##### Table of Contents

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---



Form 10-Q



---



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended June 30, 2005



OR



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



Commission File Number: 1-10982



---



Cross Timbers Royalty Trust

(Exact name of registrant as specified in its charter)



---



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Texas                                                          |  | 75-6415930                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                                      |  |           
|----------------------------------------------------- |  | ----------
|Bank of America, N.A., P.O. Box 830650, Dallas, Texas |  | 75283-0650
|(Address of principal executive offices)              |  | (Zip Code)



(877) 228-5084

(Registrants telephone number, including area code)



NONE

(Former name, former address and former fiscal year, if changed since last report)



---



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    No ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act).    Yes  x    No ̈



Indicate the number of units of beneficial interest outstanding, as of the
latest practicable date:



Outstanding as of July 15, 2005

6,000,000



---



---

##### Table of Contents

CROSS TIMBERS ROYALTY TRUST



FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2005



TABLE OF CONTENTS



|         |  |                                                                                                           |  |     
|-------- |  | --------------------------------------------------------------------------------------------------------- |  | ----
|         |  |                                                                                                           |  | Page
|         |  | Glossary of Terms                                                                                         |  | 3   
|         |  |                                                                                                          
|PART I.  |  | FINANCIAL INFORMATION                                                                                     |  |     
|         |  |                                                                                                          
|Item 1.  |  | Financial Statements                                                                                      |  | 4   
|         |  |                                                                                                          
|         |  | Report of Independent Registered Public Accounting Firm                                                   |  | 5   
|         |  |                                                                                                          
|         |  | Condensed Statements of Assets, Liabilities and Trust Corpus at June 30, 2005 and December 31, 2004       |  | 6   
|         |  |                                                                                                          
|         |  | Condensed Statements of Distributable Income for the Three and Six Months Ended June 30, 2005 and 2004    |  | 7   
|         |  |                                                                                                          
|         |  | Condensed Statements of Changes in Trust Corpus for the Three and Six Months Ended June 30, 2005 and 2004 |  | 8   
|         |  |                                                                                                          
|         |  | Notes to Condensed Financial Statements                                                                   |  | 9   
|         |  |                                                                                                          
|Item 2.  |  | Trustees Discussion and Analysis                                                                         |  | 11  
|         |  |                                                                                                          
|Item 3.  |  | Quantitative and Qualitative Disclosures about Market Risk                                                |  | 16  
|         |  |                                                                                                          
|Item 4.  |  | Controls and Procedures                                                                                   |  | 16  
|         |  |                                                                                                          
|PART II. |  | OTHER INFORMATION                                                                                         |  |     
|         |  |                                                                                                          
|Item 6.  |  | Exhibits                                                                                                  |  | 17  
|         |  |                                                                                                          
|         |  | Signatures                                                                                                |  | 18  



2



---

##### Table of Contents

CROSS TIMBERS ROYALTY TRUST



GLOSSARY OF TERMS



The following are
definitions of significant terms used in this Form 10-Q:



|                                                   |  |                                                                                                                                                                                                                                                                                                                                                     
|-------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Bbl                                                |  | Barrel (of oil)                                                                                                                                                                                                                                                                                                                                     
|                                                   | 
|Mcf                                                |  | Thousand cubic feet (of natural gas)                                                                                                                                                                                                                                                                                                                
|                                                   | 
|MMBtu                                              |  | One million British Thermal Units, a common energy measurement                                                                                                                                                                                                                                                                                      
|                                                   | 
|net proceeds                                       |  | Gross proceeds received by XTO Energy Inc. from sale of production from the underlying properties, less applicable costs, as defined in the net profits interest conveyances                                                                                                                                                                        
|                                                   | 
|net profits income                                 |  | Net proceeds multiplied by the applicable net profits percentage of 75% or 90%, which is paid to the trust by XTO Energy Inc. Net profits income is referred to as royalty
income for income tax purposes.                                                                                                                                      
|                                                   | 
|net profits interest                               |  | An interest in an oil and gas property measured by net profits from the sale of production, rather than a specific portion of production. The following defined net profits interests were
conveyed to the trust from the underlying properties:                                                                                                    
|                                                   | 
|                                                   |  | 90% net profits interests  interests that entitle the trust to receive 90% of the net proceeds from the underlying properties that are royalty or overriding royalty interests in
Texas, Oklahoma and New Mexico                                                                                                                                   
|                                                   | 
|                                                   |  | 75% net profits interests  interests that entitle the trust to receive 75% of the net proceeds from the underlying properties that are working interests in Texas and
Oklahoma                                                                                                                                                                     
|                                                   | 
|royalty interest (and overriding royalty
interest) |  | A nonoperating interest in an oil and gas property that provides the owner a specified share of production without any production expense or development costs                                                                                                                                                                                      
|                                                   | 
|underlying properties                              |  | XTO Energy Inc.s interest in certain oil and gas properties from which the net profits interests were conveyed. The underlying properties include royalty and overriding royalty interests
in producing and nonproducing properties in Texas, Oklahoma and New Mexico, and working interests in producing properties located in Texas and Oklahoma.
|                                                   | 
|working interest                                   |  | An operating interest in an oil and gas property that provides the owner a specified share of production that is subject to all production expense and development costs                                                                                                                                                                            



