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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 For the Quarterly Period ended September 30, 2005
 o
    
    Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission file number 1-8033
 PERMIAN BASIN ROYALTY TRUST
 (Exact Name of Registrant as Specified in the Permian Basin Royalty Trust Indenture)
 Texas
(State or Other Jurisdiction of
Incorporation or Organization)
    
    75-6280532
(I.R.S. Employer Identification No.)
 
 
 þ o
 þ o
 o þ




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TABLE OF CONTENTS  PART I  FINANCIAL INFORMATIONItem 1. Financial StatementsItem 2. Trustees Discussion and AnalysisItem 3. Qualitative and Quantative Disclosures About Market RiskItem 4. Controls and ProceduresPART II  OTHER INFORMATIONItems 1 through 5.Item 6. Exhibits and Reports on Form 8-KSIGNATURESINDEX TO EXHIBITSAwareness Letter of Deloitte & Touche LLPCertification by Trustee Pursuant to Section 302Certification by Trustee Pursuant to Section 906    Table of Contents  PERMIAN BASIN ROYALTY TRUST
 
 PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
  
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
       
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##### Table of Contents



PERMIAN BASIN ROYALTY TRUST
 CONDENSED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS
 September 30,
    
    
    December 31,2005
    
    
    2004(Unaudited)
    
    
    (Unaudited)ASSETSCash and short-term investments
    
    $
    6,090,764
    
    
    $
    5,429,145Net overriding royalty interests in
producing oil and gas properties
(net of accumulated amortization of
$9,315,330 and $9,179,949 at
September 30, 2005 and December 31,
2004, respectively)
    
    
    1,659,886
    
    
    
    1,795,267TOTAL ASSETS
    
    $
    7,750,650
    
    
    $
    7,224,412LIABILITIES AND TRUST CORPUSDistribution payable to Unit holders
    
    $
    6,090,764
    
    
    $
    5,429,145Commitments and contingencies
Trust corpus  46,608,796 Units of
beneficial interest authorized and
outstanding
    
    
    1,659,886
    
    
    
    1,795,267TOTAL LIABILITIES
AND TRUST CORPUS
    
    $
    7,750,650
    
    
    $
    7,224,412
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PERMIAN BASIN ROYALTY TRUST
 CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)
 THREE MONTHS ENDED
    
    
    NINE MONTHS ENDEDSeptember 30
    
    
    September 302005
    
    
    2004
    
    
    2005
    
    
    2004Royalty income
    
    $
    15,989,323
    
    
    $
    11,647,036
    
    
    $
    42,266,409
    
    
    $
    29,899,365Interest income
    
    
    13,777
    
    
    
    4,185
    
    
    
    36,821
    
    
    
    10,83716,003,100
    
    
    
    11,651,221
    
    
    
    42,303,230
    
    
    
    29,910,202General and
administrative
expenditures
    
    
    (112,337
    )
    
    
    (84,828
    )
    
    
    (648,236
    )
    
    
    (412,929
    )Distributable income
    
    $
    15,890,763
    
    
    $
    11,566,393
    
    
    $
    41,654,994
    
    
    $
    29,497,273Distributable income per
Unit (46,608,796 Units)
    
    $
    .340939
    
    
    $
    .248159
    
    
    $
    .893715
    
    
    $
    .632869
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PERMIAN BASIN ROYALTY TRUST
 CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)
 THREE MONTHS ENDED
    
    
    NINE MONTHS ENDEDSeptember 30
    
    
    September 302005
    
    
    2004
    
    
    2005
    
    
    2004Trust corpus,
beginning of period
    
    $
    1,705,706
    
    
    $
    1,902,570
    
    
    $
    1,795,267
    
    
    $
    1,991,594Amortization of net
overriding royalty
interests
    
    
    (45,820
    )
    
    
    (50,489
    )
    
    
    (135,381
    )
    
    
    (139,513
    )Distributable income
    
    
    15,890,763
    
    
    
    11,566,393
    
    
    
    41,654,994
    
    
    
    29,497,273Distributions declared
    
    
    (15,890,763
    )
    
    
    (11,566,393
    )
    
    
    (41,654,994
    )
    
    
    (29,497,273
    )Total Trust Corpus,
end of period
    
    $
    1,659,886
    
    
    $
    1,852,081
    
    
    $
    1,659,886
    
    
    $
    1,852,081Distributions per unit
    
    $
    .340939
    
    
    $
    .248159
    
    
    $
    .893715
    
    
    $
    .632869
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PERMIAN BASIN ROYALTY TRUST
 NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
 1.
    
