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<SEC-DOCUMENT>0000950134-01-002836.txt : 20010330
<SEC-HEADER>0000950134-01-002836.hdr.sgml : 20010330
ACCESSION NUMBER:		0000950134-01-002836
CONFORMED SUBMISSION TYPE:	10-K405
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20001231
FILED AS OF DATE:		20010329

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PERMIAN BASIN ROYALTY TRUST
		CENTRAL INDEX KEY:			0000319654
		STANDARD INDUSTRIAL CLASSIFICATION:	OIL ROYALTY TRADERS [6792]
		IRS NUMBER:				756280532
		STATE OF INCORPORATION:			TX
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-K405
		SEC ACT:		
		SEC FILE NUMBER:	001-08033
		FILM NUMBER:		1584540

	BUSINESS ADDRESS:	
		STREET 1:		BANK OF AMERICA N A TRUST DEPARTMENT
		STREET 2:		P O BOX 1317 NK OF TEXAS NA TRUST DEPT
		CITY:			FT WORTH
		STATE:			TX
		ZIP:			76102
		BUSINESS PHONE:		8173906905

	MAIL ADDRESS:	
		STREET 1:		1300 SUMMIT AVENUE SUITE 300
		CITY:			FORTH WORTH
		STATE:			TX
		ZIP:			76102
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<FILENAME>d85529e10-k405.txt
<DESCRIPTION>FORM 10-K FOR FISCAL YEAR END DECEMBER 31, 2000
<TEXT>

<PAGE>   1
================================================================================

               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

- --------------------------------------------------------------------------------


                                    FORM 10-K
(Mark One)

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

                  For the fiscal year ended December 31, 2000

                                       OR

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

                          Commission file number 1-8033

                           PERMIAN BASIN ROYALTY TRUST
    (Exact Name of Registrant as Specified in the Permian Basin Royalty Trust
                                   Indenture)

                         ------------------------------

<TABLE>
<S>                                                                             <C>
             Texas                                                                      75-6280532
(State or Other Jurisdiction of                                            (I.R.S. Employer Identification No.)
 Incorporation or Organization)
                                             Bank of America, N.A.
                                               Trust Department
                                                P.O. Box 830650
                                              Dallas, Texas 75202
                                        (Address of Principal Executive
                                              Offices; Zip Code)

                           (Registrant's Telephone Number, Including Area Code)
                                              (214) 209-2400

                        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                                                                                Name of Each Exchange on
         Title of Each Class                                                        Which Registered
     ----------------------------                                               -----------------------
     Units of Beneficial Interest                                               New York Stock Exchange
</TABLE>


        SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None

         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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

At March 1, 2001, there were 46,608,796 Units of Beneficial Interest of the
Trust outstanding with an aggregate market value on that date of $305,287,614.

                       DOCUMENTS INCORPORATED BY REFERENCE

         "Units of Beneficial Interest" at page 1; "Trustee's Discussion and
Analysis for the Three-Year Period Ended December 31, 2000" at pages 7 through
8; "Results of the 4th Quarters of 2000 and 1999" at pages 8 through 9; and
"Statements of Assets, Liabilities and Trust Corpus," "Statements of
Distributable Income," "Statements of Changes in Trust Corpus," "Notes to
Financial Statements" and "Independent Auditors' Report" at page 10 et seq., in
registrant's Annual Report to security holders for fiscal year ended December
31, 2000 are incorporated herein by reference for Item 5, Item 7 and Item 8 of
Part II of this Report.


