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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 September 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 ofincorporation or organization) |  | (I.R.S. EmployerIdentification 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
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ̈No x



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



| |  |                                   |  | 
| |  | --------------------------------- |  | 
| |  | Outstanding as of October 1, 2005 |  | 
| |  | 6,000,000                         |  | 



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CROSS TIMBERS ROYALTY TRUST



FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 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 September 30, 2005 and December 31, 2004        |  | 6   
|         |  |                                                                                                                
|         |  | Condensed Statements of Distributable Income for the Three and Nine Months Ended September 30, 2005 and 2004    |  | 7   
|         |  |                                                                                                                
|         |  | Condensed Statements of Changes in Trust Corpus for the Three and Nine Months Ended September 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  



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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                                                                                                                                                                            



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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 September 30, 2005, and the distributable income and changes in trust
corpus for the three- and nine-month periods ended September 30, 2005 and 2004, have been included. Distributable income for such interim periods is not necessarily indicative of distributable income for the full year.



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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 September 30, 2005 and the related condensed statements of distributable income and changes in trust
corpus for the three- and nine-month periods ended September 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

October 21, 2005



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CROSS TIMBERS ROYALTY TRUST



Condensed
Statements of Assets, Liabilities and Trust Corpus



|                                                                                 |  |                   |            |                  |   |           
|-------------------------------------------------------------------------------- |  | ----------------- | ---------- | ---------------- | - | ----------
|                                                                                 |  | September 30,2005 |            | December 31,2004
|                                                                                 |  | (Unaudited)       |            |                 
|ASSETS                                                                           |  |                   |            |                  |   |           
|Cash and short-term investments                                                  |  | $                 | 2,070,775  |                  | $ | 1,435,478 
|Interest to be received                                                          |  |                   | 2,189      |                  |   | 1,012     
|Net profits interests in oil and gas properties - net (Note 1)                   |  |                   | 21,587,720 |                  |   | 22,847,694
|                                                                                 |  |                   |            |                  |   |           
|                                                                                 |  | $                 | 23,660,684 |                  | $ | 24,284,184
|                                                                                 |  |                   |            |                  |   |           
|LIABILITIES AND TRUST CORPUS                                                     |  |                   |            |                  |   |           
|Distribution payable to unitholders                                              |  | $                 | 2,072,964  |                  | $ | 1,436,490 
|Trust corpus (6,000,000 units of beneficial interest authorized and outstanding) |  |                   | 21,587,720 |                  |   | 22,847,694
|                                                                                 |  |                   |            |                  |   |           
|                                                                                 |  | $                 | 23,660,684 |                  | $ | 24,284,184
|                                                                                 |  |                   |            |                  |   |           



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



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CROSS TIMBERS ROYALTY TRUST



Condensed
Statements of Distributable Income(Unaudited)



|                                                |  |                                |           |                               |   |           |  |      |            |  |   |           
|----------------------------------------------- |  | ------------------------------ | --------- | ----------------------------- | - | --------- |  | ---- | ---------- |  | - | ----------
|                                                |  | Three Months EndedSeptember 30 |           | Nine Months EndedSeptember 30
|                                                |  | 2005                           |           | 2004                          |   | 2005      |  | 2004
|Net profits income                              |  | $                              | 5,069,110 |                               | $ | 4,017,397 |  | $    | 14,120,370 |  | $ | 10,792,393
|Interest income                                 |  |                                | 5,578     |                               |   | 1,548     |  |      | 13,399     |  |   | 3,089     
|                                                |  |                                |           |                               |   |           |  |      |            |  |   |           
|Total income                                    |  |                                | 5,074,688 |                               |   | 4,018,945 |  |      | 14,133,769 |  |   | 10,795,482
|Administration expense                          |  |                                | 35,600    |                               |   | 90,205    |  |      | 300,289    |  |   | 264,966   
|                                                |  |                                |           |                               |   |           |  |      |            |  |   |           
|Distributable income                            |  | $                              | 5,039,088 |                               | $ | 3,928,740 |  | $    | 13,833,480 |  | $ | 10,530,516
|                                                |  |                                |           |                               |   |           |  |      |            |  |   |           
|Distributable income per unit (6,000,000 units) |  | $                              | 0.839848  |                               | $ | 0.654790  |  | $    | 2.305580   |  | $ | 1.755086  
|                                                |  |                                |           |                               |   |           |  |      |            |  |   |           



