##### 








---



##### 



The Trust
   Units of Beneficial Interest
  Sales PriceDistributions2005
    
    High
    
    
    Low
    
    
    PaidFirst Quarter
    
    $
    15.57
    
    
    $
    12.13
    
    
    $
    0.284149Second Quarter
    
    
    15.50
    
    
    
    10.75
    
    
    
    0.268627Third Quarter
    
    
    17.23
    
    
    
    14.73
    
    
    
    0.340939Fourth Quarter
    
    
    17.15
    
    
    
    15.00
    
    
    
    0.442249Total for 2005
    
    
    
    
    
    
    
    
    
    $
    1.335964
 1




---



##### 



Distributions2004
    
    High
    
    
    Low
    
    
    PaidFirst Quarter
    
    $
    9.45
    
    
    $
    7.00
    
    
    $
    0.193657Second Quarter
    
    
    9.32
    
    
    
    7.80
    
    
    
    0.191053Third Quarter
    
    
    11.87
    
    
    
    9.01
    
    
    
    0.248159Fourth Quarter
    
    
    15.29
    
    
    
    11.06
    
    
    
    0.322889Total for 2004
    
    
    
    
    
    
    
    
    
    $
    0.955758
   To Unit Holders
     2




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##### 



Bank of America, N.A., TrusteeBy:
    /s/ Ron E. HooperRon E. HooperSenior Vice President 3




---



##### 



Description of the Properties
        4




---



##### 



Computation of Royalty Income Received by the Trust
  5




---



##### 



Year Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Waddell
    
    
    Texas
    
    
    Waddell
    
    
    Texas
    
    
    Waddell
    
    
    Texas
    
    
    Waddell
    
    
    Texas
    
    
    Waddell
    
    
    TexasRanch
    
    
    Royalty
    
    
    Ranch
    
    
    Royalty
    
    
    Ranch
    
    
    Royalty
    
    
    Ranch
    
    
    Royalty
    
    
    Ranch
    
    
    RoyaltyProperties
    
    
    Properties
    
    
    Properties
    
    
    Properties
    
    
    Properties
    
    
    Properties
    
    
    Properties
    
    
    Properties
    
    
    Properties
    
    
    PropertiesGross Proceeds of Sales
From the Underlying Properties:Oil Proceeds
    
    $
    43,967,934
    
    
    $
    17,415,261
    
    
    $
    32,078,721
    
    
    $
    12,296,982
    
    
    $
    24,418,227
    
    
    $
    9,454,914
    
    
    $
    20,543,224
    
    
    $
    7,785,749
    
    
    $
    26,477,679
    
    
    $
    9,524,586Gas Proceeds
    
    
    37,531,266
    
    
    
    5,050,206
    
    
    
    28,746,318
    
    
    
    3,970,231
    
    
    
    25,255,338
    
    
    
    3,606,615
    
    
    
    14,861,094
    
    
    
    2,245,648
    
    
    
    26,068,379
    
    
    
    3,771,184Total
    
    
    81,499,200
    
    
    
    22,465,467
    
    
    
    60,825,039
    
    
    
    16,267,213
    
    
    
    49,673,565
    
    
    
    13,061,529
    
    
    
    35,404,318
    
    
    
    10,031,397
    
    
    
    52,546,058
    
    
    
    13,295,770Less:Severance TaxOil
    
    
    1,806,281
    
    
    
    675,609
    
    
    
    1,366,942
    
    
    
    457,308
    
    
    
    1,045,413
    
    
    
    350,440
    
    
    
    863,299
    
    
    
    302,665
    
    
    
    1,108,968
    
    
    
    374,204Gas
    
    
    2,319,699
    
    
    
    325,044
    
    
    
    1,702,937
    
    
    
    262,673
    
    
    
    1,632,642
    
    
    
    228,928
    
    
    
    813,581
    
    
    
    159,431
    
    
    
    1,160,095
    
    
    
    239,337Other
    
    
    42,505
    
    
    
    
    
    
    
    42,763
    
    
    
    252,906
    
    
    
    26,850
    
    
    