================================================================================
<PAGE>   2

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----
<S>                                                                       <C>
PART I .......................................................................1
       ITEM 1.    Business ...................................................1
       ITEM 2.    Properties .................................................3
                    PRODUCING ACREAGE, WELLS AND DRILLING ....................3
                    OIL AND GAS PRODUCTION ...................................4
                    PRICING INFORMATION ......................................5
                    OIL AND GAS RESERVES .....................................5
                    REGULATION ...............................................8
                                 Federal Natural Gas Regulation ..............8
                                 State Regulation ............................9
                                 Other Regulation ............................9
       ITEM 3.    Legal Proceedings ..........................................9
       ITEM 4.    Submission of Matters to a Vote of Security Holders ........9

PART II ......................................................................9
       ITEM 5.    Market for Units of the Trust and Related Security Holder
                    Matters ..................................................9
       ITEM 6.    Selected Financial Data ....................................9
       ITEM 7.    Management's Discussion and Analysis of Financial
                    Condition and Results of Operation .......................9
       ITEM 7A.   Quantitative and Qualitative Disclosures about Market
                    Risk .....................................................9
       ITEM 8.    Financial Statements and Supplementary Data ...............10
       ITEM 9.    Changes in and Disagreements with Accountants on
                    Accounting and Financial Disclosure .....................10

PART III ....................................................................10
       ITEM 10.   Directors and Executive Officers of the Registrant ........10
       ITEM 11.   Executive Compensation ....................................10
       ITEM 12.   Security Ownership of Certain Beneficial Owners and
                    Management ..............................................11
       ITEM 13.   Certain Relationships and Related Transactions ............12

PART IV .....................................................................13
       ITEM 14.   Exhibits, Financial Statement Schedules and Reports on
                    Form 8-K ................................................13
</TABLE>


                                       i
<PAGE>   3

                           FORWARD LOOKING INFORMATION

         Certain information included in this report contains, and other
materials filed or to be filed by the Trust with the Securities and Exchange
Commission (as well as information included in oral statements or other written
statements made or to be made by the Trust) may contain or include, forward
looking statements within the meaning of Section 21E of the Securities Exchange
Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as
amended. Such forward looking statements may be or may concern, among other
things, capital expenditures, drilling activity, development activities,
production efforts and volumes, hydrocarbon prices and the results thereof, and
regulatory matters. Although the Trustee believes that the expectations
reflected in such forward looking statements are reasonable, such expectations
are subject to numerous risks and uncertainties and the Trustee can give no
assurance that they will prove correct. There are many factors, none of which is
within the Trustee's control, that may cause such expectations not to be
realized, including, among other things, factors such as actual oil and gas
prices and the recoverability of reserves, capital expenditures, general
economic conditions, actions and policies of petroleum-producing nations and
other changes in the domestic and international energy markets. Such forward
looking statements generally are accompanied by words such as "estimate,"
"expect," "anticipate," "goal," "should," "assume," "believe," or other words
that convey the uncertainty of future events or outcomes.

                                     PART I

ITEM 1. BUSINESS

       The Permian Basin Royalty Trust (the "Trust") is an express trust created
under the laws of the state of Texas by the Permian Basin Royalty Trust
Indenture (the "Trust Indenture") entered into on November 3, 1980, between
Southland Royalty Company ("Southland Royalty") and The First National Bank of
Fort Worth, as Trustee. Bank of America, N.A., a banking association organized
under the laws of the United States, as the successor of The First National Bank
of Fort Worth, is now the Trustee of the Trust. The principal office of the
Trust (sometimes referred to herein as the "Registrant") is located at 901 Main
Street, Dallas, Texas (telephone number 214/209-2400).

       On October 23, 1980, the stockholders of Southland Royalty approved and
authorized that company's conveyance of net overriding royalty interests
(equivalent to net profits interests) to the Trust for the benefit of the
stockholders of Southland Royalty of record at the close of business on the date
of the conveyance consisting of a 75% net overriding royalty interest carved out
of that company's fee mineral interests in the Waddell Ranch properties in Crane
County, Texas and a 95% net overriding royalty interest carved out of that
company's major producing royalty properties in Texas. The conveyance of these
interests (the "Royalties") was made on November 3, 1980, effective as to
production from and after November 1, 1980 at 7:00 a.m. The properties and
interests from which the Royalties were carved and which the Royalties now
burden are collectively referred to herein as the "Underlying Properties." The
Underlying Properties are more particularly described under "Item 2. Properties"
herein.