3



---

##### Table of Contents

CROSS TIMBERS ROYALTY TRUST



PART I - FINANCIAL INFORMATION



Item 1. Financial Statements.



The condensed
financial statements included herein are presented, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements have
been condensed or omitted pursuant to such rules and regulations, although the trustee believes that the disclosures are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction
with the financial statements and the notes thereto included in the trusts latest Annual Report on Form 10-K. In the opinion of the trustee, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the
assets, liabilities and trust corpus of the Cross Timbers Royalty Trust at June 30, 2005, and the distributable income and changes in trust corpus for the three- and six-month periods ended June 30, 2005 and 2004, have been included. Distributable
income for such interim periods is not necessarily indicative of distributable income for the full year.



4



---

##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



Bank of America, N.A., as Trustee

for the Cross Timbers Royalty Trust:



We have reviewed the accompanying condensed statement of assets, liabilities and trust
corpus of the Cross Timbers Royalty Trust as of June 30, 2005 and the related condensed statements of distributable income and changes in trust corpus for the three- and six-month periods ended June 30, 2005 and 2004. These condensed financial
statements are the responsibility of the trustee.



We conducted our review in
accordance with standards established by the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the
expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.



The accompanying condensed financial statements are prepared on a modified cash basis as described in Note 1 which is a comprehensive basis of accounting other than
accounting principles generally accepted in the United States of America.



Based on our review, we are not aware of any material modifications that should be made to the condensed financial statements referred to above for them to be in conformity with the basis of accounting described in Note 1.



We have previously audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the statement of assets, liabilities and trust corpus of the Cross Timbers Royalty Trust as of December 31, 2004, and the related statements of distributable income and changes in trust corpus for the year then ended
(not presented herein), included in the trusts 2004 Annual Report on Form 10-K, and in our report dated March 14, 2005, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the
accompanying condensed statement of assets, liabilities and trust corpus as of December 31, 2004 is fairly stated, in all material respects, in relation to the statement of assets, liabilities and trust corpus included in the trusts 2004
Annual Report on Form 10-K from which it has been derived.



KPMG LLP



Dallas, Texas

July 19, 2005



5



---

##### Table of Contents

CROSS TIMBERS ROYALTY TRUST



Condensed
Statements of Assets, Liabilities and Trust Corpus



|                                                                                 |  |               |            |                  |   |           
|-------------------------------------------------------------------------------- |  | ------------- | ---------- | ---------------- | - | ----------
|                                                                                 |  | June 30, 2005 |            | December 31,2004
|                                                                                 |  | (Unaudited)   |            |                 
|ASSETS                                                                           |  |               |            |                  |   |           
|                                                                                 |  |              
|Cash and short-term investments                                                  |  | $             | 1,558,092  |                  | $ | 1,435,478 
|Interest to be received                                                          |  |               | 1,626      |                  |   | 1,012     
|Net profits interests in oil and gas properties - net (Note 1)                   |  |               | 21,967,298 |                  |   | 22,847,694
|                                                                                 |  |               |            |                  |   |           
|                                                                                 |  | $             | 23,527,016 |                  | $ | 24,284,184
|                                                                                 |  |               |            |                  |   |           
|LIABILITIES AND TRUST CORPUS                                                     |  |               |            |                  |   |           
|                                                                                 |  |              
|Distribution payable to unitholders                                              |  | $             | 1,559,718  |                  | $ | 1,436,490 
|Trust corpus (6,000,000 units of beneficial interest authorized and outstanding) |  |               | 21,967,298 |                  |   | 22,847,694
|                                                                                 |  |               |            |                  |   |           
|                                                                                 |  | $             | 23,527,016 |                  | $ | 24,284,184
|                                                                                 |  |               |            |                  |   |           



The accompanying notes to condensed
financial statements are an integral part of these statements.



