs              (27,585,510)   (25,366,016)   (23,774,850)
Future income tax expenses           (12,801,194)   (10,768,963)    (8,390,979)
                                     ------------   ------------   ------------
     Future net cash flows            29,860,507     25,203,091     20,934,222

10% annual discount for
  estimated timing of cash flows     (11,556,087)   (11,653,259)    (9,333,784)
                                     ------------   ------------   ------------
Standardized measure of
  discounted future net cash flows  $ 18,304,420  $  13,549,832  $  11,600,438
                                    ============   ============   ============

                              TEXAS VANGUARD OIL COMPANY

                    SUPPLEMENTAL OIL AND GAS INFORMATION, CONTINUED
                                   (Unaudited)

The following are the principal sources of change in the standardized measure
of discounted future net cash flows:

                                                2005         2004         2003

Changes:
Sale of oil and gas produced, net of
 production costs                       $ (2,045,017) $(1,799,796) $(1,257,140)
Net changes in prices and production
 costs                                     2,909,460      863,473      680,136
Purchase of minerals in place                357,263       81,867      126,430
Extensions and discoveries                       ---          ---          ---
Sales                                            ---          ---          ---
Revisions of previous quantity estimates  (1,971,036)    (139,031)     265,999
Accretion of discount                      1,354,983    1,160,044      784,485
Other                                      4,148,935    1,782,837    3,155,681
                                           ----------   ----------    ---------
    Net changes                            4,754,588    1,949,394    3,755,591

Beginning balance - standardized measure
 of discounted future net cash flows      13,549,832   11,600,438    7,844,847
                                          ----------   ----------   ----------
Ending balance - standardized measure
 of discounted future net cash flows    $ 18,304,420  $13,549,832  $11,600,438
                                          ==========   ==========   ==========

The Company has not filed with or included in reports to any Federal authority
or agency other than the Securities and Exchange Commission any estimates of
total proved net oil and gas reserves.

Capitalized Costs Relating to Oil and Gas Producing Activities

                                                  Years ended December 31,
                                               2005         2004         2003

Unproven oil and gas properties
    (including wells in progress)        $   171,774  $   166,630  $   166,630

Proven oil and gas properties              4,951,154    4,132,921    4,063,987

Accumulated depletion and amortization    (2,173,175)  (1,963,081)  (1,699,955)
                                          ----------   ----------   ----------
Net capitalized costs                    $ 2,949,753  $ 2,336,470 $  2,530,662
                                          ==========   ==========   ==========

Costs Incurred in Oil and Gas Property
 Acquisition, Exploration and Development Activities

                                              Years ended December 31,
                                               2005      2004       2003

Acquisition of properties - unproven    $    20,711       ---        ---
Acquisition of properties - proven          877,183   120,739    707,793
Exploration costs                           161,558       ---        ---
Development costs                               ---       ---        ---

ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A.  CONTROLS AND PROCEDURES

The Company, under the supervision and with the participation of its manage-
ment, including the principal executive officer and principal financial
officer, evaluated the effectiveness of the design and operation of our
disclosure controls and procedures, as defined in rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act as of the end of the period
covered by our report.  Based upon that evaluation, our principal executive
officer and principal financial officer concluded as of the Evaluation Date
that our disclosure controls and procedures were effective such that the
information to be disclosed in the reports filed or submitted under the
Act is accumulated and communicated to management, including the principal
executive and principal financial officers, to allow timely decisions
regarding required disclosures.

                                    PART III

Items 10, 11, 12 and 13 constituting Part III of Form 10-K have been omitted
from this annual report pursuant to the provisions of Instruction G(3) to Form
10-K, as the Company will file a definitive proxy statement pursuant to
Regulation 14A under the Securities Exchange Act of 1934 within 120 days after
the close of its fiscal year.

                                    PART IV

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

The aggregate fees billed to the Company by Sprouse & Anderson, L.L.P. for
the audit of Texas Vanguard Oil Companys annual financial statements
included in the 10K and for the review of the financial statements included
in its quarterly reports on Form 10-Q for the fiscal years ended December
31, 2005 and 2004 totaled $27,200 and $17,500, respectively.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1). Financial Statements.

Independent Auditors' Report, Balance Sheets at December 31, 2005 and 2004 and
the related Statements of Earnings, Stockholders' Equity, and Cash Flows for
each of the years in the three-year period ended December 31, 2005, and notes
to financial statements are included in Item 8.

