##### Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549



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Form 10-Q



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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)

OF THE SECURITIES EXCHANGE
ACT OF 1934



For the Quarter ended March 31, 2005



Commission File Number 2-71865



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TEXLAND DRILLING PROGRAM-1981, LTD.

(Name of Registrant)



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|                        |  |                                     
|----------------------- |  | ------------------------------------
|TEXAS                   |  | 75-1791491.                         
|(State of Organization) |  | (I.R.S. Employer Identification No.)



|                               |  |         
|------------------------------ |  | --------
|777 Main Street, Suite 3200    |  |         
|Fort Worth, Texas              |  | 76102.  
|(Address of Executive Offices) |  | Zip Code



Registrants
Telephone Number (817) 336-2751



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



|                                           |  |               
|------------------------------------------ |  | --------------
|2425 Units of Limited Partnership Interest |  | None.         
|(Title of Class)                           |  | (Voting Units)



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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 ̈NO  x



Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act.):    Yes ̈No  x



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##### Table of Contents

Texland Drilling Program-1981, Ltd.



Index To Financial Statements



Reference Page



|                                                                            |  |    
|--------------------------------------------------------------------------- |  | ---
|Balance Sheets at March 31, 2005 andDecember 31, 2004.                      |  | 3  
|                                                                            | 
|Statements of Operations for the Three MonthsEnded March 31, 2005 and 2004. |  | 4  
|                                                                            | 
|Statement of Partners Capital for the ThreeMonths Ended March 31, 2005.    |  | 5  
|                                                                            | 
|Statements of Cash Flows for Three Months EndedMarch 31, 2005 and 2004.     |  | 6  
|                                                                            | 
|Notes to Financial Statements.                                              |  | 7-9



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##### Table of Contents

Texland Drilling Program-1981, Ltd.

(A Limited Partnership)



Balance Sheets

March 31, 2005 and December 31, 2004



|                                                            |  |             |             |   |          |   |             |  
|----------------------------------------------------------- |  | ----------- | ----------- | - | -------- | - | ----------- | -
|                                                            |  | 03/31/05    |             |   | 12/31/04 |  
|                                                            |  | (Unaudited) |             |   |          |  
|ASSETS                                                      |  |             |             |   |          |   |             |  
|Current Assets                                              |  |             |             |   |          |   |             |  
|Cash                                                        |  | $           | 89,361      |   |          | $ | 91,885      |  
|Accounts receivable - trade                                 |  |             | 189,874     |   |          |   | 178,470     |  
|Accounts receivable - managing general partner              |  |             |            |   |          |   | 6,540       |  
|                                                            |  |             |             |   |          |   |             |  
|                                                            |  |             | 279,235     |   |          |   | 276,895     |  
|                                                            |  |             |             |   |          |   |             |  
|Property and Equipment, at Cost (Successful Efforts Method) |  |             |             |   |          |   |             |  
|Intangible development costs                                |  |             | 7,391,717   |   |          |   | 7,382,738   |  
|Lease and well equipment                                    |  |             | 4,331,949   |   |          |   | 4,320,278   |  
|Producing leaseholds                                        |  |             | 161,495     |   |          |   | 161,495     |  
|                                                            |  |             |             |   |          |   |             |  
|                                                            |  |             | 11,885,162  |   |          |   | 11,864,512  |  
|Accumulated depreciation, depletion and amortization        |  |             | (10,312,362 | ) |          |   | (10,289,208 | )
|                                                            |  |             |             |   |          |   |             |  
|                                                            |  |             | 1,572,799   |   |          |   | 1,575,304   |  
|                                                            |  |             |             |   |          |   |             |  
|Total Assets                                                |  | $           | 1,852,034   |   |          | $ | 1,852,199   |  
|                                                            |  |             |             |   |          |   |             |  
|LIABILITIES                                                 |  |             |             |   |          |   |             |  
|Current Liabilities                                         |  |             |             |   |          |   |             |  
|Accounts payable - managing general partner                 |  | $           | 50,910      |   |          | $ | 57,949      |  
|                                                            |  |             |             |   |          |   |             |  
|Total Current Liabilities                                   |  |             | 50,910      |   |          |   | 57,949      |  
|                                                            |  |            
|Asset retirement liability                                  |  |             | 188,745     |   |          |   | 186,014     |  
|                                                            |  |             |             |   |          |   |             |  
|Total Liabilities                                           |  |             | 239,655     |   |          |   | 243,963     |  
|                                                            |  |            
|PARTNERS CAPITAL                                           |  |             |             |   |          |   |             |  
|Limited partners - 2,425 units outstanding                  |  |             | 1,156,087   |   |          |   | 1,158,090   |  
|General partners                                            |  |             | 456,292     |   |          |   | 450,146     |  
|                                                            |  |             |             |   |          |   |             |  
|                                                            |  |             | 1,612,379   |   |          |   | 1,608,236   |  
|                                                            |  |             |             |   |          |   |             |  
|Total Liabilities and Partners Capital                     |  | $           | 1,852,034   |   |          | $ | 1,852,199   |  
|                                                            |  |             |             |   |          |   |             |  