       The function of the Trustee is to collect the income attributable to the
Royalties, to pay all expenses and charges of the Trust, and then distribute the
remaining available income to the Unit holders. The Trust is not empowered to
carry on any business activity and has no employees, all administrative
functions being performed by the Trustee.

       The Royalties constitute the principal asset of the Trust and the
beneficial interests in the Royalties are divided into that number of Units of
Beneficial Interest (the "Units") of the Trust equal to the number of shares of
the common stock of Southland Royalty outstanding as of the close of business on
November 3, 1980. Each stockholder of Southland Royalty of record at the close
of business on November 3, 1980, received one Unit for each share of the common
stock of Southland Royalty then held.

       In 1985, Southland Royalty became a wholly-owned subsidiary of Burlington
Northern Inc. ("BNI"). In 1988, BNI transferred its natural resource operations
to Burlington Resources Inc. ("BRI") as a result of which Southland Royalty
became a wholly-owned indirect subsidiary of BRI. As a result of these
transactions, El Paso Natural Gas Company ("El Paso") also became an indirect
subsidiary of BRI. In March 1992, El Paso completed an initial public offering
of 5,750,000 newly issued shares of El Paso common stock, thereby decreasing
BRI's ownership of El Paso to approximately eighty-five percent (85%). On June
30, 1992, BRI distributed all of the shares of El Paso common


                                       1
<PAGE>   4
stock owned by BRI to BRI's stockholders of record as of June 15, 1992. See
"Pricing Information" under "ITEM 2. Properties" herein.

       Effective January 1, 1996, Southland Royalty, a wholly-owned subsidiary
of Meridian Oil Inc. ("MOI") was merged with and into MOI, by which action the
separate corporate existence of Southland Royalty ceased and MOI survived and
succeeded to the ownership of all of the assets of Southland Royalty and has
assumed all of its rights, powers and privileges, and all of its liabilities and
obligations. In 1996, MOI changed its name to Burlington Resources Oil & Gas
Company ("BROG").

       The term "net proceeds" as used in the above described conveyance means
the excess of "gross proceeds" received by BROG during a particular period over
"production costs" for such period. "Gross proceeds" means the amount received
by BROG (or any subsequent owner of the Underlying Properties) from the sale of
the production attributable to the Underlying Properties, subject to certain
adjustments. "Production costs" means, generally, costs incurred on an accrual
basis in operating the Underlying Properties, including both capital and
non-capital costs; for example, development drilling, production and processing
costs, applicable taxes, and operating charges. If production costs exceed gross
proceeds in any month, the excess is recovered out of future gross proceeds
prior to the making of further payment to the Trust, but the Trust is not liable
for any production costs or liabilities attributable to these properties and
interests or the minerals produced therefrom. If at any time the Trust receives
more than the amount due from the Royalties, it shall not be obligated to return
such overpayment, but the amounts payable to it for any subsequent period shall
be reduced by such overpaid amount, plus interest, at a rate specified in the
conveyance.

       To the extent it has the legal right to do so, BROG is responsible for
marketing the production from such properties and interests, either under
existing sales contracts or under future arrangements at the best prices and on
the best terms it shall deem reasonably obtainable in the circumstances. BROG
also has the obligation to maintain books and records sufficient to determine
the amounts payable to the Trustee. BROG, however, can sell its interests in the
Underlying Properties.

       Proceeds from production in the first month are generally received by
BROG in the second month, the net proceeds attributable to the Royalties are
paid by BROG to the Trustee in the third month and distribution by the Trustee
to the Unit holders is made in the fourth month. The identity of Unit holders
entitled to a distribution will generally be determined as of the last business
day of each calendar month (the "monthly record date"). The amount of each
monthly distribution will generally be determined and announced ten days before
the monthly record date. Unit holders of record as of the monthly record date
will be entitled to receive the calculated monthly distribution amount for each
month on or before ten business days after the monthly record date. The
aggregate monthly distribution amount is the excess of (i) net revenues from the
Trust properties, plus any decrease in cash reserves previously established for
contingent liabilities and any other cash receipts of the Trust over (ii) the
expenses and payments of liabilities of the Trust plus any net increase in cash
reserves for contingent liabilities.