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



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CROSS TIMBERS ROYALTY TRUST



Condensed
Statements of Changes in Trust Corpus(Unaudited)



|                                      |  |                                |            |   |                               |   |            |      |  |   |             |   |  |   |             |  
|------------------------------------- |  | ------------------------------ | ---------- | - | ----------------------------- | - | ---------- | ---- |  | - | ----------- | - |  | - | ----------- | -
|                                      |  | Three Months EndedSeptember 30 |            |   | Nine Months EndedSeptember 30 |  
|                                      |  | 2005                           |            |   | 2004                          |   |            | 2005 |  |   | 2004        |  
|Trust corpus, beginning of period     |  | $                              | 21,967,298 |   |                               | $ | 23,815,899 |      |  | $ | 22,847,694  |   |  | $ | 24,665,401  |  
|Amortization of net profits interests |  |                                | (379,578   | ) |                               |   | (474,216   | )    |  |   | (1,259,974  | ) |  |   | (1,323,718  | )
|Distributable income                  |  |                                | 5,039,088  |   |                               |   | 3,928,740  |      |  |   | 13,833,480  |   |  |   | 10,530,516  |  
|Distributions declared                |  |                                | (5,039,088 | ) |                               |   | (3,928,740 | )    |  |   | (13,833,480 | ) |  |   | (10,530,516 | )
|                                      |  |                                |            |   |                               |   |            |      |  |   |             |   |  |   |             |  
|Trust corpus, end of period           |  | $                              | 21,587,720 |   |                               | $ | 23,341,683 |      |  | $ | 21,587,720  |   |  | $ | 23,341,683  |  
|                                      |  |                                |            |   |                               |   |            |      |  |   |             |   |  |   |             |  



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



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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 were paid. Because the trusts financial statements are prepared



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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 $39,512,729 as of September 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.



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|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 September 30, 2005, net profits income was $5,069,110 compared to
$4,017,397 for third quarter 2004. This 26% 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 $5,578 and administration expense of $35,600, distributable income for the quarter ended
September 30, 2005 was $5,039,088, or $0.839848 per unit of beneficial interest. Administration expense for the quarter decreased 61% from the prior year quarter primarily because of the timing of expenditures. For third quarter 2004,
distributable income was $3,928,740, or $0.654790 per unit. Distributions to unitholders for the quarter ended September 30, 2005 were:



|                   |  |                    |  |                      |         
|------------------ |  | ------------------ |  | -------------------- | --------
|Record Date        |  | Payment Date       |  | Distributionper Unit
|July 29, 2005      |  | August 12, 2005    |  | $                    | 0.219330
|August 31, 2005    |  | September 15, 2005 |  |                      | 0.275024
|September 30, 2005 |  | October 17, 2005   |  |                      | 0.345494
|                   |  |                    |  |                      |         
|                   |  |                    |  | $                    | 0.839848
|                   |  |                    |  |                      |         



The September 2005 distribution, paid
to unitholders on October 17, 2005, included $668,000, or $0.11 per unit, related to a purchasers recalculation and remittance of royalties for San Juan Basin production before February 2002. The interest payment associated with this
remittance, in the amount of $880,000, or approximately $0.15 per unit, will be included in the October 2005 distribution which will be paid to unitholders on November 15, 2005.



Nine Months



For the nine months ended September 30, 2005, net profits income was $14,120,370 compared to $10,792,393 for the same 2004 period. This 31% 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 $13,399 and administration expense of $300,289, distributable income for the nine months ended September 30, 2005 was $13,833,480, or $2.305580 per unit of beneficial
interest. Administration expense for the first nine months of 2005 increased 13% from the comparable 2004 period primarily because of fees related to the audit of the trusts internal control over financial reporting for 2004 and the timing of
expenditures. For the nine months ended September 30, 2004, distributable income was $10,530,516, or $1.755086 per unit.



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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.



