<PAGE>

================================================================================

               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, 2000
                                              ------------------

                                      OR

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


                       Commission File Number: 1-10476
                                               -------


                             Hugoton Royalty Trust
            (Exact name of registrant as specified in its charter)


                  Texas                                    58-6379215
     -------------------------------                  -------------------
     (State or other jurisdiction of                    (I.R.S. Employer
     incorporation or organization)                   Identification No.)

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

                                (877) 228-5083
             ----------------------------------------------------
             (Registrant's telephone number, including area code)

                                     NONE
  -------------------------------------------------------------------------
  (Former name, former address and former fiscal year, if change 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 the number of units of beneficial interest outstanding, as of the
latest practicable date:

                      Outstanding as of November 1, 2000
                      ----------------------------------
                                  40,000,000

================================================================================
<PAGE>

HUGOTON ROYALTY TRUST

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
-----------------------------------------------------------

                                     INDEX

<TABLE>
<CAPTION>
                                                                                                       Page
                                                                                                       ----
<S>                                                                                                    <C>
           GLOSSARY OF TERMS.........................................................................    3

PART I.    FINANCIAL INFORMATION

  Item 1.  Financial Statements......................................................................    4

           Report of Independent Public Accountants..................................................    5

           Condensed Statements of Assets, Liabilities and Trust Corpus
             at September 30, 2000 and December 31, 1999............................................     6

           Condensed Statements of Distributable Income
             for the Three and Nine Months Ended September 30, 2000 and 1999........................     7

           Condensed Statements of Changes in Trust Corpus
             for the Three and Nine Months Ended September 30, 2000 and 1999........................     8

           Notes to Condensed Financial Statements...................................................    9

  Item 2.  Trustee's Discussion and Analysis.........................................................   12

  Item 3.  Quantitative and Qualitative Disclosures about Market Risk................................   15


PART II.   OTHER INFORMATION

  Item 6.  Exhibits and Reports on Form 8-K..........................................................   16

           Signatures................................................................................   17
</TABLE>

                                                                               2
<PAGE>

HUGOTON 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 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

net proceeds             Gross proceeds from sale of production from the
                         underlying properties, less applicable costs

royalty income           Net proceeds, multiplied by the net profits percentage
                         of 80% and paid to the trust

underlying properties    Cross Timbers' interest in certain oil and gas
                         properties from which the net profits interests were
                         conveyed. The underlying properties include working
                         interests in predominantly gas-producing properties
                         located in Kansas, Oklahoma and Wyoming.

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 and development costs

                                                                               3
<PAGE>

HUGOTON 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 trust's financial statements
and the notes thereto included in the trust's 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 Hugoton Royalty Trust at September 30, 2000, and the distributable
income and changes in trust corpus for the three- and nine-month periods ended
September 30, 2000 and 1999, have been included. Distributable income for such
interim periods is not necessarily indicative of the distributable income for
the full year.

                                                                               4
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



Bank of America, N.A., as Trustee
  for the Hugoton Royalty Trust:

We have reviewed the accompanying condensed statement of assets, liabilities and
trust corpus of the Hugoton Royalty Trust as of September 30, 2000 and the
related condensed statements of distributable income and changes in trust corpus
for the three- and nine-month periods ended September 30, 2000 and 1999. These
financial statements are the responsibility of the trustee.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. 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 auditing standards generally accepted in the 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.

Based on our review, we are not aware of any material modifications that should
be made to the 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 auditing standards generally
accepted in the United States, the statement of assets, liabilities and trust
corpus of the Hugoton Royalty Trust as of December 31, 1999 included in the
trust's annual report on Form 10-K, and in our report dated March 1, 2000, we
expressed an unqualified opinion on that statement. In our opinion, the
information set forth in the accompanying condensed statement of assets,
liabilities and trust corpus as of December 31, 1999 is fairly stated in all
material respects in relation to the statement of assets, liabilities and trust
corpus included in the trust's financial statements from which it has been
derived.

