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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 FORM 10-K
 
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
 for the fiscal year ended December 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
 Commission File Number: 333-91014-01
 TREASURE ISLAND ROYALTY TRUST
  Texas(State or other jurisdiction of 
incorporation or organization)
    
    02-6148888(I.R.S. Employer
Identification No.)U.S. Bank National AssociationAs Trustee of the Treasure Island Royalty TrustCorporate Trust Services5555 San Felipe, 11thFloor Mail Code: EX-TX-WSFH 
Houston, Texas(Address of principal executive office)
    
    77056(Zip Code)
 (713) 235-9208  (Registrants telephone number, including area code)
 Securities registered pursuant to Section 12(b) of the Act:
 Securities registered pursuant to Section 12(g) of the Act:
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TABLE OF CONTENTS
 PagePART IItem 1.
    
    Business
    
    
    1Creation and Purpose of the Trust
    
    
    1Treasure Island
    
    
    1Operations Update
    
    
    1Overriding Royalty Interests
    
    
    2Distributions
    
    
    3Disposition of Overriding Royalty Interests
    
    
    3Duration of the Trust
    
    
    4The Trustee
    
    
    4Item 1A.
    
    Risk Factors
    
    
    5Item 1B.
    
    Unresolved Staff Comments
    
    
    7Item 2.
    
    Properties
    
    
    7Item 3.
    
    Legal Proceedings
    
    
    7Item 4.
    
    Submission of Matters to a Vote of Unitholders
    
    
    8PART IIItem 5.
    
    Market for the Registrants Units and Related Unitholder Matters
    
    
    8Item 6.
    
    Selected Financial Data
    
    
    8Item 7.
    
    Trustees Discussion and Analysis of Financial Condition and Results of Operations
    
    
    8Overview
    
    
    8Liquidity and Capital Resources
    
    
    9Results of Operations
    
    
    9Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    9Item 8.
    
    Financial Statements and Supplementary Data
    
    
    9Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    15Item 9A.
    
    Controls and Procedures
    
    
    15PART IIIItem 10.
    
    Directors and Executive Officers of the Registrant
    
    
    15Item 11.
    
    Executive Compensation
    
    
    15Item 12.
    
    Unit Ownership of Certain Beneficial Owners and Management
    
    
    16Item 13.
    
    Certain Relationships and Related Transactions
    
    
    16Item 14.
    
    Principal Accountant Fees and Services
    
    
    16Item 15.
    
    Exhibits and Financial Statement Schedules
    
    
    16Certification of Vice President Pursuant to Section 302Certification of Trustee Pursuant to Section 906




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PART I
 
 Item 1. Business
   
 Creation and Purpose of the Trust
   
 Treasure Island
   
 Operations Update
  1




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Overriding Royalty Interests
    
    
    Newfield owns a working interest in the lease block at any time during the grant
period of at least 25%; and
    
    at the time of its acquisition, Newfields interest in the lease block includes a
net revenue interest in the production equal to no less than its working interest
percentage multiplied by 80%.
 Properties
  2




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Distributions
  Trustees Discussion and Analysis of Financial Condition and
Results of Operations
 
 Disposition of Overriding Royalty Interests
  
    
    the value of the interests to be sold during any calendar year exceeds 10% of the
value of all royalty interests attributed with proved reserves; or
    
    the cumulative value of all royalty interests sold pursuant to such requests exceeds
25% of the value of all royalty interests attributed with proved reserves.
    3




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Duration of the Trust
  
    
    all of the royalty interests are sold;
    
    cash proceeds received by the trust with respect to the royalty interests are less
than $1,000,000 per year for each of two successive years after the first full year
during which any of the covered leases produce oil and gas in commercial quantities;
    
    the trust does not receive any cash proceeds attributable to the royalty interests
at any time prior to the third anniversary of the date that all covered leases have
expired;
    
    the holders of 80% or more of the outstanding trust units vote in favor of termination; or
    
    the trust violates the rule against perpetuities.
  