       Cash held by the Trustee as a reserve for liabilities or contingencies
(which reserves may be established by the Trustee in its discretion) or pending
distribution is placed, at the Trustee's discretion, in obligations issued by
(or unconditionally guaranteed by) the United States or any agency thereof,
repurchase agreements secured by obligations issued by the United States or any
agency thereof, or certificates of deposit of banks having a capital surplus and
undivided profits in excess of $50,000,000, subject, in each case, to certain
other qualifying conditions.

       The income to the Trust attributable to the Royalties is not subject in
material respects to seasonal factors nor in any manner related to or dependent
upon patents, licenses, franchises or concessions. The Trust conducts no
research activities. The Trust has no employees since all administrative
functions are performed by the Trustee.

       BROG has advised the Trustee that it believes that comparable revenues
could be obtained in the event of a change in purchasers of production.


                                       2
<PAGE>   5

ITEM 2. PROPERTIES

       The net overriding royalties conveyed to the Trust include: (1) a 75% net
overriding royalty carved out of BROG's (as successor to Southland Royalty) 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 BROG's
(as successor to Southland Royalty) 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. References below to "net" wells and acres are
to the interests of BROG (from which the Royalties were carved) in the "gross"
wells and acres.

       The following information under this ITEM 2 is based upon data and
information furnished to the Trustee by BROG.

                      PRODUCING ACREAGE, WELLS AND DRILLING

       Waddell Ranch Properties. The Waddell Ranch properties consist of 78,175
gross (34,205 net) producing acres. A majority of the proved reserves are
attributable to six fields: Dune, Sand Hills (Judkins), Sand Hills (McKnight),
Sand Hills (Tubb), University-Waddell (Devonian) and Waddell. At December 31,
2000, the Waddell Ranch properties contained 792 gross (328 net) productive oil
wells, 175 gross (73 net) productive gas wells and 336 gross (133 net) injection
wells.

       BROG is operator of record of the Waddell Ranch properties. All field,
technical and accounting operations have been contracted by an agreement between
the working interest owners and Coastal Management Corporation ("CMC") but
remain under the direction of BROG.

       The Waddell Ranch properties are mature producing properties, and all of
the major oil fields are currently being waterflooded for the purpose of
facilitating enhanced recovery. Proved reserves and estimated future net
revenues attributable to the properties are included in the reserve reports
summarized below. BROG does not own the full working interest in any of the
tracts constituting the Waddell Ranch properties and, therefore, implementation
of any development programs will require approvals of other working interest
holders as well as BROG. In addition, implementation of any development programs
will be dependent upon oil and gas prices currently being received and
anticipated to be received in the future. No wells were drilled and completed on
the Waddell Ranch properties during 2000. At December 31, 2000 there were 10
gross (4.88 net) wells in progress on the Waddell Ranch properties. During 1999
there were 6 gross (2.625 net) wells drilled on the Waddell Ranch properties. At
December 31, 1999 there were 3 gross (1.375 net) wells in progress on the
Waddell Ranch properties. During 1998 there were 52 gross (22.75 net) wells
drilled on the Waddell Ranch properties. At December 31, 1998 there were 3 gross
(1.375 net) wells in progress on the Waddell Ranch properties.

       BROG has advised the Trustee that the total amount of capital
expenditures for 2000 with regard to the Waddell Ranch properties totalled $8.6
million. Capital expenditures include the cost of remedial and maintenance
activities. This amount spent is approximately $5.8 million less than the
budgeted amount projected by BROG for 2000. BROG has advised the Trustee that
the capital expenditures budget for 2001 totals approximately $11 million, of
which approximately $4.7 million is attributable to the 2001 drilling program,
and $5.5 to workovers and recompletions. Accordingly, there is an increase in
capital expenditures for 2001 as compared with the 2000 capital expenditures.