6



---

##### Table of Contents

CROSS TIMBERS ROYALTY TRUST



Condensed
Statements of Distributable Income (Unaudited)



|                                                |  |                            |           |                          |   |           |  |      |           |  |   |          
|----------------------------------------------- |  | -------------------------- | --------- | ------------------------ | - | --------- |  | ---- | --------- |  | - | ---------
|                                                |  | Three Months Ended June 30 |           | Six Months Ended June 30
|                                                |  | 2005                       |           | 2004                     |   | 2005      |  | 2004
|Net profits income                              |  | $                          | 4,589,164 |                          | $ | 3,658,858 |  | $    | 9,051,260 |  | $ | 6,774,996
|Interest income                                 |  |                            | 4,302     |                          |   | 1,113     |  |      | 7,821     |  |   | 1,541    
|                                                |  |                            |           |                          |   |           |  |      |           |  |   |          
|Total income                                    |  |                            | 4,593,466 |                          |   | 3,659,971 |  |      | 9,059,081 |  |   | 6,776,537
|Administration expense                          |  |                            | 139,618   |                          |   | 104,179   |  |      | 264,689   |  |   | 174,761  
|                                                |  |                            |           |                          |   |           |  |      |           |  |   |          
|Distributable income                            |  | $                          | 4,453,848 |                          | $ | 3,555,792 |  | $    | 8,794,392 |  | $ | 6,601,776
|                                                |  |                            |           |                          |   |           |  |      |           |  |   |          
|Distributable income per unit (6,000,000 units) |  | $                          | 0.742308  |                          | $ | 0.592632  |  | $    | 1.465732  |  | $ | 1.100296 
|                                                |  |                            |           |                          |   |           |  |      |           |  |   |          



The accompanying notes to condensed
financial statements are an integral part of these statements.



7



---

##### Table of Contents

CROSS TIMBERS ROYALTY TRUST



Condensed
Statements of Changes in Trust Corpus (Unaudited)



|                                      |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|------------------------------------- |  | -------------------------- | ---------- | - | ------------------------ | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                      |  | Three Months Ended June 30 |            |   | Six Months Ended June 30 |  
|                                      |  | 2005                       |            |   | 2004                     |   |            | 2005 |  |   | 2004       |  
|Trust corpus, beginning of period     |  | $                          | 22,411,018 |   |                          | $ | 24,243,319 |      |  | $ | 22,847,694 |   |  | $ | 24,665,401 |  
|Amortization of net profits interests |  |                            | (443,720   | ) |                          |   | (427,420   | )    |  |   | (880,396   | ) |  |   | (849,502   | )
|Distributable income                  |  |                            | 4,453,848  |   |                          |   | 3,555,792  |      |  |   | 8,794,392  |   |  |   | 6,601,776  |  
|Distributions declared                |  |                            | (4,453,848 | ) |                          |   | (3,555,792 | )    |  |   | (8,794,392 | ) |  |   | (6,601,776 | )
|                                      |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Trust corpus, end of period           |  | $                          | 21,967,298 |   |                          | $ | 23,815,899 |      |  | $ | 21,967,298 |   |  | $ | 23,815,899 |  
|                                      |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  



The accompanying notes to condensed
financial statements are an integral part of these statements.



8



---

##### Table of Contents

CROSS TIMBERS ROYALTY TRUST



Notes to Condensed
Financial Statements (Unaudited)



|1. | Basis of Accounting
|-- | -------------------



The financial statements of Cross Timbers Royalty Trust are prepared on the following basis and are not intended to present financial position and results
of operations in conformity with generally accepted accounting principles (GAAP):



| |  |  | Net profits income recorded for a month is the amount computed and paid by XTO Energy Inc., the owner of the underlying properties, to Bank of America, N.A., as trustee for the
trust. Net profits income consists of net proceeds received by XTO Energy Inc. from the underlying properties in the prior month, multiplied by net profit percentages of 90% for the 90% net profits interests, and 75% for the 75% net profits
interests.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Costs deducted in the calculation of
net proceeds for the 90% net profits interests generally include applicable taxes, transportation, marketing and legal costs, and do not include production expense or development costs. For the 75% net profits interests, costs deducted in the
calculation of net proceeds include production expense, development costs, applicable taxes, operating charges and other costs.