ARTHUR ANDERSEN LLP

Fort Worth, Texas
October 21, 2000

                                                                               5
<PAGE>

HUGOTON ROYALTY TRUST
--------------------------------------------------------------------------------
Condensed Statements of Assets, Liabilities and Trust Corpus

<TABLE>
<CAPTION>
                                                                          September 30,            December 31,
                                                                               2000                   1999
                                                                         ---------------         ---------------
                                                                            (Unaudited)
<S>                                                                      <C>                     <C>
ASSETS

Cash and short-term investments.....................................     $     5,270,040         $     4,551,840

Net profits interests in oil and gas properties - net...............         222,377,164             233,428,609
                                                                         ---------------         ---------------

                                                                         $   227,647,204         $   237,980,449
                                                                         ===============         ===============

LIABILITIES AND TRUST CORPUS

Distribution payable to unitholders................................      $     5,270,040         $     4,551,840

Trust corpus (40,000,000 units of beneficial
    interest authorized and outstanding)............................         222,377,164             233,428,609
                                                                         ---------------         ---------------

                                                                         $   227,647,204         $   237,980,449
                                                                         ===============         ===============
</TABLE>


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

                                                                               6
<PAGE>

HUGOTON ROYALTY TRUST
--------------------------------------------------------------------------------

Condensed Statements of Distributable Income (Unaudited)

<TABLE>
<CAPTION>
                                              Three Months Ended              Nine Months Ended
                                                 September 30                   September 30
                                      ------------------------------    ------------------------------
                                           2000            1999             2000             1999
                                      -------------    -------------    -------------    -------------
<S>                                   <C>              <C>              <C>              <C>
Royalty income ....................   $  16,250,348    $   8,541,670    $  38,520,674    $  20,961,736

Interest income ...................          38,398           15,980           83,825           24,516
                                      -------------    -------------    -------------    -------------

Total income ......................      16,288,746        8,557,650       38,604,499       20,986,252

Administration expense ............          92,306           29,330          204,299           62,403
                                      -------------    -------------    -------------    -------------

Distributable income ..............   $  16,196,440    $   8,528,320    $  38,400,200    $  20,923,849
                                      =============    =============    =============    =============

Distributable income per unit
  (40,000,000 units) ..............   $    0.404911    $    0.213208    $    0.960005    $    0.523098
                                      =============    =============    =============    =============
</TABLE>



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

                                                                               7
<PAGE>

HUGOTON ROYALTY TRUST
--------------------------------------------------------------------------------

Condensed Statements of Changes in Trust Corpus (Unaudited)

<TABLE>
<CAPTION>
                                                  Three Months Ended                  Nine Months Ended
                                                     September 30                        September 30
                                             -----------------------------      ------------------------------
                                                 2000            1999               2000             1999
                                             -------------   -------------      -------------    -------------
<S>                                          <C>             <C>                <C>              <C>

Trust corpus, beginning of period .........  $ 226,089,846   $ 241,540,064      $ 233,428,609    $ 247,067,951

Amortization of net profits interests .....     (3,712,682)     (3,644,484)       (11,051,445)      (9,171,371)

Return of initial contribution
    to grantor.............................              -               -                  -           (1,000)

Distributable income.......................     16,196,440       8,528,320         38,400,200       20,923,849

Distributions declared ....................    (16,196,440)     (8,528,320)       (38,400,200)     (20,923,849)
                                             -------------   -------------      -------------    -------------

Trust corpus, end of period ...............  $ 222,377,164   $ 237,895,580      $ 222,377,164    $ 237,895,580
                                             =============   =============      =============    =============
</TABLE>


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

                                                                               8
<PAGE>

HUGOTON ROYALTY TRUST
--------------------------------------------------------------------------------

Notes to Condensed Financial Statements (Unaudited)


1.  Basis of Accounting

    The financial statements of the 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"):

        -   Royalty income recorded for a month is the amount computed and paid
            by the interest owner, Cross Timbers Oil Company, to Bank of
            America, N.A., as trustee for the trust. Royalty income consists of
            net proceeds received by Cross Timbers from the underlying
            properties in the prior month, multiplied by a net profits
            percentage of 80%.