(a)(2) Financial Statement Schedules

Not applicable.

(a)(3). Exhibits

Number    Description of Document

3      Copies of Articles of Incorporation and Bylaws - Incorporated by
       reference to Exhibits 4a and 4b to Registration Statement No. 2-66693
       filed by registrant on Form S-2.

3.1    Articles of Amendment to authorize capitalization of common stock,
       previously filed as exhibits to Form 8-K dated May 27, 1983.

3.2    Certificate of Amendment dated February 20, 1990 of Articles of
       Incorporation and Articles of Amendment dated February 16, 1990 to the
       Articles of Incorporation. Filed as Exhibit to 1989 Form 10-K.

10.1   Incentive Stock Option Plan, previously filed as Exhibit 5b to
       Registration Statement No. 2-66693 filed by registrant on Form S-2.

10.2   Management contract between Texas Vanguard Oil Company and Robert Watson
       Inc., previously filed with Form 8-K dated January 30, 1988.

10.4   Note payable to Fort Worth National Bank dated April 27, 2005.

10.5   Note payable to First American Bank dated December 15, 2004.

10.6   Note payable to First American Bank dated December 15, 2004.

99.1   Certificate of Chief Executive Officer and Chief Financial Officer

99.2   Certification of Periodic Financial Reports

(b). Reports on Form 8-K

       None filed during the quarter ended December 31, 2005.

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

                                       TEXAS VANGUARD OIL COMPANY



                                       By: William G. Watson
                                           William G. Watson, President
                                           March 29, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.




William G. Watson                          Robert L. Patterson
William G. Watson, President,              Robert L. Patterson, Director
Director, Chief  Executive                 March 29, 2006
Officer and Principal Financial
and Accounting Officer
March 29, 2006

Linda R. Watson                             Teresa N. Nuckols
Linda R. Watson, Director                   Teresa N. Nuckols, Secretary
and Chairman of the Board                   March 29, 2006
March 29, 2006


OFFICERS AND DIRECTORS                CORPORATE INFORMATION

Linda R. Watson                       CORPORATE OFFICE
Chairman of the Board                 9811 Anderson Mill Road, Suite 202
and Director                          Austin, Texas 78750

William G. Watson
President, Chief Executive            INDEPENDENT ACCOUNTANTS
Officer and Director                  Sprouse & Anderson, L.L.P.
                                      Austin, Texas
Teresa Nuckols
Secretary

Robert L. Patterson
Director                              TRANSFER AGENT
                                      Computershare Trust Company, Inc.
                                      P.O. Box 1596
                                      Denver, Colorado 80228

                                      COMMON STOCK
                                      Quoted on OTC Bulletin Board
                                      Symbol: TVOC.OB

                                      CORPORATE GOVERNANCE
                                      The Company has adopted a Code of Ethics
                                      for its executive officers, directors and
                                      employees which is available upon request
                                      free of charge from:
                                      Investor Relations
                                      9811 Anderson Mill Road, Suite 202
                                      Austin, Texas 78750

                                      2005 ANNUAL SHAREHOLDERS MEETING
                                      June 8, 2006, at 10:00 A.M.
                                      Holiday Inn Northwest
                                      8901 Business Park Drive
                                      Austin, Texas 78759

EXHIBITS:

                               EXHIBIT 10.4

COMMERCIAL REVOLVING OR DRAW NOTE:

Fort Worth National Bank ("Lender")
Austin Banking Center
8200 N. Mopac, Suite 130
Austin, Texas 78759

Texas Vanguard Oil Company ("Borrower")
PO Box 202650
Austin, Texas 78720

TERMS:
Interest Rate:         4.75%
Principal Amount:     $700,000.00
Funding Date:          April 27, 2005
Maturity Date:         April 27, 2006

For value received, I promise to Pay to you, or your order, at your
address listed above the Principal sum of SEVEN-HUNDRED THOUSAND AND
NO/100 DOLLARS, ($700,000.00).

XX Multiple Advance: The principal sum shown above is the maximum amount
of principal I can borrow under this note

Conditions: As agreed upon by bank and borrower.

XX Open End Credit: You and I agree that I may borrow up to the maximum
principal sum more than one time. This feature is subject to all other
conditions and expires on April 27, 2006.

Interest: I agree to pay interest on the outstanding principal balance from
04/27/2005 at the rate of 4.750% per year until April 27, 2006.