    
    
    
    
    72,397
    
    
    
    
    
    
    
    
    
    
    
    Lease Operating Expense and Property TaxOil and Gas
    
    
    12,191,168
    
    
    
    963,563
    
    
    
    9,391,083
    
    
    
    894,383
    
    
    
    10,540,850
    
    
    
    823,331
    
    
    
    9,424,724
    
    
    
    933,646
    
    
    
    9,086,468
    
    
    
    605,125Other Payments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000Capital Expenditures
    
    
    7,151,598
    
    
    
    
    
    
    
    6,539,015
    
    
    
    
    
    
    
    7,734,224
    
    
    
    
    
    
    
    3,394,674
    
    
    
    0
    
    
    
    3,350,003
    
    
    
    Total
    
    
    23,511,251
    
    
    
    1,964,216
    
    
    
    19,042,740
    
    
    
    1,867,270
    
    
    
    20,979,979
    
    
    
    1,402,699
    
    
    
    14,568,674
    
    
    
    1,395,742
    
    
    
    14,755,534
    
    
    
    1,218,666Net Profits
    
    
    57,987,949
    
    
    
    20,501,251
    
    
    
    41,782,299
    
    
    
    14,399,943
    
    
    
    28,693,586
    
    
    
    11,658,830
    
    
    
    20,835,643
    
    
    
    8,635,655
    
    
    
    37,790,524
    
    
    
    12,077,104Net Overriding Royalty Interest
    
    
    75
    %
    
    
    95
    %
    
    
    75
    %
    
    
    95
    %
    
    
    75
    %
    
    
    95
    %
    
    
    75
    %
    
    
    95
    %
    
    
    75
    %
    
    
    95
    %Royalty Income
    
    
    43,490,961
    
    
    
    19,476,189
    
    
    
    31,336,724
    
    
    
    13,679,946
    
    
    
    21,520,190
    
    
    
    11,075,888
    
    
    
    15,626,732
    
    
    
    8,203,872
    
    
    
    28,342,893
    
    
    
    11,473,248Total Royalty Income for Distribution
    
    $
    43,490,961
    
    
    $
    19,476,189
    
    
    $
    31,336,724
    
    
    $
    13,679,946
    
    
    $
    21,520,190
    
    
    $
    11,075,888
    
    
    $
    15,626,732
    
    
    $
    8,203,872
    
    
    $
    28,342,893
    
    
    $
    11,473,248
 6




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##### 



Discussion and Analysis
 Trustees Discussion and Analysis for the Three-Year Period Ended December 31, 2005
   1.
    
    Revenue Recognition
 st
 2.
    
    Reserve Recognition
   3.
    
    Contingencies
  7




---



##### 



Year Ended December 31,Royalties
    
    2005
    
    2004
    
    2003Total Revenue
    
    $
    62,967,150
    
    
    $
    45,016,670
    
    
    $
    32,596,081100
    %
    
    
    100
    %
    
    
    100
    %Oil Revenue
    
    
    38,924,579
    
    
    
    27,180,560
    
    
    
    17,927,84362
    %
    
    
    60
    %
    
    
    55
    %Gas Revenue
    
    
    24,042,571
    
    
    
    17,836,110
    
    
    
    14,668,23538
    %
    
    
    40
    %
    
    
    45
    %Total Revenue/Unit
    
    $
    1.35097
    
    
    $
    .965841
    
    
    $
    .69935
  Year Ended December 31,Royalties
    
    2005
    
    2004
    
    2003Oil Sales (Bbls)
    
    
    827,275
    
    
    
    779,052
    
    
    
    699,402Gas Sales (Mcf)
    
    
    3,608,778
    
    
    
    3,245,117
    
    
    
    3,160,921Underlying PropertiesOilTotal Oil Sales (Bbls)
    
    
    1,258,584
    
    
    
    1,222,579
    
    
    
    1,200,844Average Per Day (Bbls)
    
    
    3,448
    
    
    
    3,340
    
    
    