| |  |  | Net profits income is computed separately for each of five conveyances under which the net profits interests were conveyed to the trust. If monthly costs exceed revenues for any
conveyance, such excess costs must be recovered, with accrued interest, from future net proceeds of that conveyance and cannot reduce net proceeds from the other conveyances.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Interest income, interest to be received and distribution payable to unitholders include interest to be earned from the monthly record date (last business day of the month) through
the date of the next distribution to unitholders.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Trust expenses are recorded based on liabilities paid and cash reserves established by the trustee for liabilities and contingencies.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Distributions to unitholders are recorded when declared by the trustee.
| | - |  | -----------------------------------------------------------------------



The financial statements of the trust differ from those prepared in conformity with GAAP because revenues are recognized when received rather than accrued
in the month of production, expenses are recognized when paid rather than when incurred, and certain cash reserves may be established for contingencies which would not be accrued under GAAP. This comprehensive basis of accounting other than GAAP
corresponds to the accounting permitted for royalty trusts by the U.S. Securities and Exchange Commission, as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty Trusts.



Most accounting pronouncements apply to entities whose financial statements
are prepared in accordance with GAAP, directing such entities to accrue or defer revenues and expenses in a period other than when such revenues were received or expenses



9



---

##### Table of Contents

were paid. Because the trusts financial statements are prepared on the modified cash basis, as described above, most accounting pronouncements are not
applicable to the trusts financial statements.



The
initial carrying value of the net profits interests of $61,100,449 represents XTO Energy Inc.s historical net book value on February 12, 1991, the creation date of the trust. Amortization of the net profits interests is calculated on a
unit-of-production basis and is charged directly to trust corpus. Accumulated amortization was $39,133,151 as of June 30, 2005 and $38,252,755 as of December 31, 2004.



|2. | Contingencies
|-- | -------------



Several states have enacted legislation to require state income tax withholding from nonresident recipients of oil and gas proceeds. After consultation
with its state tax counsel, XTO Energy Inc. has advised the trustee that it believes the trust is not subject to these withholding requirements. However, regulations are subject to change by the various states, which could change this conclusion. In
the event it is determined that the trust is required to withhold state taxes, distributions to the unitholders would be reduced by the required amount, subject to the unitholders right to file a state tax return to claim any refund due.



10



---

##### Table of Contents

Item 2. Trustees Discussion and Analysis.



The following discussion should be read in conjunction with the trustees discussion and analysis contained in the trusts 2004 annual report, as well as the condensed financial statements and notes thereto included in this
quarterly report on Form 10-Q. The trusts Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports are available on the trusts web site at www.crosstimberstrust.com.



Distributable Income



Quarter



For the quarter ended June 30, 2005, net profits income was $4,589,164 compared to $3,658,858 for second quarter 2004. This 25% increase in
net profits income is the result of higher oil and gas prices. See Net Profits Income on the following page.



After considering interest income of $4,302 and administration expense of $139,618, distributable income for the quarter ended June 30, 2005 was $4,453,848, or $0.742308
per unit of beneficial interest. Administration expense for the quarter increased 34% from the prior year quarter primarily because of the timing of expenditures. For second quarter 2004, distributable income was $3,555,792, or $0.592632 per unit.
Distributions to unitholders for the quarter ended June 30, 2005 were:



|               |  |               |  |                      |         
|-------------- |  | ------------- |  | -------------------- | --------
|Record Date    |  | Payment Date  |  | Distributionper Unit
|April 29, 2005 |  | May 13, 2005  |  | $                    | 0.225121
|May 31, 2005   |  | June 14, 2005 |  |                      | 0.257234
|June 30, 2005  |  | July 15, 2005 |  |                      | 0.259953
|               |  |               |  |                      |         
|               |  |               |  | $                    | 0.742308
|               |  |               |  |                      |         



Six Months



For the six months ended June 30, 2005, net profits income was $9,051,260 compared to
$6,774,996 for the same 2004 period. This 34% increase in net profits income is the result of higher oil and gas prices. See Net Profits Income on the following page.