Accrual Method: Interest will be calculated on a 360/30 basis.

Post Maturity Rate: I agree to pay interest on the unpaid balance of this
Note owing after maturity, and until paid in full, as state below: On the
Same fixed or variable rate basis in effect before maturity (as indicated
above).

XX Late Charge: If a payment is made more than 10 days after it is due, I
agree to pay a late charge of 5.000% of payment.

XX Interest: I agree to pay accrued interest on demand, but if no demand is
made then monthly beginning 05/27/2005

XX Principal: I agree to pay the principal on demand, but if no demand is
made then on 04/27/2006.

Purpose: The purpose of this loan is revolving line of credit for business
expenses.

Security: Fort Worth National Bank Certificate of Deposit Number 13656 in
the amount of $700,000.00 along with any renewals or replacements thereof.

XX Specific Property Description: The Property includes, but is not limited
by, the following: Fort Worth National Bank Certificate of Deposit Number
13656 in the amount of $700,000.00 along with any renewals of replacements
thereof.

This Written Loan Agreement represents the final agreement between the parties
and may not be contradicted by evidence of prior, contemporaneous, or
subsequent oral agreements of the parties.

There are no unwritten oral agreements between the parties.

Signatures: I agree to the terms of this note and security agreement
(including those on pages 1 and 2). I have received a copy of this note
and security agreement on todays date.

Texas Vanguard Oil Company

Signed: Linda Watson, C.O.B./Director

Signature for Lender: Patrick S. Maloy, President



                               EXHIBIT 10.5

TERM PROMISSORY NOTE:

First American Bank, SSB ("Lender")
500 West Illinois, Suite 10
Midland, Texas 79701
Midland County

Texas Vanguard Oil Company ("Borrower")
PO Box 202650
Austin, Texas 78720
TERMS:
Interest Rate:         Variable
Principal Amount:     $622,514.00
Funding Date:          December 15, 2004
Maturity Date:         December 15, 2006
Loan Number:           700062938
PROMISE TO PAY:

For value received, Texas Vanguard Oil Company, a Texas Corporation
("Borrower"), whose address is PO Box 202650, Austin, TX 78720-2650
promises to pay to the order of First American Bank, SSB ("Lender"
or "Payee") the sum of SIX HUNDRED TWENTY-TWO THOUSAND FIVE HUNDRED FOURTEEN
DOLLARS ($622,514.00), together with interest on the unpaid principal balance
thereof from date hereof until maturity at the rate hereinafter provided,
both principal and interest payable as hereinafter provided in lawful money
of the United States of America at Lender's offices at 500 West Illinois,
Suite 10, Midland, TX 79701 or at such place as from time to time may be
designated by the holder of this Note.

This Note, that certain Revolving Line of Credit Note dated as of the date of
this Note having an original commitment amount of $3,000,000.00 executed by
Borrower and payable to Lender ("Line of Credit Note") and that certain Letter
of Credit Note or Agreement dated on or about the date of this Note have a face
amount of $250,000.00 executed by Borrower and payable to Lender ("Letter of
Credit Note") in support of a Letter of Credit in favor of the Texas Railroad
Commission are described in and are subject to the terms and provisions of that
certain Loan Agreement ("Loan Agreement") dated as of the date of this Note by
and between Borrower and Lender.  The Loan Agreement, among other things,
contains provisions regarding the amount that Lender is required to advance
under the terms of the Line of Credit Note ("the Borrowing Base"), provisions
for acceleration of the maturity hereof upon the happening or omission of
certain stated events upon the terms and conditions therein specified.

"Stated Rate" means, on any day, a rate per annum equal to the Prime Rate from
time to time in effect plus one-half of one percent (.5%), provided, that (a)
if on any day the Stated Rate shall exceed the Highest Lawful Rate for that day
then the Stated Rate shall be fixed at the Highest Lawful Rate on that day and
on each day thereafter until the total amount of interest accrued at the Stated
Rate on the unpaid balance of this Note equals the total amount of interest
which would have accrued if there were no Highest Lawful Rate and/or (b) the
Stated Rate shall not be less than five and one-half percent (5.50%).

