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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 June 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




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TABLE OF CONTENTS  PART I  FINANCIAL INFORMATIONItem 1. Financial StatementsItem 2. Trustees Discussion And AnalysisItem 3. Qualitative And Quantitative Disclosures About Market RiskItem 4. Controls and ProceduresPART II  OTHER INFORMATIONItem 6. Exhibits and Reports on Form 8-KSIGNATURESINDEX TO EXHIBITSAwareness Letter of Deloitte & Touche LLPCertification Pursuant to Rule 13a-14(a)/15d-14(a)Certification 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
 June 30,
    
    December 31,2005
    
    2004(Unaudited)ASSETSCash and short-term investments
    
    $
    4,800,362
    
    
    $
    5,429,145Net overriding royalty interests in
producing oil and gas properties (net of
accumulated amortization of $9,269,510
and $9,179,949 at June 30, 2005 and
December 31, 2004, respectively)
    
    
    1,705,706
    
    
    
    1,795,267TOTAL ASSETS
    
    $
    6,506,068
    
    
    $
    7,224,412LIABILITIES AND TRUST CORPUSDistribution payable to Unit holders
    
    $
    4,800,362
    
    
    $
    5,429,145Trust corpus - 46,608,796 Units of
beneficial interest authorized and
outstanding
    
    
    1,705,706
    
    
    
    1,795,267TOTAL LIABILITIES
AND TRUST CORPUS
    
    $
    6,506,068
    
    
    $
    7,224,412
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PERMIAN BASIN ROYALTY TRUST
 CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)
 THREE
    
    THREEMONTHS
    
    MONTHSENDED
    
    ENDEDJune 30, 2005
    
    June 30, 2004Royalty income
    
    $
    12,746,016
    
    
    $
    9,045,654Interest income
    
    
    11,569
    
    
    
    3,15412,757,585
    
    
    
    9,048,808General and administrative
expenditures
    
    
    (237,206
    )
    
    
    (144,076
    )Distributable income
    
    $
    12,520,379
    
    
    $
    8,904,732Distributable income per Unit
(46,608,796 Units)
    
    $
    .268627
    
    
    $
    .191053
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PERMIAN BASIN ROYALTY TRUST
 CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)
 SIX
    
    SIXMONTHS
    
    MONTHSENDED
    
    ENDEDJune 30, 2005
    
    June 30, 2004Royalty income
    
    $
    26,277,087
    
    
    $
    18,252,328Interest income
    
    
    23,043
    
    
    
    6,65226,300,130
    
    
    
    18,258,980General and administrative
expenditures
    
    
    (535,899
    )
    
    
    (328,101
    )Distributable income
    
    $
    25,764,231
    
    
    $
    17,930,879Distributable income per Unit
(46,608,796 Units)
    
    $
    .552776
    
    
    $
    .384710
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PERMIAN BASIN ROYALTY TRUST
 CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)
 THREE
    
    THREEMONTHS
    
    MONTHSENDED
    
    ENDEDJune 30, 2005
    
    June 30, 2004Trust corpus, beginning of
Period
    
    $
    1,745,977
    
    
    $
    1,947,308Amortization of net overriding
royalty interests
    
    
    (40,271
    )
    
    
    (44,738
    )Distributable income
    
    
    12,520,379
    
    
    
    8,904,732Distributions declared
    
    
    (12,520,379
    )
    
    
    (8,904,732
    )Total Trust Corpus, end of
period
    
    $
    1,705,706
    
    
    $
    1,902,570Distributions per Unit
    
    $
    .268627
    
    
    $
    .191053
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PERMIAN BASIN ROYALTY TRUST
 CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)
 SIX
    
    SIXMONTHS
    
    MONTHSENDED
    
    ENDEDJune 30, 2005
    
    June 30, 2004Trust corpus, beginning of
Period
    
    $
    1,795,267
    
    
    $
    1,991,594Amortization of net overriding
royalty interests
    
    
    (89,561
    )
    
    
    (89,024
    )Distributable income
    
    

    25,764,231
    
    
    
    17,930,879Distributions declared
    
    
    (25,764,231
    )
    
    
    (17,930,879
    )Total Trust Corpus, end of
period
    
    $
    1,705,706
    
    
    $
    1,902,570Distributions per Unit
    
    $
    .552776
    
    
    $
    .384710
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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) currently
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 interests 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 June 30, 2005, the Trust declared a distribution on July 19, 2005 of $.099822
payable on August 12, 2005, to Unit holders of record on July 29, 2005.
 