            Costs deducted in the calculation of net proceeds for the 80% net
            profits interests generally include applicable taxes,
            transportation, marketing and legal costs, production expenses,
            development costs, operating charges and other costs. Development
            costs may include amounts budgeted under operating agreements or
            authorizations for expenditure.

        -   Royalty income is computed separately for each of three conveyances
            under which the net profits interests were conveyed to the trust. If
            monthly costs exceed revenues for any conveyance, such excess costs
            cannot reduce royalty income from other conveyances, but are carried
            forward with accrued interest to be recovered from future net
            proceeds of that conveyance.

        -   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 trust's financial statements 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 by the trustee
    for certain contingencies which would not be recorded under GAAP.

    The initial carrying value of the net profits interests of $247,066,951
    represents Cross Timbers' net book value for the interests on December 1,
    1998, the date the trust was created. Amortization of the net profits
    interests is calculated on a unit-of-production basis and charged directly
    to trust corpus. Accumulated amortization was $24,689,787 as of September
    30, 2000 and $13,638,342 as of December 31, 1999.

                                                                               9
<PAGE>

2.  Distributions to Unitholders

    The trustee determines the amount to be distributed to unitholders each
    month by totaling royalty income, interest income and other cash receipts,
    and subtracting liabilities paid and adjustments in cash reserves
    established by the trustee. The resulting amount is distributed to
    unitholders of record generally within ten business days after the monthly
    record date, the last business day of the month.

    Royalty income received by the trustee is equal to the net proceeds received
    in the prior month by Cross Timbers from the underlying properties,
    multiplied by 80%. Net proceeds are the gross proceeds received from the
    sale of production from the underlying properties, less applicable costs.
    Such costs generally include applicable taxes, transportation, legal and
    marketing charges, production expenses, development and drilling costs, and
    overhead.

    For monthly trust distributions declared through March 2000, the related
    royalty income was based on gross proceeds equal to the greater of:

        -   the actual amount received from sales of production, or

        -   the imputed amount that would be received from sales of production
            at a gas price of $2.00 per Mcf.

    Subsequent to March 2000, trust royalty income is based on the actual gross
    proceeds received from sale of production.

3.  Federal Income Taxes

    Tax counsel has advised the trust that, under current tax laws, the trust
    will be classified as a grantor trust for federal income tax purposes and
    therefore is not subject to taxation at the trust level. However, the
    opinion of tax counsel is not binding on the Internal Revenue Service.

    For federal income tax purposes, unitholders are considered to own the
    trust's income and principal as though no trust were in existence. The
    income of the trust is deemed to be received or accrued by the unitholders
    at the time such income is received or accrued by the trust, rather than
    when distributed by the trust.

    Cross Timbers has advised the trustee that the trust receives royalty income
    from tight sands gas wells. Certain tight sands gas produced and sold
    through 2002 qualifies for the federal income tax credit for producing
    nonconventional fuels under Section 29 of the Internal Revenue Code. This
    tax credit is recalculated annually based on each year's qualifying
    production. The 1999 tight sands tax credit was $0.016 per unit. Tight sands
    tax credit data for 2000 will be provided to unitholders with year-end tax
    information. Unitholders should consult their tax advisors regarding use of
    this credit and other trust tax compliance matters.

4.  Litigation

    Cross Timbers is a defendant in three separate lawsuits that could, if
    adversely determined, decrease future trust distributable income. Damages
    relating to production prior to the formation of the trust will be borne by
    Cross Timbers.