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



|                                |  |                                   |  |                     |  |                                  |      |                     |      |             |  |      
|------------------------------- |  | --------------------------------- |  | ------------------- |  | -------------------------------- | ---- | ------------------- | ---- | ----------- |  | -----
|                                |  | Three MonthsEnded September 30(a) |  | Increase (Decrease) |  | Nine MonthsEnded September 30(a) |      | Increase (Decrease)
|                                |  |                                   | 
|                                |  | 2005                              |  | 2004                |  |                                  | 2005 |                     | 2004 |            
|Sales Volumes                   |  |                                   |  |                     |  |                                  |      |                     |      |             |  |      
|Oil (Bbls) (b)                  |  |                                   |  |                     |  |                                  |      |                     |      |             |  |      
|Underlying properties           |  | 65,643                            |  | 68,573              |  | (4%)                             |      | 203,329             |      | 207,651     |  | (2%) 
|Average per day                 |  | 714                               |  | 745                 |  | (4%)                             |      | 745                 |      | 758         |  | (2%) 
|Net profits interests           |  | 35,866                            |  | 35,415              |  | 1%                               |      | 110,257             |      | 98,086      |  | 12%  
|Gas (Mcf) (b)                   |  |                                   |  |                     |  |                                  |      |                     |      |             |  |      
|Underlying properties           |  | 492,130                           |  | 647,814             |  | (24%)                            |      | 1,684,821           |      | 1,933,538   |  | (13%)
|Average per day                 |  | 5,408                             |  | 7,119               |  | (24%)                            |      | 6,172               |      | 7,057       |  | (13%)
|Net profits interests           |  | 428,430                           |  | 569,213             |  | (25%)                            |      | 1,470,111           |      | 1,701,999   |  | (14%)
|                                |  |                                   |  |                     |  |                                 
|Average Sales Prices            |  |                                   |  |                     |  |                                  |      |                     |      |             |  |      
|Oil (per Bbl)                   |  | $50.57                            |  | $36.44              |  | 39%                              |      | $46.61              |      | $33.05      |  | 41%  
|Gas (per Mcf)                   |  | $9.05                             |  | $6.05               |  | 50%                              |      | $7.51               |      | $5.59       |  | 34%  
|                                |  |                                   |  |                     |  |                                 
|Revenues                        |  |                                   |  |                     |  |                                  |      |                     |      |             |  |      
|Oil sales                       |  | $3,319,375                        |  | $2,498,487          |  | 33%                              |      | $9,476,428          |      | $6,863,501  |  | 38%  
|Gas sales                       |  | 4,454,082                         |  | 3,917,682           |  | 14%                              |      | 12,648,425          |      | 10,818,144  |  | 17%  
|                                |  |                                   |  |                     |  |                                  |      |                     |      |             |  |      
|Total Revenues                  |  | 7,773,457                         |  | 6,416,169           |  | 21%                              |      | 22,124,853          |      | 17,681,645  |  | 25%  
|                                |  |                                   |  |                     |  |                                  |      |                     |      |             |  |      
|                                |  |                                   |  |                     |  |                                 
|Costs                           |  |                                   |  |                     |  |                                  |      |                     |      |             |  |      
|Taxes, transportation and other |  | 909,166                           |  | 966,335             |  | (6%)                             |      | 2,873,378           |      | 2,652,934   |  | 8%   
|Production expense (c)          |  | 867,386                           |  | 800,030             |  | 8%                               |      | 2,559,442           |      | 2,373,009   |  | 8%   
|Development costs               |  | 128,768                           |  | 24,926              |  | 417%                             |      | 311,893             |      | 282,951     |  | 10%  
|                                |  |                                   |  |                     |  |                                  |      |                     |      |             |  |      
|Total Costs                     |  | 1,905,320                         |  | 1,791,291           |  | 6%                               |      | 5,744,713           |      | 5,308,894   |  | 8%   
|                                |  |                                   |  |                     |  |                                  |      |                     |      |             |  |      
|Net Proceeds                    |  | $5,868,137                        |  | $4,624,878          |  | 27%                              |      | $16,380,140         |      | $12,372,751 |  | 32%  
|                                |  |                                   |  |                     |  |                                  |      |                     |      |             |  |      
|Net Profits Income              |  | $5,069,110                        |  | $4,017,397          |  | 26%                              |      | $14,120,370         |      | $10,792,393 |  | 31%  
|                                |  |                                   |  |                     |  |                                  |      |                     |      |             |  |      

---

|(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 September 30 generally represent
oil production for the period May through July and gas production for the period April through June and (2) oil and gas sales for the nine months ended September 30 generally represent oil production for the period November through July
and gas production for the period October through June.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(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.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



Sales Volumes



Oil



Oil sales volumes decreased 4% for third quarter 2005 and decreased 2% from the first nine
months of 2004 to the comparable period in 2005 primarily because of natural production decline, partially offset by the timing of cash receipts.