       Texas Royalty Properties. The Texas Royalty properties consist of royalty
interests in mature producing oil fields, such as Yates, Wasson, Sand Hills,
East Texas, Kelly-Snyder, Panhandle Regular, N. Cowden, Todd, Keystone, Kermit,
McElroy, Howard-Glasscock, Seminole and others. The Texas Royalty properties
contain approximately 303,000 gross (approximately 51,000 net) producing acres.
Detailed information concerning the number of wells on royalty properties is not
generally available to the owners of royalty interests. Consequently, an
accurate count of the number of wells located on the Texas Royalty properties
cannot readily be obtained.

       In February 1997, BROG sold its interests in the Texas Royalty properties
that are subject to the Net Overriding Royalty Conveyance to the Trust dated
effective November 1, 1980 ("Texas Royalty Conveyance") to Riverhill Energy
Corporation ("Riverhill Energy"), which was then a wholly-owned subsidiary of
Riverhill Capital Corporation


                                       3
<PAGE>   6
("Riverhill Capital") and an affiliate of CMC. At the time of such sale,
Riverhill Capital was a privately owned Texas corporation with offices in Bryan
and Midland, Texas. The Trustee was informed by BROG that, as required by the
Texas Royalty Conveyance, Riverhill Energy succeeded to all of the requirements
upon and the responsibilities of BROG under the Texas Royalty Conveyance with
regard to the Texas Royalty properties. BROG and Riverhill Energy further
advised the Trustee that all accounting operations pertaining to the Texas
Royalty properties were being performed by CMC under the direction of Riverhill
Energy. BROG indicated to the Trustee that BROG will work together with CMC and
Riverhill Energy in an effort to assure that various administrative functions
and reporting requirements assumed by Riverhill Energy are met. The Trustee has
been advised that independent auditors representing Riverhill Energy and CMC are
Arthur Andersen LLP.

       The Trustee has been advised that in the first quarter of 1998
Schlumberger Technology Corporation ("Schlumberger"), acquired all of the shares
of stock of Riverhill Capital. Prior to such acquisition by Schlumberger, CMC
and Riverhill Energy were wholly-owned subsidiaries of Riverhill Capital. The
Trustee has further been advised that in connection with Schlumberger'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. Accounting operations pertaining to the Texas Royalty
properties are being performed by CMC under the direction of Riverhill Energy.
CMC also currently conducts all field, technical and accounting operations on
behalf of BROG with regard to the Waddell Ranch properties.

                             OIL AND GAS PRODUCTION

       The Trust recognizes production during the month in which the related
distribution is received. Production of oil and gas attributable to the
Royalties and the Underlying Properties and the related average sales prices
attributable to the Underlying Properties for the three years ended December 31,
2000, excluding portions attributable to the adjustments discussed below, were
as follows:

<TABLE>
<CAPTION>
                                             WADDELL RANCH                       TEXAS ROYALTY
                                              PROPERTIES                           PROPERTIES
                                   ---------------------------------   ---------------------------------
                                     2000        1999         1998       2000        1999         1998
                                   --------    --------     --------   --------    --------     --------
<S>                                <C>         <C>          <C>        <C>         <C>         <C>
ROYALTIES:
   Production
         Oil (barrels) .........     584,269     601,148      87,187     335,160     308,204     369,823
         Gas (Mcf) .............   2,654,731   2,754,393     666,864     691,714     709,815     766,085
UNDERLYING PROPERTIES:
   Production
         Oil (barrels) .........   1,119,835   1,309,396   1,475,258     366,275     365,502     434,444
         Gas (Mcf) .............   5,134,829   6,066,149   6,458,411     755,194     841,018     915,025
   Average Price
         Oil/barrel ............   $   28.28   $   14.26   $   12.76   $   26.58   $   14.40   $   12.44
         Gas/Mcf ...............   $    3.65   $    2.11   $    2.13   $    3.58   $    2.09   $    2.06