After considering interest income of $7,821 and administration expense of $264,689, distributable income for the six months ended June 30,
2005 was $8,794,392, or $1.465732 per unit of beneficial interest. Administration expense for the first half of 2005 increased 51% from the comparable 2004 period primarily because of fees related to the 2004 audit of the trusts internal
control over financial reporting and the timing of expenditures. For the six months ended June 30, 2004, distributable income was $6,601,776, or $1.100296 per unit.



11



---

##### Table of Contents

Net Profits Income



Net profits income is recorded when received by the trust, which is the month following receipt by XTO Energy Inc., and generally two months after oil production and
three months after gas production. Net profits income is generally affected by three major factors:



| |  |  | oil and gas sales volumes,
| | - |  | --------------------------



| |  |  | oil and gas sales prices, and
| | - |  | -----------------------------



| |  |  | costs deducted in the calculation of net profits income.
| | - |  | --------------------------------------------------------



Because properties underlying the 90% net profits interests are royalty and overriding royalty interests, they generally bear no costs other than production and property
taxes, related legal costs, and marketing and transportation charges. In addition to these costs, the 75% net profits interests are subject to production expense and development costs, since the properties underlying the 75% net profits interests
are working interests.



12



---

##### Table of Contents

The following is a summary of the calculation of net profits income received by the trust:



|                                |  |                               |           |                     |   |                             |      |                     |      |   |            |  |   |            |  |      
|------------------------------- |  | ----------------------------- | --------- | ------------------- | - | --------------------------- | ---- | ------------------- | ---- | - | ---------- |  | - | ---------- |  | -----
|                                |  | Three Months Ended June 30(a) |           | Increase (Decrease) |   | Six Months Ended June 30(a) |      | Increase (Decrease)
|                                |  | 2005                          |           | 2004                |   |                             | 2005 |                     | 2004 |  
|Sales Volumes                   |  |                               |           |                     |   |                             |      |                     |      |   |            |  |   |            |  |      
|Oil (Bbls) (b)                  |  |                               |           |                     |   |                             |      |                     |      |   |            |  |   |            |  |      
|Underlying properties           |  |                               | 69,240    |                     |   | 69,095                      |      |                    |      |   | 137,686    |  |   | 139,078    |  | (1)% 
|Average per day                 |  |                               | 778       |                     |   | 768                         |      | 1%                  |      |   | 761        |  |   | 764        |  |     
|Net profits interests           |  |                               | 38,720    |                     |   | 30,649                      |      | 26%                 |      |   | 74,391     |  |   | 62,671     |  | 19%  
|                                |  |                               |           |                     |   |                            
|Gas (Mcf) (b)                   |  |                               |           |                     |   |                             |      |                     |      |   |            |  |   |            |  |      
|Underlying properties           |  |                               | 587,848   |                     |   | 671,561                     |      | (12)%               |      |   | 1,192,691  |  |   | 1,285,724  |  | (7)% 
|Average per day                 |  |                               | 6,532     |                     |   | 7,380                       |      | (11)%               |      |   | 6,553      |  |   | 7,026      |  | (7)% 
|Net profits interests           |  |                               | 516,161   |                     |   | 590,697                     |      | (13)%               |      |   | 1,041,681  |  |   | 1,132,786  |  | (8)% 
|                                |  |                               |           |                     |   |                            
|Average Sales Prices            |  |                               |           |                     |   |                             |      |                     |      |   |            |  |   |            |  |      
|Oil (per Bbl)                   |  |                               | $47.16    |                     |   | $33.13                      |      | 42%                 |      |   | $44.72     |  |   | $31.39     |  | 42%  
|Gas (per Mcf)                   |  |                               | $  6.78   |                     |   | $  5.53                     |      | 23%                 |      |   | $  6.87    |  |   | $  5.37    |  | 28%  
|                                |  |                               |           |                     |   |                            
|Revenues                        |  |                               |           |                     |   |                             |      |                     |      |   |            |  |   |            |  |      
|Oil sales                       |  | $                             | 3,265,472 |                     | $ | 2,289,143                   |      | 43%                 |      | $ | 6,157,053  |  | $ | 4,365,014  |  | 41%  
|Gas sales                       |  |                               | 3,986,406 |                     |   | 3,715,258                   |      | 7%                  |      |   | 8,194,343  |  |   | 6,900,462  |  | 19%  
|                                |  |                               |           |                     |   |                             |      |                     |      |   |            |  |   |            |  |      
|Total Revenues                  |  |                               | 7,251,878 |                     |   | 6,004,401                   |      | 21%                 |      |   | 14,351,396 |  |   | 11,265,476 |  | 27%  
|                                |  |                               |           |                     |   |                             |      |                     |      |   |            |  |   |            |  |      
|Costs                           |  |                               |           |                     |   |                             |      |                     |      |   |            |  |   |            |  |      
|Taxes, transportation and other |  |                               | 1,004,500 |                     |   | 875,680                     |      | 15%                 |      |   | 1,964,212  |  |   | 1,686,599  |  | 16%  
|Production expense (c)          |  |                               | 823,129   |                     |   | 792,229                     |      | 4%                  |      |   | 1,692,056  |  |   | 1,572,979  |  | 8%   
|Development costs               |  |                               | 82,303    |                     |   | 160,355                     |      | (49)%               |      |   | 183,125    |  |   | 258,025    |  | (29)%
|                                |  |                               |           |                     |   |                             |      |                     |      |   |            |  |   |            |  |      
|Total Costs                     |  |                               | 1,909,932 |                     |   | 1,828,264                   |      | 4%                  |      |   | 3,839,393  |  |   | 3,517,603  |  | 9%   
|                                |  |                               |           |                     |   |                             |      |                     |      |   |            |  |   |            |  |      
|Net Proceeds                    |  | $                             | 5,341,946 |                     | $ | 4,176,137                   |      | 28%                 |      | $ | 10,512,003 |  | $ | 7,747,873  |  | 36%  
|                                |  |                               |           |                     |   |                             |      |                     |      |   |            |  |   |            |  |      
|Net Profits Income              |  | $                             | 4,589,164 |                     | $ | 3,658,858                   |      | 25%                 |      | $ | 9,051,260  |  | $ | 6,774,996  |  | 34%  
|                                |  |                               |           |                     |   |                             |      |                     |      |   |            |  |   |            |  |      