    3,290Average Price/Bbl
    
    $
    48.77
    
    
    $
    36.30
    
    
    $
    28.21
 8




---



##### 



Year Ended December 31,Royalties
    
    2005
    
    2004
    
    2003GasTotal Gas Sales (Mcf)
    
    
    6,132,716
    
    
    
    5,975,867
    
    
    
    6,243,956Average Per Day (Mcf)
    
    
    16,802
    
    
    
    16,328
    
    
    
    17,107Average Price/Mcf
    
    $
    6.94
    
    
    $
    5.47
    
    
    $
    4.62
           9




---



##### 



Results of the Fourth Quarters of 2005 and 2004
   Fourth Quarter2005
    
    
    2004RoyaltiesOil Sales (Bbls)
    
    
    222,071
    
    
    
    222,843Gas Sales (Mcf)
    
    
    991,092
    
    
    
    994,151Underlying PropertiesTotal Oil Sales (Bbls)
    
    
    309,862
    
    
    
    322,871Average Per Day (Bbls)
    
    
    3,368
    
    
    
    3,509Average Price/Bbls
    
    $
    58.88
    
    
    $
    43.87Total Gas Sales (Mcf)
    
    
    1,499,863
    
    
    
    1,530,758Average Per Day (Mcf)
    
    
    16,303
    
    
    
    16,639Average Price/Mcf
    
    $
    8.70
    
    
    $
    6.18
   10




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##### 



Off-Balance Sheet Arrangements.
  Tabular Disclosure of Contractual Obligations.
 ContractualObligations
    
    Total
    
    Payments Due by PeriodLess than 1 Year
    
    1 - 3 Years
    
    3-5 Years
    
    More than 5 YearsDistribution
payable to Unit
holders
    
    $
    7,264,048
    
    
    $
    7,264,048
    
    
    
    0
    
    
    
    0
    
    
    
    0Total
    
    $
    7,264,048
    
    
    $
    7,264,048
    
    
    
    0
    
    
    
    0
    
    
    
    0
 11




---



##### 



PERMIAN BASIN ROYALTY TRUST
FINANCIAL STATEMENTS
 STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS
DECEMBER 31, 2005 AND 2004
 2005
    
    
    2004ASSETSCash and Short-term Investments
    
    $
    7,264,048
    
    
    $
    5,429,145Net Overriding Royalty Interests in Producing Oil and
Gas Properties - Net (Notes 2 and 3)
    
    
    1,610,630
    
    
    
    1,795,267$
    8,874,678
    
    
    $
    7,224,412LIABILITIES AND TRUST CORPUSDistribution Payable to Unit Holders
    
    $
    7,264,048
    
    
    $
    5,429,145Trust Corpus  46,608,796 Units of Beneficial Interest
Authorized and Outstanding
    
    
    1,610,630
    
    
    
    1,795,267$
    8,874,678
    
    
    $
    7,224,412
 STATEMENTS OF DISTRIBUTABLE INCOME
FOR THE THREE YEARS ENDED DECEMBER 31, 2005
 2005
    
    
    2004
    
    
    2003Royalty Income (Notes 2 and 3)
    
    $
    62,967,150
    
    
    $
    45,016,670
    
    
    $
    32,596,078Interest Income
    
    
    63,909
    
    
    
    19,883
    
    
    
    13,93763,031,059
    
    
    
    45,036,553
    
    
    
    32,610,015Expenditures  General and
Administrative
    
    
    763,390
    
    
    
    489,810
    
    
    
    496,890Distributable Income
    
    $
    62,267,669
    
    
    $
    44,546,743
    
    
    $
    32,113,125Distributable Income per Unit
(46,608,796 Units)
    
    $
    1.335964
    
    
    $
    .955758
    
    
    $
    .688993
 12




---



##### 



STATEMENTS OF CHANGES IN TRUST CORPUS
FOR THE THREE YEARS ENDED DECEMBER 31, 2005
 2005
    
    
    2004
    
    
    2003Trust Corpus, Beginning of Period
    
    $
    1,795,267
    
    
    $
    1,991,594
    
    
    $
    2,172,393Amortization of Net Overriding
Royalty Interests
(Notes 2 and 3)
    