As used herein the following terms shall have the meanings set forth below:

"Prime Rate" means the fluctuating per annum rate of interest which is
published in the Wall Street Journal as the Prime Rate, or if, but only if,
such Prime Rate or index is no longer available or if such Prime Rate is no
longer ascertainable, Lender (or its successors) will substitute an index
determined by Lender to be comparable, in its sole discretion, which rate shall
become the "Prime Rate".  In the event The Wall Street Journal publishes more
than one interest rate as the Prime Rate, the Prime Rate used herein shall be
the highest of said published rates, unless Lender (or its successors) notifies
Borrower in writing of Lender's (or its successor's) intent to use one of the
lower published rates as the prime rate.  The interest rate on this Note will
change each time and as of the date that the Prime Rate or applicable index
rate changes.  The Prime Rate may not be the lowest rate of interest charged
by Lender to its customers.

"Highest Lawful Rate" means the maximum nonusurious rate of interest that
Lender is permitted under applicable law to contract for, take, charge or
receive with respect to the indebtedness evidenced by this Note.

The above sum and accrued interest shall be due and payable in twenty-three
(23) monthly principal installments of Twenty-Five Thousand Nine Hundred
Thirty-Eight dollars and Eight cents($25,938.08) each, plus interest accrued
on the unpaid principal balance to the date of each installment, beginning
January 15, 2005, and continuing on the 15th date of each month thereafter
until and including November 15, 2006, and then in one installment of the
entire unpaid principal balance plus accrued unpaid interest on
December 15, 2006.

All past due principal and/or interest or installments thereof shall bear
interest from maturity at the Highest Lawful Rate.

This Note, the Line of Credit Note and Letter of Credit Note described above
are secured by a Deed of Trust, Mortgage, Security Agreement, Assignment of
Production and Financing Statement dated as of the date of this Note from
Borrower (hereinafter sometimes referred to as "Grantor," whether one or
more) to Robert Nordhaus, Trustee for the benefit of the Lender covering any
and all of Grantor's interest, whether now owned or hereafter acquired, in and
to various leasehold and associated net revenue and overriding royalty
interests in oil and gas wells and leases along with personal property
associated therewith and proceeds derived therefrom located in the state of
Texas(hereinafter referred to as "Security Documents").  Failure to describe
all or part of the security shall not be considered as a waiver of such
security.

Upon the failure to pay any installment of the principal or interest on this
Note as above promised or upon the occurrence of a default or event of default
specified in the Line of Credit Note, Letter of Credit Note, the Loan Agreement
and/or the Security Documents described above, the holder of this Note or any
part thereof shall have the option of declaring the principal balance hereof
and the interest accrued herein to be immediately due and payable.

Borrower shall have the right to prepay, without penalty, at any time and from
time to time prior to maturity, all or any part of the unpaid principal
balance of this Note and/or all or any part of the interest accrued to the
date of such prepayment, provided that any such principal thus paid is
accompanied by accrued interest on such principal.

It is the intent of the Payee of the Note and the undersigned in the execution
of this Note and all other instruments now or hereafter securing this Note
to contract in strict compliance with applicable usury law.  In furtherance
thereof, the said Lender and the undersigned stipulate and agree that none of
the terms and provisions contained in this Note, or in any other instrument
executed in connection herewith, shall ever be construed to create a contract
to pay for the use, forbearance or detention of money, at a rate in excess of
the Highest Lawful Rate; that neither the undersigned nor any guarantors,
endorsers or other parties now or hereafter becoming liable for payment of
this Note shall ever be obligated or required to pay interest on this Note
at a rate in excess of the Highest Lawful Rate; and that the provisions of this
paragraph shall control over all other provisions of this Note and any other
instruments now or hereafter executed in connection herewith which may be
in apparent conflict herewith.  The holder of this Note expressly disavows
any intention to charge or collect excessive unearned interest or finance
charges in the event the maturity of this Note is accelerated.  If the maturity
of this Note shall be accelerated for any reason of if the principal of this
Note is paid prior to the end of the term of this Note, and as a result
thereof the interest received for the actual period of existence of the loan
evidenced by this Note exceeds the Highest Lawful Rate, the holder of this
Note shall, at its option, either refund to the undersigned the amount of such
excess or credit the amount of such excess against the principal balance of
this Note then outstanding and thereby shall render inapplicable any and all
penalties of any kind provided by applicable law as a result of such excess
interest.  In the event that the said Lender or any other holder of this Note
shall contract for, charge or receive any amount or amounts and/or any other
thing of value which are determined to constitute interest which would equal
to interest in excess of the Highest Lawful Rate shall, upon such determination
at the option of the Holder of this Note, be either immediately returned to
the undersigned or credited against the principal balance of this Note then
outstanding, in which event any and all penalties of any kind under applicable
law as a result of such excess shall be inapplicable.  By execution of this
Note the undersigned acknowledges that it believes the loan evidenced by this
Note to be non-usurious and agrees that if, at any time the undersigned should
have reason to believe that such loan is in fact usurious, it will give the
holder of this Note notice of such condition and the undersigned agrees that
said holder shall have ninety (90) days in which to make appropriate refund
or other adjustment in order to correct such condition if in fact such exists.
The term "applicable law" as used in this Note shall mean the laws of the
State of Texas or the laws of the United States, whichever laws allow the
greater rate of interest, as such laws now exist or may be changed or amended
or come into effect in the future.