    BASIS OF ACCOUNTINGThe Permian Basin Royalty Trust (Trust) was established as of November 1, 1980. The net
overriding royalties conveyed to the Trust include: (1) a 75% net overriding royalty carved
out of Southland Royalty Companys fee mineral interests in the Waddell Ranch in Crane
County, Texas (the Waddell Ranch properties); and (2) a 95% net overriding royalty carved
out of Southland Royalty Companys major producing royalty interests in Texas (the Texas
Royalty properties). The net overriding royalty for the Texas Royalty properties is
subject to the provisions of the lease agreements under which such royalties were created.
The financial statements of the Trust are prepared on the following basis:
 
    
    Royalty income recorded for a month is the amount computed and paid to Bank of
America, N.A. (Trustee) as Trustee for the Trust by the interest owners: Burlington
Resources Oil & Gas Company LP (BROG) for the Waddell Ranch properties and Riverhill
Energy Corporation (Riverhill Energy), formerly a wholly owned subsidiary of
Riverhill Capital Corporation (Riverhill Capital) and formerly an affiliate of
Coastal Management Corporation (CMC), for the Texas Royalty properties. Schlumberger
Technology Corporation (STC) conducts all field, technical and accounting operations
on behalf of BROG with regard to the Waddell Ranch properties. Riverhill Energy
currently conducts the accounting operations for the Texas Royalty properties. Royalty
income consists of the amounts received by the owners of the interest burdened by the
net overriding royalty interests (Royalties) from the sale of production less accrued
production costs, development and drilling costs, applicable taxes, operating charges,
and other costs and deductions multiplied by 75% in the case of the Waddell Ranch
properties and 95% in the case of the Texas Royalty properties.As was previously reported, in February 1997, BROG sold its interest in the Texas
Royalty properties to Riverhill Energy.The Trustee has been advised that in the first quarter of 1998, STC acquired all of
the shares of stock of Riverhill Capital. Prior to such acquisition by STC, CMC and
Riverhill Energy were wholly-owned subsidiaries of Riverhill Capital. The Trustee
has further been advised that in connection with STCs acquisition of Riverhill
Capital, the shareholders of Riverhill Capital acquired ownership of all of the
shares of stock of Riverhill Energy. Thus, the ownership in the Texas Royalty
properties referenced above remained in Riverhill Energy, the stock ownership of
which was acquired by the former shareholders of Riverhill Capital.
    
    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.
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
    
    Royalty income is computed separately for each of the conveyances under which the
Royalties were conveyed to the Trust. If monthly costs exceed revenues for any
conveyance (excess costs), such excess cannot reduce royalty income from other
conveyances, but is carried forward with accrued interest to be recovered from future
net proceeds of that conveyance.
 The financial statements of the Trust differ from financial statements prepared in
accordance with accounting principles generally accepted in the United States of America
(GAAP) because revenues are not accrued in the month of production and certain cash
reserves may be established for contingencies which would not be accrued in financial
statements. Amortization of the Royalties calculated on a unit-of-production basis is
charged directly to trust corpus. 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.2.
    
    FEDERAL INCOME TAXESFor Federal income tax purposes, the Trust constitutes a fixed investment trust which is
taxed as a grantor trust. A grantor trust is not subject to tax at the trust level. The
Unit holders 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 have been received or accrued by each
Unit holder at the time such income is received or accrued by the Trust and not when
distributed by the Trust.The Royalties constitute economic interests in oil and gas properties for Federal income
tax purposes. Unit holders must report their share of the revenues from the Royalties as
ordinary income from oil and gas royalties and are entitled to claim depletion with respect
to such income.The Trust has on file technical advice memoranda confirming the tax treatment described
above.The classification of the Trusts income for purposes of the passive loss rules may be
important to a Unit holder. Royalty income generally is treated as portfolio income and
does not offset passive losses.Unit holders should consult their tax advisors for further information.3.
    
    SUBSEQUENT EVENTSSubsequent to September 30, 2005, the Trust declared a distribution on October 21, 2005 of
$.136926 payable on November 15, 2005, to Unit holders of record on October 31, 2005.
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Item 2. Trustees Discussion and Analysis
 Forward Looking Information
  Three Months Ended September 30, 2005 Compared to Three Months Ended September 30, 2004
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Third Quarter2005
    
    
    2004Royalties:Oil sales (Bbls)
    
    
    215,618
    
    
    
    198,032Gas sales (Mcf)
    
    
    957,711
    
    
    
    849,226Product Sales From Which The Royalties Were
Carved:Oil:Total oil sales (Bbls)
    
    
    327,081
    
    
    
    319,176Average per day (Bbls)
    
    
    3,555
    
    
    