Gas



Gas sales volumes decreased 24% for third quarter 2005 and 13% for the nine-month period as compared with the same 2004 periods. The 2005 third quarter and nine-month period gas sales volumes were lower because of a
purchasers gas sales adjustments related to prior periods. These lower volumes affected the September 2005 distribution to unitholders. Excluding the effect of these adjustments, gas sales volumes decreased 15% for third quarter 2005 and 10%
for the nine-month period as compared with the same 2004 periods. These decreased gas sales volumes are primarily because of natural production decline, prior period volume adjustments in 2005 and the timing of cash receipts.



See Gulf of Mexico Hurricanes below.



Sales Prices



Oil



The average oil price increased 39% to $50.57 per Bbl for the third quarter and 41% to $46.61 per Bbl for the nine-month period. Oil prices increased for the third
quarter and for the nine-month period primarily because of increasing global demand and supply shortage concerns, inadequate refining capacity, reduced production as a result of July tropical storms in the Gulf of Mexico, market speculation and
political instability, and are expected to remain volatile. Oil prices increased to record levels in August 2005, exceeding $69.00 per Bbl. The average NYMEX price for August and September 2005 was $65.22 per Bbl. At October 21, 2005, the
average NYMEX futures price for the following twelve months was $61.12 per Bbl. Recent trust oil prices have averaged approximately $3.90 per Bbl lower than the NYMEX price.



Gas



Gas prices for the third quarter increased 50% to $9.05 per Mcf and for the nine-month period increased 34% to $7.51 per Mcf. The 2005 third quarter and nine-month period
gas prices were higher because of a purchasers recalculation and remittance of royalties for San Juan Basin production before February 2002. Excluding the effect of this adjustment, gas prices for the third quarter increased 25% to $7.54 per
Mcf and for the nine-month period increased 26% to $7.07 per Mcf. Gas prices increased for the third quarter and for the nine-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 third quarter 2005 gas price is primarily related to production from
April through June 2005, when the average NYMEX price was $6.95 per MMBtu. The average NYMEX price for July through September 2005 was



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$9.64 per MMBtu. At October 21, 2005, the average NYMEX futures price for the following twelve months was $11.58 per MMBtu. Recent trust gas prices have
been approximately $0.50 per Mcf higher than the NYMEX price. Because of regional differences in supply and demand, however, trust gas prices are generally expected to decline in relationship to the NYMEX price as the NYMEX price increases.



See Gulf of Mexico Hurricanes below.



Costs



Taxes



Taxes generally vary in relation to revenues, with oil taxed at a lower rate than gas revenue. Taxes, transportation and other decreased 6% for the third quarter and
increased 8% for the nine-month period as compared with increased revenues of 21% for the quarter and 25% for the nine-month period. Decreased taxes, transportation and other for the third quarter and the lower percentage increase in taxes for the
nine-month period are primarily because of a higher proportion of oil revenue to total revenue in 2005 and a purchaser adjustment related to prior periods.



Production Expense



Production expense was 8% higher for the third quarter and nine-month period primarily because of the timing of maintenance projects as well as the timing of cash disbursements.



Development



Development costs increased 417% for the third quarter and 10% for the nine-month period primarily because of the timing of projects and
disbursements primarily related to two properties underlying the 75% net profits interests.



Gulf of Mexico Hurricanes



In late
August and September 2005, hurricanes in the Gulf of Mexico disrupted a significant portion of U.S. oil and gas production, leading to higher prices. These increased prices will affect distributions to unitholders beginning with the November 2005
distribution to be paid in December 2005. The underlying properties to the trust are not located near the Gulf and related production was not significantly affected. However, because of greater supply and weaker demand in areas where trust related
oil and gas is produced, the price received for such production is expected to be lower than the price received for Gulf production or NYMEX prices. As a result of storm damages and related supply shortages, production expense and development costs
are expected to increase throughout the industry. The duration of these higher prices and costs cannot be predicted.



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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 and expenses, oil and gas prices and differentials to NYMEX prices, supply shortages, distributions to unitholders 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.



|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.



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##### Table of Contents

PART II - OTHER INFORMATION



Items 1 through 5.



Not Applicable.



|Item 6. | Exhibits.
|------- | ---------



(a) Exhibits.



|                              |  |                                                                                                                                                                                        
|----------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Numberand 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)



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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: October 25, 2005 |  |  |  | By                                |  | /s/    LOUIS G. BALDWIN
|                       |  |  |  |                                   |  |                         |  | Louis G. Baldwin                                   
|                       |  |  |  |                                   |  |                         |  | Executive Vice Presidentand Chief Financial Officer



18