 The Trustee
  
    
    collecting revenue attributable to the royalty interests;
    
    paying expenses, charges and obligations of the trust from the trusts revenue and assets;
    
    distributing available cash to the trusts unitholders;
    
    investing cash on hand;
    
    establishing cash reserves;
    
    borrowing funds under specified circumstances;
    
    prosecuting, defending or settling any claim of or against the trustee, the trust or
the royalty interests; and
    
    taking any other action not otherwise prohibited that it deems necessary or
advisable to best achieve the purposes of the trust.
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Item 1A. Risk Factors
  There is no established public market for the trust units, which limits their market price and
unitholders ability to sell them for their inherent value
 The trust may not receive any royalties
  All of the leases subject to the royalty interests may expire
  Any future distributions from the trust will be subject to fluctuating prices for oil and gas.
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The occurrence of drilling, production or transportation accidents or other problems at any of
the underlying properties could reduce trust distributions
 The trust is dependent on Newfield for funding. Trustees Discussion and Analysis of Financial Condition and Results of Operations
 Trust unitholders have limited voting rights and the trust has no influence over the operation
or future development of the underlying properties.
 Newfields interests and the interests of the trust unitholders may not always be aligned.
 Newfield may transfer or abandon underlying properties . Business
 Trust unitholders have limited ability to enforce their rights.
 Limited liability of trust unitholders is uncertain.
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Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
 Business
 
    
    Newfield owns a working interest in the lease block at any time during the grant
period of at least 25%; and
    
    at the time of its acquisition, Newfields interest in the lease block includes a
net revenue interest equal to no less than its working interest percentage multiplied
by 80%.
    
 Item 3. Legal Proceedings
  7




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Unitholders
  
 PART II
 
 Item 5. Market for the Registrants Units and Related Unitholder Matters
     
 Item 6. Selected Financial Data
  At or for the Year or Period Ended December 31,2006
    
    2005
    
    2004
    
    2003
    
    2002Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Net loss
    
    
    118,436
    
    
    
    96,637
    
    
    
    91,774
    
    
    
    94,819
    
    
    
    44,438Cash distributions to unitholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash distributions per unit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Trust corpus
    
    
    835,745
    
    
    
    835,745
    
    
    
    835,745
    
    
    
    835,745
    
    
    
    835,745Trust assets
    
    
    835,745
    
    
    
    835,745
    
    
    
    835,745
    
    
    
    835,745
    
    
    
    835,745Trust liabilities
    
    
    446,104
    
    
    
    327,668
    
    
    
    231,031
    
    
    
    139,257
    
    
    
    44,438Trust accumulated deficit
    
    
    446,104
    
    
    
    327,668
    
    
    
    231,031
    
    
    
    139,257
    
    
    
    44,438
 
 Item 7. Trustees Discussion and Analysis of Financial Condition and Results of Operations
 
 Overview
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Liquidity and Capital Resources
  ,
 
 Results of Operations
  
 Item 7A. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 8. Financial Statements and Supplementary Data
 
 Report of Independent Registered Public Accounting Firm
     
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TREASURE ISLAND ROYALTY TRUST
 BALANCE SHEET
 At December 31,2006
    
    
    2005AssetsCash
    
    $
    100
    
    
    $
    100Overriding royalty interests in gas properties
    
    
    835,645
    
    
    
    835,645Total assets
    
    $
    835,745
    
    
    $
    835,745Liabilities and trust corpusCurrent trust expenses payable
    
    $
    37,068
    
    
    $
    49,465Loan payable to Newfield
    
    
    353,173
    
    
    
    246,190Interest payable
    
    
    55,863
    
    
    
    32,013Commitments and contingencies
    
    
    
    
    
    
    Trust corpus (42,574,298 units of beneficial
interest authorized and outstanding)
    
    
    835,745
    
    
    
    835,745Accumulated deficit
    
    
    (446,104
    )
    
    
    (327,668
    )Total liabilities and trust corpus
    
    $
    835,745
    
    
    $
    835,745
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TREASURE ISLAND ROYALTY TRUST
 STATEMENT OF LOSS
 Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31, 2006
    
    
    December 31, 2005
    
    
    December 31, 2004Royalty income
    
    $
    
    
    
    $
    
    
    
    $
    General and administrative expense
(Note 2)
    
    
    94,586
    
    
    
    79,810
    
    
    
    80,498Interest expense
    
    
    23,850
    
    
    
    16,827
    
    
    
    11,276Net loss
    
    $
    118,436
    
    
    $
    96,637
    
    
    $
    91,774Distributable income
    
    
    
    
    
    
    
    
    
    
    Distributable income per trust unit
    
    
    
    
    
    
    
    
    
    
    Outstanding trust units
    
    
    42,574,298
    
    
    
    42,574,298
    
    
    