See accompanying
notes to financial statements.



3



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##### Table of Contents

Texland Drilling Program-1981, Ltd.

(A Limited Partnership)



Statements of Operations

(Unaudited)



|                                                                |  |                             |         |      |   |        
|--------------------------------------------------------------- |  | --------------------------- | ------- | ---- | - | -------
|                                                                |  | Three Months EndedMarch 31,
|                                                                |  | 2005                        |         | 2004
|Revenue                                                         |  |                             |         |      |   |        
|Oil and gas sales                                               |  | $                           | 468,207 |      | $ | 415,819
|Interest income                                                 |  |                             | 263     |      |   | 106    
|                                                                |  |                             |         |      |   |        
|                                                                |  |                             | 468,470 |      |   | 415,925
|                                                                |  |                             |         |      |   |        
|Operating Expenses                                              |  |                             |         |      |   |        
|Fees to managing general partner                                |  |                             | 33,563  |      |   | 22,875 
|Production expense                                              |  |                             | 115,274 |      |   | 118,431
|Severance tax                                                   |  |                             | 23,832  |      |   | 22,444 
|Depreciation, depletion and amortization                        |  |                             | 22,779  |      |   | 27,405 
|Other                                                           |  |                             | 2,758   |      |   | 17,585 
|Accretion expense                                               |  |                             | 2,731   |      |   | 3,445  
|                                                                |  |                             |         |      |   |        
|                                                                |  |                             | 200,937 |      |   | 212,185
|                                                                |  |                             |         |      |   |        
|Net Income                                                      |  | $                           | 267,534 |      | $ | 203,740
|                                                                |  |                             |         |      |   |        
|Allocation of Net Income                                        |  |                             |         |      |   |        
|Limited partners                                                |  | $                           | 130,160 |      | $ | 91,381 
|General partners                                                |  |                             | 137,374 |      |   | 112,359
|                                                                |  |                             |         |      |   |        
|                                                                |  | $                           | 267,534 |      | $ | 203,740
|                                                                |  |                             |         |      |   |        
|Net Income per $5,000 Limited Partner (2,425 Units Outstanding) |  |                             |         |      |   |        
|                                                                |  |                             |         |      |   |        
|Net income per limited partner unit                             |  | $                           | 53.67   |      | $ | 37.68  
|                                                                |  |                             |         |      |   |        



See accompanying
notes to financial statements.



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##### Table of Contents

Texland Drilling Program-1981, Ltd.