    3,496Average price per Bbl
    
    $
    49.38
    
    
    $
    36.74Gas:Total gas sales (Mcf)
    
    
    1,612,808
    
    
    
    1,535,078Average per day (Mcf)
    
    
    17,531
    
    
    
    16,686Average price per Mcf
    
    $
    6.34
    
    
    $
    5.82
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Nine Months Ended September 30, 2005 and 2004
    First Nine Months2005
    
    
    2004Royalties:Oil sales (Bbls)
    
    
    605,204
    
    
    
    556,209Gas sales (Mcf)
    
    
    2,617,686
    
    
    
    2,250,966Properties From Which The Royalties Were
Carved:Oil:Total oil sales (Bbls)
    
    
    948,722
    
    
    
    899,708Average per day (Bbls)
    
    
    3,475
    
    
    
    3,284Average price per Bbl
    
    $
    45.47
    
    
    $
    33.58Gas:Total gas sales (Mcf)
    
    
    4,632,853
    
    
    
    4,445,109Average per day (Mcf)
    
    
    16,970
    
    
    
    16,223Average price per Mcf
    
    $
    6.38
    
    
    $
    5.23
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Calculation Of Royalty Income
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THREE MONTHS ENDED SEPTEMBER 30,2005
    
    
    2004WADDELL
    
    
    TEXAS
    
    
    WADDELL
    
    
    TEXASRANCH
    
    
    ROYALTY
    
    
    RANCH
    
    
    ROYALTYPROPERTIES
    
    
    PROPERTIES
    
    
    PROPERTIES
    
    
    PROPERTIESGross proceeds of sales from
the Underlying PropertiesOil proceeds
    
    $
    11,783,550
    
    
    $
    4,369,141
    
    
    $
    8,539,737
    
    
    $
    3,186,730Gas proceeds
    
    
    9,047,274
    
    
    
    1,180,180
    
    
    
    7,916,495
    
    
    
    1,011,491Total
    
    
    20,830,824
    
    
    
    5,549,321
    
    
    
    16,456,232
    
    
    
    4,198,221Less:Severance tax:Oil
    
    
    483,590
    
    
    
    168,686
    
    
    
    364,217
    
    
    
    120,328Gas
    
    
    571,626
    
    
    
    76,621
    
    
    
    439,973
    
    
    
    71,200Lease operating expense and
property tax:Oil and gas
    
    
    3,100,383
    
    
    
    225,000
    
    
    
    2,246,213
    
    
    
    210,000Capital expenditures
    
    
    1,789,545
    
    
    
    
    
    
    
    2,685,591
    
    
    
    Total
    
    
    5,945,144
    
    
    
    470,307
    
    
    
    5,735,994
    
    
    
    401,528Net profits
    
    
    14,885,680
    
    
    
    5,079,014
    
    
    
    10,720,238
    
    
    
    3,796,693Net overriding royalty interests
    
    
    75
    %
    
    
    95
    %
    
    
    75
    %
    
    
    95
    %Royalty income
    
    $
    11,164,260
    
    
    $
    4,825,063
    
    
    $
    8,040,178
    
    
    $
    3,606,858
 Gulf
of Mexico Hurricanes
  Critical Accounting Policies and Estimates
  Basis of Accounting
  
    
    Royalty income and interest income are recorded in the period in which amounts are
received by the Trust rather than in the period of production and accrual, respectively.
    
    General and administrative expenses recorded are based on liabilities paid and cash
reserves established out of cash received.
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
    
    Amortization of the royalty interests is calculated on a unit-of-production basis and
charged directly to trust corpus when revenues are received.
    
    Distributions to Unit holders are recorded when declared by the Trustee (see Note 1 to
the Financial Statements).
  Revenue Recognition
  Reserve Disclosure
  Contingencies
  Use of Estimates
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Item 3. Qualitative and Quantative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
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PART II  OTHER INFORMATION
 
 Items 1 through 5.
  
 Item 6. Exhibits and Reports on Form 8-K
 4.1
    
    Permian Basin Royalty Trust Indenture dated November 3, 1980,
between Southland Royalty Company (now Burlington Resources Oil & Gas Company
LP) and The First National Bank of Fort Worth (now Bank of America, N.A.), as
Trustee, heretofore filed as Exhibit (4)(a) to the Trusts Annual Report on
Form 10-K to the Securities and Exchange Commission for the fiscal year ended
December 31, 1980 is incorporated herein by reference.4.2
    