                                                                              10
<PAGE>

    On April 3, 1998, a class action lawsuit, Booth, et al. v. Cross Timbers Oil
    Company, was filed in the District Court of Dewey County, Oklahoma by
    royalty owners of natural gas wells in Oklahoma. The plaintiffs allege that
    since 1991 Cross Timbers has underpaid royalty owners as a result of
    reducing royalties for improper charges for production, marketing,
    gathering, processing and transportation costs and selling natural gas
    through affiliated companies at prices less favorable than those paid by
    third parties. Cross Timbers believes that it has strong defenses to this
    lawsuit and intends to vigorously defend its position. However, if Cross
    Timbers ultimately makes any settlement payments, the trust will bear its
    80% share of such settlement related to production from the underlying
    properties for periods since December 1, 1998. Additionally, if a judgment
    or settlement increases the amount of future payments to royalty owners, the
    trust would bear its proportionate share of the increased payments through
    reduced net proceeds. The amount of any reduction in net proceeds is not
    presently determinable, but, in Cross Timbers management's opinion, is not
    currently expected to be material to the trust's annual distributable
    income, financial position or liquidity.

    A second lawsuit, United States of America ex rel. Grynberg v. Cross Timbers
    Oil Company, et al., was filed in the United States District Court for the
    Western District of Oklahoma. This action alleges that Cross Timbers
    underpaid royalties on natural gas produced from federal leases and lands
    owned by Native Americans by at least 20% during the past 10 years as a
    result of mismeasuring the volume of natural gas and wrongfully analyzing
    its heating content. The suit, which was brought under the qui tam
    provisions of the U.S. False Claims Act, seeks treble damages for the unpaid
    royalties (with interest), civil penalties between $5,000 and $10,000 for
    each violation of the U.S. False Claims Act, and an order for Cross Timbers
    to cease the allegedly improper measuring practices. The cases against Cross
    Timbers and other defendants have been consolidated in the United States
    District Court for Wyoming. Cross Timbers and other defendants have filed a
    motion to dismiss the lawsuit. The motion to dismiss has been heard by the
    Court and a decision is pending. Cross Timbers believes that the allegations
    of this lawsuit are without merit and intends to vigorously defend the
    action. However, an order to change measuring practices or a related
    settlement could adversely affect the trust by reducing net proceeds in the
    future by an amount that is presently not determinable, but, in Cross
    Timbers management's opinion, is not expected to be material to the trust's
    annual distributable income, financial position or liquidity.

    A third lawsuit, Bishop, et al. v. Amoco Production Co., et al., was filed
    in May 2000 in the Third Judicial District Court in Lincoln County, Wyoming
    by owners of royalty and overriding royalty interests in wells located in
    Wyoming. The plaintiffs allege that Cross Timbers and the other producer
    defendants have deducted impermissible costs of production from royalty
    payments that have been made to the plaintiffs and other similarly situated
    persons and have failed to properly inform the plaintiffs and others of the
    deductions taken. The action is being brought as a class action on behalf of
    all persons who own an interest in wells located in Wyoming as to which the
    defendants pay royalties and overriding royalties. The plaintiffs seek a
    declaratory judgment that the deductions made are impermissible and seek
    damages in the amount of the deductions made together with interest and
    attorneys' fees. Cross Timbers believes that the plaintiffs' interpretation
    of the Wyoming statute that governs this issue, based upon a 1999 court
    decision, is erroneous, and that any deductions made from royalties by Cross
    Timbers are permitted by the statute. Cross Timbers intends to vigorously
    defend this action. If Cross Timbers does not prevail, however, the trust
    will bear its 80% share of any judgment related to production from the
    underlying properties for periods since December 1, 1998. Additionally, if
    an adverse judgment increases the amount of future payments to royalty
    owners, the trust would bear its proportionate share of the increased
    payments through reduced net proceeds. Cross Timbers management believes
    that any reduction in future distributions will not be material to the
    trust's annual distributable income, financial position, or liquidity.