 Item 2. Trustees Discussion And Analysis
 Forward Looking Information
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Three Months Ended June 30, 2005 Compared to Three Months Ended June 30, 2004
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Second Quarter2005
    
    2004Royalties:Oil sales (Bbls)
    
    
    181,562
    
    
    
    175,475Gas sales (Mcf)
    
    
    747,306
    
    
    
    711,703Properties From Which The Royalties Were Carved:Oil:Total oil sales (Bbls)
    
    
    312,749
    
    
    
    298,568Average per day (Bbls)
    
    
    3,514
    
    
    
    3,317Average price per Bbl
    
    $
    46.61
    
    
    $
    33.89Gas:Total gas sales (Mcf)
    
    
    1,518,099
    
    
    
    1,426,463Average per day (Mcf)
    
    
    17,057
    
    
    
    15,850Average price per Mcf
    
    $
    6.43
    
    
    $
    4.98
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Six Months Ended June 30, 2005 and 2004
    First Six Months2005
    
    2004Royalties:Oil sales (Bbls)
    
    
    389,586
    
    
    
    358,177Gas sales (Mcf)
    
    
    1,659,975
    
    
    
    1,401,740Properties From Which The Royalties Were Carved:Oil:Total oil sales (Bbls)
    
    
    621,641
    
    
    
    580,532Average per day (Bbls)
    
    
    3,434

    
    
    
    3,190Average price per Bbl
    
    $
    43.41
    
    
    $
    31.84Gas:Total gas sales (Mcf)
    
    
    3,020,045
    
    
    
    2,910,031Average per day (Mcf)
    
    
    16,685
    
    
    
    15,989Average price per Mcf
    
    $
    6.39
    
    
    $
    4.92
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Calculation of Royalty Income
  Three Months Ended June 30,2005
    
    2004Waddell
    
    Texas
    
    Waddell
    
    TexasRanch
    
    Royalty
    
    Ranch
    
    RoyaltyProperties
    
    Properties
    
    Properties
    
    PropertiesGross proceeds of sales from the
Underlying PropertiesOil proceeds
    
    $
    10,479,780
    
    
    $
    4,098,342
    
    
    $
    7,137,395
    
    
    $
    2,982,205Gas proceeds
    
    
    8,609,544
    
    
    
    1,154,657
    
    
    
    6,174,456
    
    
    
    935,861Total
    
    
    19,089,324
    
    
    
    5,252,999
    
    
    
    13,311,851
    
    
    
    3,918,066Less:Severance tax:Oil
    
    
    429,141
    
    
    
    157,934
    
    
    
    302,110
    
    
    
    105,264Gas
    
    
    494,545
    
    
    
    71,968
    
    
    
    354,289
    
    
    
    63,291Lease operating expense and
property tax:
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Three Months Ended June 30,2005
    
    2004Waddell
    
    Texas
    
    Waddell
    
    TexasRanch
    
    Royalty
    
    Ranch
    
    RoyaltyProperties
    
    Properties
    
    Properties
    
    PropertiesOil and gas
    
    
    2,744,168
    
    
    
    225,000
    
    
    
    2,355,207
    
    
    
    210,000Other
    
    
    42,504
    
    
    
    
    
    
    
    42,763
    
    
    
    Capital expenditures
    
    
    4,461,869
    
    
    
    
    
    
    
    2,679,989
    
    
    
    Total
    
    
    8,172,227
    
    
    
    454,902
    
    
    
    5,734,358
    
    
    
    378,555Net profits
    
    
    10,917,097
    
    
    
    4,798,097
    
    
    
    7,577,492
    
    
    
    3,539,511Net overriding royalty interests
    
    
    75
    %
    
    
    95
    %
    
    
    75
    %
    
    
    95
    %Royalty income
    
    $
    8,187,823
    
    
    $
    4,558,193
    
    
    $
    5,683,119
    
    
    $
    3,362,535
 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.
    
    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
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st
 Reserve Disclosure
   Contingencies
  Use of Estimates
  
 Item 3. Qualitative And Quantitative 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 August 5, 2005 and submitted pursuant to Rule
13a-14(a)/15d-14(a).32.1
    
    
    Certificate by Bank of America, Trustee of Permian Basin
Royalty Trust, dated August 5, 2005 and submitted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
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SIGNATURES
  BANK OF AMERICA, N.A.,
TRUSTEE FOR THE
PERMIAN BASIN ROYALTY TRUSTBy:
    /s/ Ron E. HooperRon E. HooperSenior Vice President
Trust Administrator   18




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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 August 5, 2005 and submitted pursuant to Rule
13a-14(a)/15d-14(a).32.1
    
    Certificate by Bank of America, Trustee of Permian Basin Royalty Trust,
dated August 5, 2005 and submitted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 
 *
    
    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.