    
    (184,637
    )
    
    
    (196,327
    )
    
    
    (180,799
    )Distributable Income
    
    
    62,267,669
    
    
    
    44,546,743
    
    
    
    32,113,125Distributions Declared
    
    
    (62,267,669
    )
    
    
    (44,546,743
    )
    
    
    (32,113,125
    )Trust Corpus, End of Period
    
    $
    1,610,630
    
    
    $
    1,795,267
    
    
    $
    1,991,594
  13




---



##### 



NOTES TO FINANCIAL STATEMENTS
 1. Trust Organization and Provisions
    
    
    the Trust shall not engage in any business or commercial activity of any kind or
acquire any assets other than those initially conveyed to the Trust;
    
    the Trustee may not sell all or any part of the Royalties unless approved by
holders of 75% of all Units outstanding in which case the sale must be for cash and
the proceeds promptly distributed;
    
    the Trustee may establish a cash reserve for the payment of any liability which is
contingent or uncertain in amount;
    
    the Trustee is authorized to borrow funds to pay liabilities of the Trust; and
    
    the Trustee will make monthly cash distributions to Unit holders (see Note 2).
 2. Net Overriding Royalty Interests and Distribution to Unit Holders
  14




---



##### 



3. Basis of Accounting
  
    
    Royalty income recorded is the amount computed and paid by the working interest
owner to the Trustee on behalf of the Trust.
    
    Trust expenses recorded are based on liabilities paid and cash reserves established
out of cash received or borrowed funds for liabilities and contingencies.
    
    Distributions to Unit holders are recorded when declared by the Trustee.
  4. New Accounting Pronouncements
 Accounting for Stock-Based Compensation
   15




---



##### 



5. Federal Income Tax
      6. Significant Customers
  7. Proved Oil and Gas Reserves (Unaudited)
  8. Quarterly Schedule of Distributable Income (Unaudited)
  DistributableIncome andRoyalty
    
    Distributable
    
    Distribution2005
    
    Income
    
    Income
    
    Per UnitFirst Quarter
    
    $
    13,531
    
    
    $
    13,244
    
    
    $
    .284149Second Quarter
    
    
    12,746
    
    
    
    12,521
    
    
    
    .268627Third Quarter
    
    
    15,989
    
    
    
    15,890
    
    
    
    .340939Fourth Quarter
    
    
    20,701
    
    
    
    20,613
    
    
    
    .442249Total
    
    $
    62,697
    
    
    $
    62,268
    
    
    $
    1.335964
 16




---



##### 



DistributableIncome andRoyalty
    
    Distributable
    
    Distribution2004
    
    Income
    
    Income
    
    Per UnitFirst Quarter
    
    $
    9,207
    
    
    $
    9,026
    
    
    $
    .193657Second Quarter
    
    
    9,046
    
    
    
    8,905
    
    
    
    .191053Third Quarter
    
    
    11,647
    
    
    
    11,566
    
    
    
    .248159Fourth Quarter
    
    
    15,117
    
    
    
    15,050
    
    
    
    .322889Total
    
    $
    45,017
    
    
    $
    44,547
    
    
    $
    .955758
 9. Subsequent Events
  Monthly Record Date
    
    Payment Date
    

Distribution
Per UnitJanuary 31, 2006
    
    February 14, 2006
    
    $.142168February 28, 2006
    
    March 14, 2006
    
    $.123749
 17




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 Unit
Holders of Permian Basin Royalty Trust and Bank of America, N.A., Trustee:
     Internal
Control-Integrated Framework




---



##### 



PERMIAN BASIN ROYALTY TRUST901 Main Street, Suite 1700P.O. Box 830650Dallas, Texas 75202Bank of America, N.A., TrusteeAUDITORSDeloitte & Touche LLPDallas, TexasLEGAL COUNSELThompson & Knight L.L.P.Dallas, TexasTAX COUNSELWinstead, Sechrest MinickHouston, TexasTRANSFER AGENTMellon Investor Services LLCRidgefield Park, New Jersey