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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, 2007
 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
  o þ o
 o þ




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TABLE OF CONTENTS  PART I  FINANCIAL INFORMATIONItem1. Financial StatementsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMCONDENSED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS (UNAUDITED)CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)Item 3. Qualitative and Quantitative Disclosures About Market RiskItem 4. Controls and ProceduresPART II  OTHER INFORMATIONItem 6. Exhibits and Reports on Form 8-KSIGNATURESCertification by Ron E. Hooper Pursuant to Rule 13a-14(a)/15d-14(a)Certificate by Bank of America Submitted Pursuant to Section 906    Table of Contents  PERMIAN BASIN ROYALTY TRUST
 
 PART I  FINANCIAL INFORMATION
 
 Item1. 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 (UNAUDITED)
 June 30,
    
    
    December 31,2007
    
    
    2006ASSETSCash and short-term investments
    
    $
    4,500,184
    
    
    $
    5,135,136Net overriding royalty interests in
producing oil and gas properties (net of
accumulated amortization of $9,602,921
and $9,536,002 at June 30, 2007 and
December 31, 2006, respectively)
    
    $
    1,372,295
    
    
    
    1,439,214TOTAL ASSETS
    
    $
    5,872,479
    
    
    $
    6,574,350LIABILITIES AND TRUST CORPUSDistribution payable to Unit holders
    
    $
    4,500,184
    
    
    $
    5,135,136Commitments and contingenciesTrust corpus
  46,608,796 Units of
beneficial interest authorized and
outstanding
    
    
    1,372,295
    
    
    
    1,439,214TOTAL LIABILITIES
AND TRUST CORPUS
    
    $
    5,872,479
    
    
    $
    6,574,350
 
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PERMIAN BASIN ROYALTY TRUST
 
 CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)
 THREE
    
    
    THREEMONTHS
    
    
    MONTHSENDED
    
    
    ENDEDJune 30, 2007
    
    
    June 30, 2006Royalty income
    
    $
    13,419,418
    
    
    $
    14,040,544Interest income
    
    
    27,208
    
    
    
    28,20213,446,626
    
    
    
    14,068,746General and administrative
expenditures
    
    
    (322,344
    )
    
    
    (224,361
    )Distributable income
    
    $
    13,124,282
    
    
    $
    13,844,385Distributable income per Unit
(46,608,796 Units)
    
    $
    .28
    
    
    $
    .30
  
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PERMIAN BASIN ROYALTY TRUST
 CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)
 SIX
    
    
    SIXMONTHS
    
    
    MONTHSENDED
    
    
    ENDEDJune 30, 2007
    
    
    June 30, 2006Royalty income
    
    $
    27,319,961
    
    
    $
    32,958,471Interest income
    
    
    57,993
    
    
    
    63,71527,377,954
    
    
    
    33,022,186General and administrative
expenditures
    
    
    (644,620
    )
    
    
    (524,827
    )Distributable income
    
    $
    26,733,334
    
    
    $
    32,497,359Distributable income per Unit
(46,608,796 Units)
    
    $
    .57
    
    
    $
    .70
  
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PERMIAN BASIN ROYALTY TRUST
 
 CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)
 SIX
    
    
    SIXMONTHS
    
    
    MONTHSENDED
    
    
    ENDEDJune 30, 2007
    
    
    June 30, 2006Trust corpus, beginning of
period
    
    $
    1,439,214
    
    
    $
    1,610,630Amortization of net overriding
royalty interests
    
    
    (66,919
    )
    
    
    (83,331
    )Distributable income
    
    
    26,733,334
    
    
    
    32,497,359Distributions declared
    
    
    (26,733,334
    )
    
    
    (32,497,359
    )Total trust corpus, end of
period
    
    $
    1,372,295
    
    
    $
    1,527,299Distributions per Unit
    
    $
    .57
    
    
    $
    .70
  
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PERMIAN BASIN ROYALTY TRUST
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
 1. BASIS OF ACCOUNTING
  
    
    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), a subsidiary of ConocoPhillips (BRI) 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.
   
    
    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.
  New Accounting Pronouncements
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2. FEDERAL INCOME TAXES
       3. STATE TAX CONSIDERATIONS
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4. SUBSEQUENT EVENTS
  Item 2. Trustees Discussion And Analysis
 Forward Looking Information
  Three Months Ended June 30, 2007 Compared to Three Months Ended June 30, 2006
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Second Quarter2007
    
    2006Royalties:Oil sales (Bbls)
    
    
    161,440
    
    
    
    170,398Gas sales (Mcf)
    
    
    740,684
    
    
    
    654,765Properties From Which The Royalties Were Carved:Oil:Total oil sales (Bbls)
    
    
    290,391
    
    
    
    301,624Average per day (Bbls)
    
    
    3,263
    
    
    
    3,389Average price per Bbl
    
    $
    55.49
    
    
    $
    57.44Gas:Total gas sales (Mcf)
    
    
    1,648,661
    
    
    
    1,433,943Average per day (Mcf)
    
    
    18,524
    
    
    
    16,112Average price per Mcf
    
    $
    6.78
    
    
    $
    7.23
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Six Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006
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Six Months Ended2007
    
    2006Royalties:Oil sales (Bbls)
    
    
    336,057
    
    
    
    376,310Gas sales (Mcf)
    
    
    1,509,975
    
    
    
    1,550,103Properties From Which The Royalties Were Carved:Oil:Total oil sales (Bbls)
    
    
    587,178
    
    
    