---

|(a) | Because of the interval between time of production and receipt of royalty income by the trust, (1) oil and gas sales for the quarter ended June 30 generally represent oil
production for the period February through April and gas production for the period January through March and (2) oil and gas sales for the six months ended June 30 generally represent oil production for the period November through April and gas
production for the period October through March.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | Oil and gas sales volumes are allocated to the net profits interests based upon a formula that considers oil and gas prices and the total amount of production expense and
development costs. Changes in any of these factors may result in disproportionate fluctuations in volumes allocated to the net profits interests. Therefore, comparative discussion of oil and gas sales volumes is based on the underlying properties.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(c) | Includes an overhead charge which is deducted and retained by XTO Energy Inc. This charge is approximately $26,000 per month and is subject to adjustment each May.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



13



---

##### Table of Contents

The following are explanations of significant variances on the underlying properties from second quarter 2004 to second
quarter 2005 and from the first six months of 2004 to the comparable period in 2005:



Sales Volumes



Oil



Oil sales volumes remained relatively unchanged from second quarter 2004 to second quarter
2005 and decreased 1% from the first six months of 2004 to the comparable period in 2005 primarily because natural production decline was largely offset by the timing of cash receipts.



Gas



Gas sales volumes decreased 12% for second quarter 2005 and 7% for the six-month period as compared with the same 2004 periods. Decreased gas sales volumes are primarily
because of natural production decline, the timing of cash receipts and prior period volume adjustments in 2005.



Sales Prices



Oil



The average oil price increased
42% to $47.16 per Bbl for the second quarter and 42% to $44.72 per Bbl for the six-month period. Oil prices increased for the second quarter and for the six-month period primarily because of increasing global demand and supply shortage concerns, the
weaker U.S. dollar, market speculation and political instability. Oil prices increased to record levels in July 2005, exceeding $61.00 per Bbl. The average NYMEX price for May and June 2005 was $53.18 per Bbl. At July 15, 2005, the average NYMEX
futures price for the following twelve months was $59.93 per Bbl. Recent trust oil prices have averaged approximately $5.30 per Bbl lower than the NYMEX price.