    42,574,298
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TREASURE ISLAND ROYALTY TRUST
 NOTES TO FINANCIAL STATEMENTS
 1. Formation of the Trust and Basis of Presentation
      
    
    all of the royalty interests are sold;
    
    cash proceeds received by the trust with respect to the royalty interests are less
than $1,000,000 per year for each of two successive years after the first full year
during which any of the covered leases produce oil and gas in commercial quantities;
    
    the trust does not receive any cash proceeds attributable to the royalty interests
at any time prior to the third anniversary of the date that all covered leases have
expired;
    
    the holders of 80% or more of the outstanding trust units vote in favor of termination; or
    
    the trust violates the rule against perpetuities.
  2. Funding of the Trust and Distributions
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3. Disposition of Overriding Royalty Interests
  
    
    the value of the interests to be sold during any calendar year exceeds 10% of the
value of all royalty interests attributed with proved reserves; or
    
    the cumulative value of all royalty interests sold pursuant to such requests exceeds
25% of the value of all royalty interests attributed with proved reserves.
    13




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4. Federal Income Tax
  5. Trust Unitholder Voting Rights
  6. Trustee Compensation
  14




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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
  
 PART III
 
 Item 10. Directors and Executive Officers of the Registrant
  www.usbank.com
 Section 16(a) Beneficial Ownership Reporting Compliance
  
 Item 11. Executive Compensation
  15




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Item 12. Unit Ownership of Certain Beneficial Owners and Management
  Beneficial OwnershipName of Beneficial Owner
    
    Units
    
    PercentRichard C. McKenzie, Jr. (1)
    
    
    10,355,022
    
    
    
    24.3
    %Seven Bridges Foundation, Inc. (2)
    
    
    5,873,196
    
    
    
    13.8
    %
 
 (1)
    
    All information in the table above and in this note with respect to
Richard C. McKenzie, Jr. is based solely on Amended No. 4 to Schedule 13D he filed
with the SEC on May 26, 2006. Mr. McKenzies address is 118 John St., Greenwich, CT
06831.(2)
    
    All information in the table above and in this note with respect to Seven
Bridges Foundation, Inc. is based solely on the Schedule 13G it filed on May 26, 2006.
Seven Bridges Foundation, Inc.s address is 114 John Street, Greenwich, CT 06831. 
 Item 13. Certain Relationships and Related Transactions
  
 Item 14. Principal Accountant Fees and Services
  For the YearEnded December 31,2006
    
    
    2005Audit fees
    
    $
    22,000
    
    
    $
    22,000Audit-related fees
    
    
    
    
    
    
    Tax fees
    
    
    
    
    
    
    All other fees
    
    
    
    
    
    
    $
    22,000
    
    
    $
    22,000
  
 Item 15. Exhibits and Financial Statement Schedules
 Financial Statements
 Report of Independent Registered Public Accounting Firm
    
    
    9Balance Sheet
    
    
    10Statement of Loss
    
    
    11Notes to Financial Statements
    
    
    12
 Financial Statement Schedules
  16




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Exhibits
 ExhibitNumber
    
    Title4.1
    
    Form of Amended and Restated Trust Agreement of the Treasure Island Royalty Trust by and
between Newfield and U.S. Bank National Association, as successor trustee (incorporated by
reference to Exhibit 4.7 to the Registration Statement on Form S-4 filed by Newfield and the
trust with the SEC on June 24, 2002 (File No. 333-91014))10.1
    
    Form of Master Conveyance of Overriding Royalty Interest between EEX and Treasure Island
Royalty Trust (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form
S-4 filed by Newfield and the trust with the SEC on September 27, 2002 (File No. 333-91014))*31.1
    
    Certification of Vice President of Trustee of Treasure Island
Royalty Trust pursuant to 15 U.S.C. Section 7241, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*32.1
    
    Certification of Trustee of Treasure Island Royalty Trust pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 
 *
    
    Filed herewith. Supplemental Information to be Furnished
  17




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SIGNATURE
  TREASURE ISLAND ROYALTY TRUSTDate:  March 26, 2007
    By:
    U.S. Bank National Association, as trusteeBy:
    /s/ Steven A. FinkleaSteven A. FinkleaVice President  18




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Index to Exhibits
 ExhibitNumber4.1
    
    Form of Amended and Restated Trust Agreement of the Treasure Island Royalty Trust by and
between Newfield and U.S. Bank National Association, as successor trustee (incorporated by
reference to Exhibit 4.7 to the Registration Statement on Form S-4 filed by Newfield and the
trust with the SEC on June 24, 2002 (File No. 333-91014))10.1
    
    Form of Master Conveyance of Overriding Royalty Interest between EEX and Treasure Island
Royalty Trust (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form
S-4 filed by Newfield and the trust with the SEC on September 27, 2002 (File No. 333-91014))*31.1
    
    Certification of Vice President of Trustee of Treasure Island
Royalty Trust pursuant to 15 U.S.C. Section 7241, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*32.1
    
    Certification of Trustee of Treasure Island Royalty Trust pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 
 *
    
    Filed herewith. 19