                                                                              11
<PAGE>

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 1999 annual report, as well as
the condensed financial statements and notes thereto included in this quarterly
report on Form 10-Q.

Distributable Income

For the quarter ended September 30, 2000 royalty income was $16,250,348, as
compared to $8,541,670 for third quarter 1999. This 90% increase in royalty
income is primarily the result of higher oil and gas prices. See "Royalty
Income" below.

Distributable income for the quarter ended September 30, 2000 was $16,196,440,
or $0.404911 per unit of beneficial interest. Distributions for the quarter
were:

<TABLE>
<CAPTION>
                                                                          Distribution
                          Record Date               Payment Date            per Unit
                    ----------------------     ----------------------    -------------
                    <S>                        <C>                       <C>
                    July 31, 2000              August 14, 2000           $    0.102685
                    August 31, 2000            September 15, 2000             0.170475
                    September 29, 2000         October 16, 2000               0.131751
                                                                         -------------

                                                                         $    0.404911
                                                                         =============
</TABLE>

For the nine months ended September 30, 2000 royalty income was $38,520,674,
compared with $20,961,736 for the same 1999 period. Higher oil and gas prices in
2000 and the lag effect on cash receipts in the trust's initial accounting
period in 1999 are the primary reasons for this 84% increase in royalty income.
See "Royalty Income" below.

Trust administration expenses were higher in third quarter 2000 primarily
because of the timing of payments related to annual reporting costs.
Administration expenses were generally lower in 1999 because of the lag effect
on cash disbursements in the trust's initial accounting year.

Royalty Income

Royalty income is recorded when received by the trust, which is the month
following receipt by Cross Timbers, and generally two months after oil and gas
production. Royalty 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 royalty income.

                                                                              12
<PAGE>

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

<TABLE>
<CAPTION>
                                         Three Months                                    Nine Months
                                     Ended September 30 (a)       Increase          Ended September 30 (a)        Increase
                                  ----------------------------                   -----------------------------
                                      2000            1999        (Decrease)         2000             1999       (Decrease)
                                  ------------    ------------   -----------     -------------    ------------  ------------
<S>                               <C>             <C>            <C>             <C>              <C>           <C>
Sales Volumes
   Gas (Mcf) (b)
     Underlying properties.....      9,050,655       9,515,797       (5%)           27,397,263      24,603,008       11%
       Average per day.........         98,377         103,433       (5%)               99,990         101,247       (1%)
     Net profits interests.....      4,579,058       4,164,330       10%            13,630,859      10,479,471       30%

   Oil (Bbls) (b)
     Underlying properties.....         97,602         104,133       (6%)              302,332         285,041        6%
       Average per day.........          1,061           1,132       (6%)                1,103           1,173       (6%)
     Net profits interests.....         49,445          55,660      (11%)              151,115         138,296        9%

Average Sales Prices

   Gas (per Mcf) (c)...........         $ 3.57          $ 2.01       78%                $ 2.80          $ 2.00       40%
   Oil (per Bbl)...............         $29.71          $18.18       63%                $27.49          $14.66       88%

Revenues

   Gas sales...................   $ 32,299,570    $ 19,118,253       69%         $  76,699,307    $ 49,292,675       56%
   Oil sales...................      2,899,763       1,892,765       53%             8,311,719       4,178,765       99%
                                  ------------    ------------                   -------------    ------------
     Total Revenues............     35,199,333      21,011,018       68%            85,011,026      53,471,440       59%
                                  ------------    ------------                   -------------    ------------