Should the indebtedness represented by this Note or any part thereof be
collected at law or in equity or through bankruptcy, probate or other court
proceeding or if this Note is placed in the hands of attorneys for collection
after default, the undersigned and all endorsers, guarantors and sureties of
this Note jointly and severally agree to pay to the holder of this Note in
addition to the principal and interest due and payable herein all the costs
and expenses of said holder in enforcing this Note including, without
limitation, reasonable attorneys' fees and legal expenses.

This Note is given in renewal and extension, but expressly not in extinguishment
Of that certain Promissory Note dated February 12, 2003 having an original face
Value amount of $735,074.00 executed by Borrower and payable to Lender
("Original Note"), which Original Note is secured by the Deed of Trust setout
above. All Liens, assignments and security interests securing the payment of
said Original Note are hereby ratified, confirmed, renewed, extended,
rearranged and brought forward as security for the payment of this Note.

The undersigned and all endorsers, guarantors and sureties of this Note and
all other persons liable or to become liable on this Note severally waive
presentment for payment, demand, notice of demand and of dishonor and
nonpayment of this Note, notice of acceleration, notice of intention to
accelerate the maturity of this Note, protest and notice of protest, diligence
in collecting, and the bringing of suit against any other party, and agree to
all renewals, extensions, modifications, partial payments, releases or
substitutions of security, in whole or in party, with or without notice, before
or after maturity.

This Note and the Rights and Duties of the parties hereunder shall be governed
for all purposes by the law of the state of Texas and the law of the United
States applicable to transactions within such state.

This loan is payable in full on December 15, 2006 or upon acceleration for any
reason permitted under this note. At maturity you must repay the entire
principal balance of the loan and unpaid interest then due. The Lender is under
no obligation to refinance the loan at that time. You will therefore, be
required to make payment out of other assets that you may own or you will have
to find a lender, which may be the Lender you have this loan with, willing to
lend you the money. If you refinance this loan at maturity, you may have to pay
some or all of the closing costs normally associated with a new loan even if
you obtain refinancing from the same Lender.

NOTICE: This term note, the line of credit note, the Letter of Credit, the
Security Documents and accompanying UCC-1 Financing Statements and Loan
Agreement and/or any and all other documents executed at or near the time of
execution of this document constitute a "Loan Agreement" as defined in section
26.02(a) of the Texas Business & Commerce Code, and represents the final
agreement between the parties and may not be contradicted by evidence to
prior, contemporaneous or subsequent oral agreements of the
parties.  There are no unwritten oral agreements between the Parties.

Dated the date set out above, although executed on this 16th day of December
2004.


By: TEXAS VANGUARD OIL COMPANY
    WILLIAM G. WATSON
    PRESIDENT


                               EXHIBIT 10.6

PROMISSORY NOTE (REVOLVING LINE OF CREDIT):

First American Bank, SSB ("Lender")
500 West Illinois, Suite 10
Midland, Texas 79701
Midland County

Texas Vanguard Oil Company ("Borrower")
PO Box 202650
Austin, Texas 78720

TERMS:
Interest Rate:         Variable
Principal Amount:     $3,000,000.00
Funding Date:          December 15, 2004
Maturity Date:         February 15, 2007
Loan Number:           028799
PROMISE TO PAY:

For value received, Texas Vanguard Oil Company, a Texas Corporation
("Borrower"), whose address is PO Box 202650, Austin, TX 78720-2650
promises to pay to the order of First American Bank, SSB ("Lender"
or "Payee") the sum of THREE-MILLION DOLLARS ($3,000,000.00), or so much
thereof as may be advanced by Lender prior to maturity, together with interest
on the unpaid principal balance thereof from date hereof until maturity at
the rate hereinafter provided, both principal and interest payable as
hereinafter provided in lawful money of the United States of America at
Lender's offices at 500 West Illinois, Suite 10, Midland, TX 79701 or at
such place as from time to time may be designated by the holder of this Note.