(A Limited Partnership)



Statements of Partners Capital

Three Months Ended March 31, 2005

(Unaudited)



|                             |  |                 |           |   |                 |   |          |       |  |   |           |  
|---------------------------- |  | --------------- | --------- | - | --------------- | - | -------- | ----- |  | - | --------- | -
|                             |  | LimitedPartners |           |   | GeneralPartners |   |          | Total | 
|Balance at December 31, 2004 |  | $               | 1,158,090 |   |                 | $ | 450,146  |       |  | $ | 1,608,236 |  
|Partners distributions      |  |                 | (132,163  | ) |                 |   | (142,900 | )     |  |   | (275,063  | )
|Partners contributions      |  |                 |          |   |                 |   | 11,671   |       |  |   | 11,671    |  
|Net income                   |  |                 | 130,160   |   |                 |   | 137,374  |       |  |   | 267,534   |  
|                             |  |                 |           |   |                 |   |          |       |  |   |           |  
|Balance at March 31, 2005    |  | $               | 1,156,087 |   |                 | $ | 456,292  |       |  | $ | 1,612,379 |  
|                             |  |                 |           |   |                 |   |          |       |  |   |           |  



See accompanying
notes to financial statements.



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##### Table of Contents

Texland Drilling Program-1981, Ltd.

(A Limited Partnership)



Statements of Cash Flow

Three Months Ended March 30, 2005 and 2004

(Unaudited)



|                                                                                  |  |      |          |   |      |   |          |  
|--------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | -
|                                                                                  |  | 2005 |          |   | 2004 |  
|Operating Activities                                                              |  |      |          |   |      |   |          |  
|Net income                                                                        |  | $    | 267,534  |   |      | $ | 203,740  |  
|                                                                                  |  |      |          |   |      |   |          |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |      |          |   |      |   |          |  
|Accretion expense                                                                 |  |      | 2,731    |   |      |   | 3,445    |  
|Depreciation, depletion and amortization                                          |  |      | 22,779   |   |      |   | 27,405   |  
|(Increase) decrease in accounts receivable                                        |  |      | (4,864   | ) |      |   | (44,755  | )
|(Decrease) increase in accounts payable                                           |  |      | (7,039   | ) |      |   | 22,731   |  
|Other                                                                             |  |      | 375      |   |      |   |         |  
|                                                                                  |  |      |          |   |      |   |          |  
|                                                                                  |  |      | 13,983   |   |      |   | 8,826    |  
|                                                                                  |  |      |          |   |      |   |          |  
|Net cash provided by operating activities                                         |  |      | 281,517  |   |      |   | 212,566  |  
|                                                                                  |  |      |          |   |      |   |          |  
|Investing Activities                                                              |  |      |          |   |      |   |          |  
|Acquisition of property and equipment                                             |  |      | (20,650  | ) |      |   | (4,845   | )
|                                                                                  |  |      |          |   |      |   |          |  
|Net cash used in investing activities                                             |  |      | (20,650  | ) |      |   | (4,845   | )
|                                                                                  |  |      |          |   |      |   |          |  
|Financing Activities                                                              |  |      |          |   |      |   |          |  
|Partners contributions                                                           |  |      | 11,671   |   |      |   | 2,830    |  
|Partners distributions                                                           |  |      | (275,063 | ) |      |   | (169,200 | )
|                                                                                  |  |      |          |   |      |   |          |  
|Net cash used in financing activities                                             |  |      | (263,392 | ) |      |   | (166,370 | )
|                                                                                  |  |      |          |   |      |   |          |  
|Net Change in Cash                                                                |  |      | (2,524   | ) |      |   | 41,351   |  
|Cash - beginning of year                                                          |  |      | 91,885   |   |      |   | 52,124   |  
|                                                                                  |  |      |          |   |      |   |          |  
|Cash - End of Quarter                                                             |  | $    | 89,361   |   |      | $ | 93,475   |  
|                                                                                  |  |      |          |   |      |   |          |  



See accompanying
notes to financial statements.