Gas



Gas prices for the second quarter increased 23% to $6.78 per Mcf and for the six-month period increased 28% to $6.87 per Mcf. Gas prices increased for the second quarter and for the six-month period primarily because
of increased demand and declining North American production. Prices will continue to be affected by weather, the U.S. economy, the level of North American production, crude oil prices and import levels of liquified natural gas, and are expected to
remain volatile. The second quarter 2005 gas price is primarily related to production from January through March 2005, when the average NYMEX price was $6.47 per MMBtu. The average NYMEX price for April through June 2005 was $6.95 per MMBtu. At July
15, 2005, the average NYMEX futures price for the following twelve months was $8.30 per MMBtu. Recent trust gas prices have been approximately $0.30 per MMBtu higher than the NYMEX price.



14



---

##### Table of Contents

Costs



Taxes



Taxes generally vary in relation to revenues, with oil taxed at a lower rate than gas revenue. Taxes, transportation and other increased 15% for the second quarter and 16% for the six-month period, as compared with
increased revenues of 21% for the quarter and 27% for the six-month period. The lower percentage increase in taxes is primarily because of a higher proportion of oil revenue to total revenue in 2005.



Production Expense



Production expense was 4% higher for the second quarter and 8% higher for the six-month period primarily because of the timing of
maintenance projects.



Development



Development costs decreased 49% for the second quarter and 29% for the six-month period
primarily because of the timing of activity and disbursements related to properties underlying the 75% net profits interests.



Forward-Looking Statements



This report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact included in this Form 10-Q including, without limitation, statements regarding the net profits interests, underlying properties, development
activities, development, production and other costs, oil and gas prices, and industry and market conditions, are forward-looking statements that are subject to risks and uncertainties which are detailed in Part II, Item 7 of the trusts Annual
Report on Form 10-K for the year ended December 31, 2004, which is incorporated by this reference as though fully set forth herein. Although XTO Energy Inc. and the trustee believe that the expectations reflected in such forward-looking statements
are reasonable, neither XTO Energy Inc. nor the trustee can give any assurance that such expectations will prove to be correct.



15



---

##### Table of Contents

Item 3. Quantitative and Qualitative Disclosures about Market Risk.



There have been no material changes in the trusts market risks, as disclosed in Part II, Item 7A of the trusts Annual Report on Form 10-K for the year ended December 31, 2004.



Item 4. Controls and Procedures.



As of the end
of the period covered by this report, the trustee carried out an evaluation of the effectiveness of the design and operation of the trusts disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. Based upon that
evaluation, the trustee concluded that the trusts disclosure controls and procedures are effective in timely alerting the trustee to material information relating to the trust required to be included in the trusts periodic filings with
the Securities and Exchange Commission. In its evaluation of disclosure controls and procedures, the trustee has relied, to the extent considered reasonable, on information provided by XTO Energy Inc. There has not been any change in the
trusts internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the trusts internal control over financial reporting.



16



---

##### Table of Contents

PART II - OTHER INFORMATION



Items 1 through 5.



Not Applicable.



Item 6. Exhibits.



(a) Exhibits.



|                               |  |                                                                                                                                                                                        
|------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number and Description
|(15)                           |  | Awareness letter of KPMG LLP                                                                                                                                                           
|                               | 
|(31)                           |  | Rule 13a-14(a)/15d-14(a) Certification                                                                                                                                                 
|                               | 
|(32)                           |  | Section 1350 Certification                                                                                                                                                             
|                               | 
|(99)                           |  | Items 7 and 7A to the Annual Report on Form 10-K for Cross Timbers Royalty Trust filed with the Securities and Exchange Commission on March 14, 2005 (incorporated herein by
reference)



17



---

##### Table of Contents

SIGNATURES



Pursuant to the requirements 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.



|                    |  |                             |  |                               
|------------------- |  | --------------------------- |  | ------------------------------
|                    |  | CROSS TIMBERS ROYALTY TRUST
|                    |  | By                          |  | BANK OF AMERICA, N.A., TRUSTEE
|                    |  |                            
|                    |  | By                          |  | /S/ NANCY G. WILLIS           
|                    |  |                             |  | Nancy G. Willis               
|                    |  |                             |  | Vice President                
|                    | 
|                    |  | XTO ENERGY INC.            
|                    |  |                            
|Date: July 20, 2005 |  | By                          |  | /S/ LOUIS G. BALDWIN          
|                    |  |                             |  | Louis G. Baldwin              
|                    |  |                             |  | Executive Vice President      
|                    |  |                             |  | and Chief Financial Officer   



18