This Note, that certain Term Promissory Note dated as of the date of
this Note in the original principal amount of $622,514.00 executed by
Borrower and payable to Lender ("Term Note") and that certain Letter
of Credit Note or Agreement dated on or about October 31, 2004 having a face
amount of $250,000.00 executed by Borrower and payable to Lender ("Letter of
Credit Note") in support of a Letter of Credit in favor of the Texas Railroad
Commission are described in and are subject to the terms and provisions of that
certain Loan Agreement ("Loan Agreement") dated as of the date of this Note by
and between Borrower and Lender.  The Loan Agreement, among other things,
contains provisions regarding the amount that Lender is required to advance
under the terms of the Line of Credit Note ("the Borrowing Base"), provisions
for acceleration of the maturity hereof upon the happening or omission of
certain stated events upon the terms and conditions therein specified and the
payment of a non-refundable origination fee at closing of $13,750.00.

"Stated Rate" means, on any day, a rate per annum equal to the Prime Rate from
time to time in effect plus one-half of one percent (.5%), provided, that (a)
if on any day the Stated Rate shall exceed the Highest Lawful Rate for that day
then the Stated Rate shall be fixed at the Highest Lawful Rate on that day and
on each day thereafter until the total amount of interest accrued at the Stated
Rate on the unpaid balance of this Note equals the total amount of interest
which would have accrued if there were no Highest Lawful Rate and/or (b) the
Stated Rate shall not be less than four and three-quarters percent (5.50%).

As used herein the following terms shall have the meanings set forth below:

"Prime Rate" means the fluctuating per annum rate of interest which is
published in the Wall Street Journal as the Prime Rate, or if, but only if,
such Prime Rate or index is no longer available or if such Prime Rate is no
longer ascertainable, Lender (or its successors) will substitute an index
determined by Lender to be comparable, in its sole discretion, which rate shall
become the "Prime Rate".  In the event The Wall Street Journal publishes more
than one interest rate as the Prime Rate, the Prime Rate used herein shall be
the highest of said published rates, unless Lender (or its successors) notifies
Borrower in writing of Lender's (or its successor's) intent to use one of the
lower published rates as the prime rate.  The interest rate on this Note will
change each time and as of the date that the Prime Rate or applicable index
rate changes.  The Prime Rate may not be the lowest rate of interest charged
by Lender to its customers.

"Highest Lawful Rate" means the maximum nonusurious rate of interest that
Lender is permitted under applicable law to contract for, take, charge or
receive with respect to the indebtedness evidenced by this Note.

The above sum and accrued interest shall be due and payable as follows:

(a) Interest shall be due and payable monthly as it accrues on the unpaid
principal balance to the date of each installment, payment beginning January
15, 2005, and continuing on the 15th day of each month thereafter until
and including January 15, 2007.

(b) On February 15, 2007, the remaining balance, including principal and
interest, then remaining unpaid on this Note shall be due and payable.

This Note is a Revolving Line of Credit Promissory Note having a face
amount of $3,000,000.00 but an initial commitment amount described in
the Loan Agreement.  The unpaid principal balance of this Note at any
time shall be the total of all amounts loaned or advanced by the holder
hereof less the amount of all payments or prepayments of principal made
hereon by or for Maker.  Maker may use all or any part of the credit
provided for herein at any time before February 15, 2007, subject to the
Borrowing Base limitation set out in the Loan Agreement.  Maker may borrow,
repay and reborrow hereunder and there is no limitation on the number of
advances made hereunder so long as the total unpaid balance, at any time
outstanding, does not exceed the lessor of (a) $3,000,000.00 or (b) the
Borrowing Base as set out in the Loan Agreement.

Upon the failure to pay any installment of the principal or interest on this
Note as above promised or upon the occurrence of a default or event of default
specified in the Term Note, Letter of Credit Note, the Loan Agreement and/or
the Security Documents described below, the holder of this Note or any part
thereof shall have the option of declaring the principal balance hereof and
the interest accrued hereon to be immediately due and payable.