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##### Table of Contents

Texland Drilling Program-1981, Ltd.

(A Limited Partnership)



Notes To Financial Statements

March 31, 2005

(Unaudited)



Note 1 - Organization and Summary of Significant Accounting Policies



Texland Drilling Program - 1981, Ltd. (the Partnership) was organized as a
limited partnership on July 20, 1981, for the purpose of engaging in oil and gas exploration and production. Texland Properties - 1981, a general partnership, and Texland Petroleum, L.P. are the general partners. The managing general partner is
Texland Petroleum, L.P. Partnership operations are conducted predominately in West Texas.



The Partnership shall continue in existence, unless terminated sooner through the occurrence of a final terminating event as defined by the Partnership agreement, until December 31, 2006, as extended through
approval by the limited partners owning a majority of aggregate Partnership subscriptions.



In the opinion of management, all adjustments (consisting of normal occurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2005
are not necessarily indicative of the results that may be expected for the entire year.



The Partnerships accounting policies are summarized below:



Basis of Accounting



The Partnership maintains its financial records on the income tax basis. The financial statements are presented in accordance with accounting principles generally
accepted in the United States of America.



Revenue Recognition



Revenues associated with the production of oil and gas properties in
which we have an interest are based on volumes produced during the period.



Property and Equipment



The Partnership uses the successful
efforts method of accounting for oil and gas producing activities. Costs incurred for the acquisition of producing and non-producing leaseholds are capitalized. Costs of intangible development and lease and well equipment incurred to drill and equip
successful exploratory and development wells are capitalized. Costs to drill and equip unsuccessful exploratory wells are charged to operations while costs of unsuccessful development wells remain capitalized. Costs to carry unproved properties and
geophysical costs are expensed. Costs associated with uncompleted wells are capitalized as wells-in-progress.



On the sale or retirement of a complete unit of a proved property, the cost and the related accumulated depreciation, depletion, and amortization are eliminated from the property accounts, and the resultant gain or
loss is recognized. On the retirement or sale of a partial unit of proved property, the cost is charged to accumulated depreciation, depletion, and amortization with a resulting gain or loss recognized in income.



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##### Table of Contents

Texland Drilling Program-1981, Ltd.

(A Limited Partnership)



Notes To Financial Statements (Continued)

March 31, 2005

(Unaudited)



Non-producing Leaseholds



Costs of
non-producing properties are charged to expense at such time as they are deemed to be impaired, based upon periodic assessments of such costs.



Amortization and Depletion



Leasehold costs of producing properties are amortized on the unit-of-production method based on proved oil and gas reserves as estimated by the Partnership. Intangible
development costs of producing properties are amortized on the unit-of-production method based on estimated proved developed oil and gas reserves.



Depreciation



Depreciation of equipment is provided by the unit-of-production method based on estimated proved developed oil and gas reserves.



Income Taxes



Income taxes have not been provided for by the Partnership, because the partners are liable for taxes on their respective shares of the Partnerships taxable income.



Statement of Cash Flows



For purposes of these statements, the Partnership considers cash on deposits and highly liquid money market funds as cash and cash
equivalents.



Allocation of Net Income



Revenues and costs of the Partnership are allocated between the general and limited partners
in accordance with the Partnership agreement.



Fair Values of Financial
Instruments



The Partnerships financial instruments consist of cash,
accounts receivable and accounts payable. The carrying amount of each of these financial instruments reported in the accompanying statements of financial position approximates the instruments fair value.



Use of Estimates



The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported revenues and expenses during the
reporting period. Actual results could differ from those estimates. The estimation of oil and gas reserves is inherently imprecise and may change materially in the near term.



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##### Table of Contents

Texland Drilling Program-1981, Ltd.