    604,562Average per day (Bbls)
    
    
    3,244
    
    
    
    3,340Average price per Bbl
    
    $
    53.72
    
    
    $
    56.11Gas:Total gas sales (Mcf)
    
    
    3,152,091
    
    
    
    2,855,906Average per day (Mcf)
    
    
    17,415
    
    
    
    15,778Average price per Mcf
    
    $
    6.95
    
    
    $
    8.39
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Calculation of Royalty Income
  Three Months Ended June 30,2007
    
    
    2006Waddell
    
    
    Texas
    
    
    Waddell
    
    
    TexasRanch
    
    
    Royalty
    
    
    Ranch
    
    
    RoyaltyProperties
    
    
    Properties
    
    
    Properties
    
    
    PropertiesGross proceeds of sales from the
Underlying PropertiesOil proceeds
    
    $
    11,436,838
    
    
    $
    4,677,364
    
    
    $
    12,049,454
    
    
    $
    5,275,847Gas proceeds
    
    
    9,976,806
    
    
    
    1,205,034
    
    
    
    8,926,146
    
    
    
    1,445,849Total
    
    
    21,413,644
    
    
    
    5,882,398
    
    
    
    20,975,600
    
    
    
    6,721,696Less:Severance tax:Oil
    
    
    486,789
    
    
    
    178,540
    
    
    
    522,406
    
    
    
    177,414Gas
    
    
    472,307
    
    
    
    77,175
    
    
    
    577,998
    
    
    
    90,916Lease operating expenses and
property tax:Oil and gas
    
    
    3,523,723
    
    
    
    330,000
    
    
    
    3,300,435
    
    
    
    285,000Other
    
    
    
    
    
    
    
    
    
    
    42,695
    
    
    
    Capital expenditures
    
    
    5,747,400
    
    
    
    
    
    
    
    5,624,603
    
    
    
    Total
    
    
    10,230,219
    
    
    
    585,715
    
    
    
    10,068,137
    
    
    
    553,330Net profits
    
    
    11,183,425
    
    
    
    5,296,683
    
    
    
    10,907,463
    
    
    
    6,168,366Net overriding royalty interests
    
    
    75
    %
    
    
    95
    %
    
    
    75
    %
    
    
    95
    %Royalty income
    
    $
    8,387,569
    
    
    $
    5,031,849
    
    
    $
    8,180,597
    
    
    $
    5,859,947
 Critical Accounting Policies and Estimates
  Basis of Accounting
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
    
    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
 st
 Reserve Disclosure
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Contingencies
  Use of Estimates
  New Accounting Pronouncements
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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.10.2
    
    Underwriting Agreement dated December 15, 2005 among the
Permian Basin Royalty Trust, Burlington Resources, Inc., Burlington Resources
Oil & Gas L.P. and Lehman Brothers Inc. and Wachovia Capital Markets, LLC as
representatives of the several underwriters, heretofore filed as Exhibit 10.1
to the Trusts current report filed on Form 8-K to the
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Securities and Exchange Commission filed on December 19, 2005, is
incorporated herein by reference.10.3
    
    Underwriting Agreement dated August 2, 2005 among the Permian
Basin Royalty Trust, Burlington Resources, Inc., Burlington Resources Oil & Gas
L.P. and Goldman Sachs & Co. and Lehman Brothers Inc. as representatives of the
several underwriters, heretofore filed as Exhibit 10.1 to the Trusts current
report filed on Form 8-K to the Securities and Exchange Commission filed on
August 8, 2005, is incorporated herein by reference.15.1
    
    Underwriting Agreement dated August 17, 2006, among Permian
Basin Royalty Trust, ConocoPhillips, Burlington Resources Oil & Gas Company LP
and Lehman Brothers Inc. and Wachovia Capital Markets, LLC as representatives
of the several underwriters heretofore filed as Exhibit 10.1 to the Trusts
current report on Form 8-K to the Securities and Exchange Commission filed on
August 22, 2006, is incorporated herein by reference.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 8, 2007 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 8, 2007 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   21




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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.10.2
    
    Underwriting Agreement dated December 15, 2005 among the
Permian Basin Royalty Trust, Burlington Resources, Inc.,
Burlington Resources Oil & Gas L.P. and Lehman Brothers
Inc. and Wachovia Capital Markets, LLC as representatives
of the several underwriters, heretofore filed as Exhibit
10.1 to the Trusts current report filed on Form 8-K to the
Securities and Exchange Commission filed on December 19,
2005, is incorporated herein by reference.10.3
    
    Underwriting Agreement dated August 2, 2005 among the
Permian Basin Royalty Trust, Burlington Resources, Inc.,
Burlington Resources Oil & Gas L.P. and Goldman Sachs & Co.
and Lehman Brothers Inc. as representatives of the several
underwriters, heretofore filed as Exhibit 10.1 to the
Trusts current report filed on Form 8-K to the Securities
and Exchange Commission filed on August 8, 2005, is
incorporated herein by reference.
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ExhibitNumber
    
    Exhibit10.4
    
    Underwriting Agreement dated August 17, 2006, among Permian
Basin Royalty Trust, ConocoPhillips, Burlington Resources
Oil & Gas Company LP and Lehman Brothers Inc. and Wachovia
Capital Markets, LLC as representatives of the several
underwriters heretofore filed as Exhibit 10.1 to the
Trusts current report on Form 8-K to the Securities and
Exchange Commission filed on August 22, 2006, is
incorporated herein by reference.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 8, 2007 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 8, 2007 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. 23