All past due principal and/or interest or installments thereof shall bear
interest from maturity at the Highest Lawful Rate.

This Note, the Term Note and Letter of Credit Note described above
are secured by a Deed of Trust, Mortgage, Security Agreement, Assignment of
Production and Financing Statement dated as of the date of this Note from
Borrower (hereinafter sometimes referred to as "Grantor," whether one or
more) to Robert Nordhaus, Trustee for the benefit of the Lender covering any
and all of Grantor's interest, where now owned or hereafter acquired, in and
to various leasehold and associated net revenue and overriding royalty
interests in oil and gas wells and leases along with personal property
associated therewith and proceeds derived therefrom located in the state of
Texas (hereinafter referred to as "Security Documents").  Failure to describe
all or part of the security shall not be considered as a waiver of such
security.

Upon the failure to pay any installment of the principal or interest on this
Note as above promised or upon the occurrence of a default or event of default
specified in the Term Note, the Loan Agreement and/or the Security Documents
described above, the holder of this Note or any part thereof shall have the
option of declaring the principal balance hereof and the interest accrued
hereon to be immediately due and payable.

Borrower shall have the right to prepay, without penalty, at any time and from
time to time prior to maturity, all or any part of the unpaid principal
balance of this Note and/or all or any part of the interest accrued to the
date of such prepayment, provided that any such principal thus paid is
accompanied by accrued interest on such principal.

It is the intent of the Payee of the Note and the undersigned in the execution
of this Note and all other instruments now or hereafter securing this Note
to contract in strict compliance with applicable usury law.  In furtherance
thereof, the said Lender and the undersigned stipulate and agree that none of
the terms and provisions contained in this Note, or in any other instrument
executed in connection herewith, shall ever be construed to create a contract
to pay for the use, forbearance or detention of money, at a rate in excess of
the Highest Lawful Rate; that neither the undersigned nor any guarantors,
endorsers or other parties now or hereafter becoming liable for payment of
this Note shall ever be obligated or required to pay interest on this Note
at a rate in excess of the Highest Lawful Rate; and that the provisions of this
paragraph shall control over all other provisions of this Note and any other
instruments now or hereafter executed in connection herewith which may be
in apparent conflict herewith.  The holder of this Note expressly disavows
any intention to charge or collect excessive unearned interest or finance
charges in the event the maturity of this Note is accelerated.  If the maturity
of this Note shall be accelerated for any reason or if the principal of this
Note is paid prior to the end of the term of this Note, and as a result
thereof the interest received for the actual period of existence of the loan
evidenced by this Note exceeds the Highest Lawful Rate, the holder of this
Note shall, at its option, either refund to the undersigned the amount of such
excess or credit the amount of such excess against the principal balance of
this Note then outstanding and thereby shall render inapplicable any and all
penalties of any kind provided by applicable law as a result of such excess
interest.  In the event that the said Lender or any other holder of this Note
shall contract for, charge or receive any amount or amounts and/or any other
thing of value which are determined to constitute interest which would equal
to interest in excess of the Highest Lawful Rate shall, upon such determination
at the option of the Holder of this Note, be either immediately returned to
the undersigned or credited against the principal balance of this Note then
outstanding, in which event any and all penalties of any kind under applicable
law as a result of such excess shall be inapplicable.  By execution of this
Note the undersigned acknowledges that it believes the loan evidenced by this
Note to be non-usurious and agrees that if, at any time the undersigned should
have reason to believe that such loan is in fact usurious, it will give the
holder of this Note notice of such condition and the undersigned agrees that
said holder shall have ninety (90) days in which to make appropriate refund
or other adjustment in order to correct such condition if in fact such exists.
The term "applicable law" as used in this Note shall mean the laws of the
State of Texas or the laws of the United States, whichever laws allow the
greater rate of interest, as such laws now exist or may be changed or amended
or come into effect in the future.

Should the indebtedness represented by this Note or any part thereof be
collected at law or in equity or through bankruptcy, probate or other court
proceeding or if this Note is placed in the hands of attorneys for collection
after default, the undersigned and all endorsers, guarantors and sureties of
this Note jointly and severally agree to pay to the holder of this Note in
addition to the principal and interest due and payable hereon all the costs
and expenses of said holder in enforcing this Note including, without
limitation, reasonable attorneys' fees and legal expenses.