(A Limited Partnership)



Notes To Financial Statements (Continued)

March 31, 2005

(Unaudited)



2. Contributions By General Partner



Under terms of the Partnership Agreement, the General Partner is charged for certain costs related to drilling and production operations which are required to be capitalized for federal income tax purposes. These costs are treated as
capital contributions by the General Partner. In addition, Texland Properties-1981 and Texland Petroleum, L.P. initially invested in limited partnership units in the amount of $95,000 and $30,000 respectively.



3. Payments To Managing General Partner



In consideration of its management services rendered, the Managing General Partner is
entitled to charge management fees to the Partnership. In addition, for the three months ended March 31, 2005 and March 31, 2004, the Partnership was charged $44,818 and $40,121 respectively for technical services, accounting services, and
supervisory services performed by the employees of the Managing General Partner and such charges are included in intangible development costs, production expenses and fees to Managing General Partner. These charges are allocated between the General
and Limited Partners based upon applicable revenue and expense sharing rates.



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##### Table of Contents

Texland Drilling Program-1981, Ltd.

(A Limited Partnership)



Item 2. Managements Discussion And Analysis of Financial Condition and Results of Operaations



Risk Factors and Cautionary Statement for Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995



Certain information included in this report contain certain statements that may constitute
forward-looking statements within the meaning of Securities and Exchange regulations. Such forward-looking statements are based upon the current expectations of Texland Drilling Program-1981, Ltd. and speak only as of the date made.



Where any forward-looking statement includes a statement of the assumptions or bases
underlying such forward-looking statement, we caution that while we believe these assumptions or bases to be reasonable and to be made in good faith, assumed facts or bases almost always vary from actual results and the difference between assumed
facts or bases and the actual results could be material, depending on the circumstances.



Factors that could cause our results to differ materially from the results discussed in such forward-looking statements include, but are not limited to, the following: production variance from expectations, volatility
of oil and gas prices, the need to further develop reserves, the substantial capital expenditures required to fund operations, development risks, environmental risks, uncertainties about estimates of reserves, litigation, government regulation,
political risks, costs and results of developmental drilling, and mechanical and other inherent risks associated with oil and gas production. All such forward-looking statements in this document are expressly qualified in their entirety by the
cautionary statements in this paragraph, and the Partnership undertakes no obligation to publicly update or revise any forward-looking statements.



Critical Accounting Policies and Estimates



The Partnerships discussion and analysis of its financial condition and results of operations are based upon financial statements which have been prepared in
accordance with United States generally accepted accounting principles. The preparation of these financial statements requires the Partnership to make estimates and judgments that affect the amounts reported in the financial statements and related
footnote disclosures. Application of certain of the Partnerships accounting policies, including those related to oil and gas revenues, oil and gas properties, asset retirement obligations, and litigation require significant estimates. The
Partnership bases its estimates on historical experience and various assumptions that are believed reasonable under the circumstances. Actual results may differ from these estimates. The Partnership believes the following critical accounting
policies reflect its more significant judgments and estimates used in the preparation of its financial statements.



Property, Plant and Equipment



Proved reserves are defined by the U.S. Securities and Exchange Commission (SEC) as those volumes of crude oil, condensate, natural gas liquids and natural
gas that geological and engineering data demonstrate with reasonable certainty are recoverable from known reservoirs under existing economic and operating conditions. Proved developed reserves are volumes expected to be recovered through existing
wells with existing equipment and operating methods. Although the Managing General Partners engineers are knowledgeable of and follow the guidelines for reserves established by the SEC, the estimation of reserves requires a significant number
of assumptions based on professional judgment. Reserve estimates are updated at least annually and consider recent production levels and other technical information. Estimated reserves are often subject to future revision, which could be
substantial, based on the availability of additional information. Changes in oil and gas prices can lead to substantial revisions to reserve quantities.



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##### Table of Contents

Texland Drilling Program-1981, Ltd.