    Net Overriding Royalty Conveyance (Permian Basin Royalty Trust)
from Southland Royalty Company (now Burlington Resources Oil & Gas Company LP)
to The First National Bank of Fort Worth (now Bank of America, N.A.), as
Trustee, dated November 3, 1980 (without Schedules), heretofore filed as
Exhibit (4)(b) to the Trusts Annual Report on Form 10-K to the Securities and
Exchange Commission for the fiscal year ended December 31, 1980 is incorporated
herein by reference.4.3
    
    Net Overriding Royalty Conveyance (Permian Basin Royalty Trust
  Waddell Ranch) from Southland Royalty Company (now Burlington Resources Oil &
Gas Company LP) to The First National Bank of Fort Worth (now Bank of America,
N.A.), as Trustee, dated November 3, 1980 (without Schedules), heretofore filed
as Exhibit (4)(c) to the Trusts Annual Report on Form 10-K to the Securities
and Exchange Commission for the fiscal year ended December 31, 1980 is
incorporated herein by reference.10.1
    
    Registration Rights Agreement dated as of July 21, 2004 by and
between Burlington Resources, Inc. and Bank of America, N.A., as trustee of
Permian Basin Royalty Trust, heretofore filed as Exhibit 10.1 to the Trusts
Quarterly Report on Form 10-Q to the Securities and Exchange Commission for the
quarterly period ended June 30, 2004 is incorporated herein by reference.15.1
    
    Awareness Letter of Deloitte & Touche LLP.31.1
    
    Certification by Ron E. Hooper, Senior Vice President and Trust
Administrator of Bank of America, Trustee of Permian Basin Royalty Trust, dated
November 8, 2005 and submitted pursuant to Rule 13a-14(a)/15d-14(a) and
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32.1
    
    Certificate by Bank of America, Trustee of Permian Basin
Royalty Trust, dated November 8, 2005 and submitted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
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SIGNATURES
  BANK OF AMERICA, N.A.,TRUSTEE FOR THEPERMIAN BASIN ROYALTY TRUSTBy:
    
    /s/ RON E. HOOPERRon E. Hooper,Senior Vice President and Trust AdministratorBank of America, N.A.Date: November 8, 2005
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INDEX TO EXHIBITS
 ExhibitNumber
    
    Exhibit4.1
    
    Permian Basin Royalty Trust Indenture dated November 3,
1980, between Southland Royalty Company (now Burlington
Resources Oil & Gas Company LP) and The First National Bank
of Fort Worth (now Bank of America, N.A.), as Trustee,
heretofore filed as Exhibit (4)(a) to the Trusts Annual
Report on Form 10-K to the Securities and Exchange
Commission for the fiscal year ended December 31, 1980 is
incorporated herein by reference.*4.2
    
    Net Overriding Royalty Conveyance (Permian Basin Royalty
Trust) from Southland Royalty Company (now Burlington
Resources Oil & Gas Company LP) to The First National Bank
of Fort Worth (now Bank of America, N.A.), as Trustee,
dated November 3, 1980 (without Schedules), heretofore
filed as Exhibit (4)(b) to the Trusts Annual Report on
Form 10-K to the Securities and Exchange Commission for the
fiscal year ended December 31, 1980 is incorporated herein
by reference.*4.3
    
    Net Overriding Royalty Conveyance (Permian Basin Royalty
Trust  Waddell Ranch) from Southland Royalty Company (now
Burlington Resources Oil & Gas Company LP) to The First
National Bank of Fort Worth (now Bank of America, N.A.), as
Trustee, dated November 3, 1980 (without Schedules),
heretofore filed as Exhibit (4)(c) to the Trusts Annual
Report on Form 10-K to the Securities and Exchange
Commission for the fiscal year ended December 31, 1980 is
incorporated herein by reference.*10.1
    
    Registration Rights Agreement dated as of July 21, 2004 by
and between Burlington Resources, Inc. and Bank of America,
N.A., as trustee of Permian Basin Royalty Trust, heretofore
filed as Exhibit 10.1 to the Trusts Quarterly Report on
Form 10-Q to the Securities and Exchange Commission for the
quarterly period ended June 30, 2004 is incorporated herein
by reference.15.1
    
    Awareness Letter of Deloitte & Touche LLP.31.1
    
    Certification by Ron E. Hooper, Senior Vice President and
Trust Administrator of Bank of America, Trustee of Permian
Basin Royalty Trust, dated November 8, 2005 and submitted
pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certificate by Bank of America, Trustee of Permian Basin
Royalty Trust, dated November 8, 2005 and submitted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(18 U.S.C. Section 1350).
 
 *
    
    A copy of this Exhibit is available to any Unit holder, at the actual cost of
reproduction, upon written request to the Trustee, Bank of America, N.A., 901
Main Street, Dallas, Texas 75202. 19