Costs
   Taxes, transportation
      and other................      3,338,100       2,097,817       59%             8,167,888       5,620,703       45%
   Production expense..........      3,859,271       2,791,131       38%            10,381,693       8,050,046       29%
   Development costs...........      5,774,583       3,693,053       56%            12,894,988       8,496,160       52%
   Overhead....................      1,914,444       1,751,680        9%             5,415,615       5,102,111        6%
   Excess costs................              -         (35,718)       -                      -         (35,718)       -
   Recovery of excess costs
     and accrued interest......              -          35,968        -                      -          35,968        -
                                  ------------    ------------                   -------------    ------------
     Total Costs...............     14,886,398      10,333,931       44%            36,860,184      27,269,270       35%
                                  ------------    ------------                   -------------    ------------

Net Proceeds...................     20,312,935      10,677,087       90%            48,150,842      26,202,170       84%

Net Profits Percentage.........             80%             80%                             80%             80%
                                  ------------    ------------                   -------------    ------------
Royalty Income.................   $ 16,250,348    $  8,541,670       90%         $  38,520,674    $ 20,961,736       84%
                                  ============    ============                   =============    ============
</TABLE>

_____________________
(a)  Because of the two-month 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 production for the period May through July
     and (2) oil and gas sales for the nine months ended September 30, 2000
     generally represent production for the period November 1999 through July
     2000. Oil and gas sales for the nine months ended September 30, 1999
     represent production for the period December 1998 (the trust's initial
     month) through July 1999.

(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 expenses 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)  See Note 2 to condensed financial statements.

                                                                              13
<PAGE>

The following are explanations of significant variances from third quarter 1999
to 2000 and from the first nine months of 1999 to the comparable period in 2000:

Sales Volumes

Gas

Third quarter gas sales volumes declined 5% primarily because of natural
production decline, partially offset by new wells. Gas sales volumes were 11%
higher for the nine-month period, primarily because of the lag effect on cash
receipts in the trust's initial accounting period, which resulted in less than
eight full months of sales volumes in the first nine months of 1999. Average
daily gas sales volumes for the nine-month period declined 1%.

Oil

Third quarter oil sales volumes declined 6% primarily because of natural
production decline, partially offset by new wells. Oil sales volumes were 6%
higher for the nine-month period, primarily because of the lag effect on cash
receipts in the trust's initial accounting period, which resulted in less than
eight full months of sales volumes in the first nine months of 1999. Average
daily oil sales volumes for the nine-month period declined 6% because of natural
production decline.

Sales Prices

Gas

The average gas price increased 78% for the third quarter and 40% for the
nine-month period. The third quarter 1999 average gas price of $2.01 per Mcf
approximated the actual average price before adjustment to provide the $2.00
minimum price contractually provided to unitholders for distributions declared
through March 2000. As of April 2000, there are no longer any minimum price
provisions. See Note 2 to the condensed financial statements. The 1999
year-to-date minimum price of $2.00 per Mcf exceeded the actual average price by
$0.22. The actual average gas price of $1.78 per Mcf for the nine-month period
reflects lower prices caused by high levels of gas in storage remaining from the
abnormally warm winter of 1998-1999. Gas prices began to increase in May 1999
and, after declining briefly at year end, have continued to strengthen in 2000.
Higher gas prices have been supported by both lower gas storage levels and
increased demand for power generation. Prices are expected to remain high as the
winter heating season approaches. On November 3, 2000, the average NYMEX price
for the following twelve months was $4.50 per MMBtu. The trust's recent average
gas price has been approximately $0.40 per MMBtu lower than the NYMEX price.

Oil

Average prices during 1999 reflect abnormally low prices resulting from excess
global supply. After OPEC members and other oil producers agreed to production
cuts in March 1999, oil prices climbed through the remainder of 1999 and first
quarter 2000. Despite OPEC production increases, increased demand has sustained
higher prices. In September 2000, when crude oil prices rose to their highest
level in 10 years, the average West Texas Intermediate ("WTI") posted price was
$30.86 per Bbl. The average WTI posted price for October 2000 was $29.96 per
Bbl. Recent trust oil prices have averaged approximately $2.50 higher than the
WTI posted price.