This Note is given in renewal and extension, but expressly not in extinguishment
Of that certain Revolving Line of Credit dated February 12, 2003 having a face
amount of $3,000,000.00 executed by Borrower and payable to Lender ("Original
Note"), which Original Note is secured by the Deed of Trust set out above. All
liens, assignments and security interests securing the payment of said Original
Note are hereby ratified, confirmed, renewed, extended, rearranged and
brought forward as security for the payment of this Note.

The undersigned and all endorsers, guarantors and sureties of this Note and
all other persons liable or to become liable on this Note severally waive
presentment for payment, demand, notice of demand and of dishonor and
nonpayment of this Note, notice of acceleration, notice of intention to
accelerate the maturity of this Note, protest and notice of protest, diligence
in collecting, and the bringing of suit against any other party, and agree to
all renewals, extensions, modifications, partial payments, releases or
substitutions of security, in whole or in party, with or without notice, before
or after maturity.

This Note and the Rights and Duties of the parties hereunder shall be governed
for all purposes by the law of the state of Texas and the law of the United
States applicable to transactions within such state.

This loan is payable in full on December 15, 2006 or upon acceleration for any
reason permitted under this note. At maturity you must repay the entire
principal balance of the loan and unpaid interest then due. The Lender is under
no obligation to refinance the loan at that time. You will therefore, be
required to make payment out of other assets that you may own or you will have
to find a lender, which may be the Lender you have this loan with, willing to
lend you the money. If you refinance this loan at maturity, you may have to pay
some or all of the closing costs normally associated with a new loan even if
you obtain refinancing from the same Lender.

NOTICE: This line of credit note, the term note, the Letter of Credit, the
Security Documents and accompanying UCC-1 Financing Statements and Loan
Agreement and/or any and all other documents executed at or near the time of
execution of this document constitute a "Loan Agreement" as defined in section
26.02(a) of the Texas Business & Commerce Code, and represents the final
agreement between the parties and may note be contradicted by evidence to
prior, contemporaneous or subsequent oral agreements of the
parties.  There are no unwritten oral agreements between the Parties.

Dated the date set out above, although executed on this 16th day of December
2004.


By: TEXAS VANGUARD OIL COMPANY
    WILLIAM G. WATSON
    PRESIDENT



EXHIBIT 99.1:
CERTIFICATE OF CHIEF FINANCIAL OFFICER AND CHIEF FINANCIAL OFFICER

I, William Watson, certify that:

1.  I have reviewed this annual report on Form 10-K of Texas Vanguard Oil
Company (TVOC).

2.  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.

3.  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, results of operations and cash
flows of TVOC as of, and for, the periods presented in this annual report.

4.  Texas Vanguard Oil Company's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in the Exchange Act Rules 13a-14 and 15d-14) for
TVOC and we have:

a)  designed such disclosure controls and procedures to ensure that material
information relating to TVOC, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b)  evaluated the effectiveness of TVOC disclosure controls and procedures
as of the disclosure controls and procedures based on our evaluation as of
the Evaluation Date.

c)  presented in this annual report our conclusions about the effective-
ness of the disclosure controls and procedures based on our evaluation as
of the Evaluation Date.

5.  TVOC's other certifying officers and I have disclosed, based on our
most recent evaluation, to our auditors and the audit committee of TVOC's
board of directors:

a)  all significant deficiencies in the design or operation of internal
controls which could adversely affect TVOC's ability to record, process,
summarize and report financial data and have identified for TVOC's auditors
any material weaknesses in internal controls; and

b)  any fraud, whether or not material, that involves management or other
employees who have a significant role in TVOC's internal controls.

6.  TVOC's other certifying officers and I have indicated in this annual
report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

March 29, 2006


By /s/ William G. Watson
------------------------
William G. Watson, President
(Principal Financial and Accounting Officer)


EXHIBIT 99.2:  CERTIFICATION OF PERIODIC FINANCIAL REPORTS

The undersigned hereby certifies that this Annual Report on Form 10-K
for the fiscal year ended December 31, 2005, fully complies with the
requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act
of 1934 and that the information contained in this report fairly presents,
in all material respects, the financial conditions and results of operations
of Texas Vanguard Oil Company.

Date:  March 29, 2006            By/s/ William G. Watson
                                 --------------------------
                                 William G. Watson, President
                                (Principal Financial and Accounting Officer)