(A Limited Partnership)



Reserve revisions in turn may cause adjustments in the units-of-production depreciation and depletion rates, the estimates of potential impairment of carrying value, and the supplemental disclosure of standardized measure of discounted
future net cash flows relating to oil and gas producing activities. The Partnership cannot predict what reserve revisions may be required in future periods.



Financial Results



The Partnerships average price received per barrel of oil for the first quarter of 2005 was 42.95 as compared to $31.23 for the first quarter of 2004. The increase
in the price of oil was offset by normal and expected declines in oil and gas production which reduced the positive impact on sales of the increase in average oil prices. Gas sales, which represent approximately 20% of total oil and gas sales,
declined by 28%. Gas sales are primarily short-term contracts which can vary widely from month to month.



Fees to the managing general partner increased by 47% in 2005, and increased by 31% in 2004 due to discretionary changes in fees charged by the General Partner. Such changes are within the allowable fees specified by
the provisions of the Partnership Agreement.



Operating expenses have remained stable with a change of less than 3%.



Depreciation, depletion and amortization for the first quarter of 2005 was $22,779 as compared to $27,405 for the first quarter of 2004. Changes in depreciation and depletion for 2005 are due primarily to normal expected decline in oil and
gas production.



The Partnership was formed with cash contributions from the
Limited and General Partners. Management does not intend to incur any substantial indebtedness and any developmental drilling which is necessary will be processed by farmout to other parties or by reinvestment of internally generated funds.
Management, therefore, anticipates no liquidity problems during the life of the Partnership.



Item 4. Controls and Procedures



Based on an evaluation of the effectiveness of the Texland Drilling Program-1981 (the Partnership) disclosure controls and procedures, the Partnerships Chief Executive Officer and Chief Financial Officer concluded that, as of the end
of the period covered by this report, the Partnerships disclosure controls and procedures are effective to ensure that information required to be disclosed by the Partnership in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified in the SECs rules and forms.



There have been no changes in the Partnerships internal control over financial reporting identified in connection with the evaluation described in the above
paragraph that have materially affected, or are reasonably likely to materially affect, the Partnerships internal control over financial reporting.



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##### Table of Contents

Texland Drilling Program-1981, Ltd.

(A Limited Partnership)



Part II. Other Information



Items 1,2,3,4 and 5 are
not applicable and have been omitted.



Item 6



|(a) | Exhibits:
|--- | ---------



| | 31 | Certification by CEO & CFO Pursuant to Rule 13a-14(a)/15d-14(a).
| | -- | ----------------------------------------------------------------



| | 32 | Certification by CEO & CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
| | -- | --------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Texland Drilling Program-1981, Ltd.

(A Limited Partnership)



SIGNATURE



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.



|                                    |  |                                         |  |                      
|----------------------------------- |  | --------------------------------------- |  | ---------------------
|TEXLAND DRILLING PROGRAM-1981, LTD. |  |                                        
|Registrant                          |  |                                        
|                                    |  |                                        
|By                                  |  | /s/ M. E. Chapman.                      |  |                      
|                                    |  | M. E. Chapman, Vice President  Finance |  |                      
|                                    |  | Texland Petroleum, L.P.                 |  | Date October 11, 2005



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



|   |  |                                         |  |                      
|-- |  | --------------------------------------- |  | ---------------------
|By |  | /s/ R. J. Schumacher.                   |  |                      
|   |  | R. J. Schumacher, Chairman of the Board |  |                      
|   |  | Texland Petroleum, L.P.                 |  | Date October 11, 2005
|   |  |                                        
|By |  | /s/ J. N. Namy.                         |  |                      
|   |  | J. N. Namy, President & C.E.O.          |  |                      
|   |  | Texland Petroleum, L.P.                 |  | Date October 11, 2005
|   |  |                                        
|By |  | /s/ J. H. Wilkes.                       |  |                      
|   |  | J. H. Wilkes, President & C.O.O.        |  |                      
|   |  | Texland Petroleum, L.P.                 |  | Date October 11, 2005



13