Costs

Total costs deducted in the calculation of royalty income increased 44% for the
third quarter and 35% for the nine-month period. Increased taxes, transportation
and other are the result of higher oil and gas prices, increased development
costs are related to projects in Oklahoma and Wyoming, and increased production
expense is primarily related to the timing of maintenance projects. Costs were
also lower in the nine-month

                                                                              14
<PAGE>

1999 period because of the lag effect on cash disbursements in the trust's
initial accounting period, which resulted in the inclusion of only approximately
eight months of costs.

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 contained in this "Trustee's Discussion and
Analysis" regarding the net profits interests and industry conditions, are
forward-looking statements. Although Cross Timbers believes that the
expectations reflected in such forward-looking statements are reasonable,
neither Cross Timbers 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
the trust's Form 10-K for the year ended December 31, 1999.

                                                                              15
<PAGE>

PART II - OTHER INFORMATION

Items 1 through 5.    Not applicable.


Item 6. (a)  Exhibits.

<TABLE>
<CAPTION>
   Exhibit Number
   and Description                                                                                  Page
   ---------------                                                                                  ----
   <S>                                                                                              <C>
     (4)  (a)     Hugoton Royalty Trust Indenture by and between NationsBank, N.A. (now
                  Bank of America, N.A.), as trustee and Cross Timbers Oil Company
                  heretofore filed as Exhibit 4.1 to the trust's Registration Statement No. 333-
                  68441 on Form S-1 filed with the Securities and Exchange Commission on
                  December 4, 1998, is incorporated herein by reference.

          (b)     Net Overriding Royalty Conveyance (Hugoton Royalty Trust, 80% -
                  Kansas) as amended and restated from Cross Timbers Oil Company to
                  NationsBank, N.A. (now Bank of America, N.A.), as trustee, dated
                  December 1, 1998 heretofore filed as Exhibit 10.1.1 to Amendment No. 2
                  to the trust's Registration Statement No. 333-68441 on Form S-1 filed with
                  the Securities and Exchange Commission on March 16, 1999, is
                  incorporated herein by reference.

          (c)     Net Overriding Royalty Conveyance (Hugoton Royalty Trust, 80% -
                  Oklahoma) as amended and restated from Cross Timbers Oil Company to
                  NationsBank, N.A. (now Bank of America, N.A.), as trustee, dated
                  December 1, 1998, heretofore filed as Exhibit 10.2.1 to Amendment No. 2
                  to the trust's Registration Statement No. 333-68441 on Form S-1 filed with
                  the Securities and Exchange Commission on March 16, 1999, is
                  incorporated herein by reference.

          (d)     Net Overriding Royalty Conveyance (Hugoton Royalty Trust, 80% -
                  Wyoming) as amended and restated from Cross Timbers Oil Company to
                  NationsBank, N.A. (now Bank of America, N.A.), as trustee, dated
                  December 1, 1998, heretofore filed as Exhibit 10.3.1 to Amendment No. 2
                  to the trust's Registration Statement No. 333-68441 on Form S-1 filed with
                  the Securities and Exchange Commission on March 16, 1999, is
                  incorporated herein by reference.

     (15)         Awareness letter of Arthur Andersen LLP                                             18
</TABLE>

         (b)  Reports on Form 8-K.

          No reports on Form 8-K have been filed during the quarter for which
this report is filed.

                                                                              16
<PAGE>

                                  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.

                                   HUGOTON ROYALTY TRUST
                                   By BANK OF AMERICA, N.A., TRUSTEE



                                   By        RON E. HOOPER
                                     --------------------------------------
                                             Ron E. Hooper
                                             Vice President


                                   CROSS TIMBERS OIL COMPANY



Date: November 13, 2000            By        LOUIS G. BALDWIN
                                     --------------------------------------
                                             Louis G. Baldwin
                                             Executive Vice President and
                                             Chief Financial Officer

                                                                              17