<CAPTION>

                                                TOTAL
                                   ---------------------------------
                                     2000        1999         1998
                                   --------    --------     --------
<S>                                <C>         <C>         <C>
ROYALTIES:
   Production
         Oil (barrels) .........     919,429     909,352     457,010
         Gas (Mcf) .............   3,346,445    3,464,20   1,432,949
UNDERLYING PROPERTIES:
   Production
         Oil (barrels) .........   1,486,110   1,674,898   1,909,702
         Gas (Mcf) .............   5,890,023   6,907,167   7,373,436
   Average Price
         Oil/barrel ............   $   27.66   $   14.29   $   12.69
         Gas/Mcf ...............   $    3.63   $    2.11   $    2.12
</TABLE>

         Since the oil and gas sales attributable to the Royalties are based on
an allocation formula that is dependent on such factors as price and cost
(including capital expenditures), production amounts do not necessarily provide
a meaningful comparison.

         In calculating Trust royalty income for the months of June through
December 1998, costs exceeded revenues in the Waddell Ranch properties by
$1,218,732. Pursuant to the Waddell Ranch Net Overriding Royalty Conveyance
dated effective November 1, 1980 ("Waddell Ranch Conveyance"), excess costs plus
accrued interest must be recovered from future net proceeds relating to the
underlying Waddell Ranch properties before the properties can again contribute
to Trust royalty income. As a result of this, no royalty income was received for
those months. Production attributable to the Trust is calculated based on net
royalty income. As there was no royalty income, no production was reported for
the Waddell Ranch properties at the Trust level for those months. Production at
the Trust level for the Waddell Ranch properties was not recorded again until
February 1999 when the cumulative excess amounts had been recovered.


                                       4
<PAGE>   7

         In September 1998, the Trust received $1,041,340 from BROG which
represented the Trust's portion of amounts that had been previously held in
suspense by BROG relating to the Texas Royalty properties. The Trustee was
advised that these amounts relate to revenues received by BROG prior to the
conveyance of its interest in the Texas Royalty properties to Riverhill Energy
in February 1997. In October 1998, Riverhill Energy advised the Trustee that an
overpayment of $521,183 with regard to the suspended funds had been made to the
Trust. Pursuant to the Texas Royalty Conveyance, Riverhill Energy offset the
overpayment against royalty income attributable to the Texas Royalty properties
for the months of October and November 1998. The suspense amounts are not
reflected in Trust production or used in calculating average prices in 1998 or
prior years.

         The Trustee was notified in the third quarter of 1996 of the settlement
of a class action lawsuit pending in the 270th District Court of Harris County,
Texas (the "Court") styled Caroline Altheide and Langdon Harrison vs. Meridian
Oil Inc., Meridian Oil Holding Inc., Meridian Oil Trading Inc., Meridian Oil
Production Inc., Southland Royalty Company, El Paso Production Company, Meridian
Oil Hydrocarbons Inc., Meridian Oil Gathering Inc., Meridian Oil Services Inc.
and Edward Parker ("Class Action"), in which the Trust was a class member. The
judgment approving the settlement of the Class Action was the subject of an
appeal. The Trustee was advised that such appeal was dismissed and in October
1998, the Trust's portion of such settlement proceeds, in the amount of $766,051
was received by the Trustee. The proceeds were subsequently distributed with the
regular monthly Trust distribution on November 16, 1998, to the Trust's Unit
holders of record on October 31, 1998. The settlement proceeds are not reflected
in Trust production in 1998 or prior years.

                              PRICING INFORMATION

         Reference is made to "Regulation" for information as to federal
regulation of prices of natural gas. The following paragraphs provide
information regarding sales of oil and gas from the Waddell Ranch properties. As
a royalty owner, BROG is not furnished detailed information regarding sales of
oil and gas from the Texas Royalty properties.

         Oil. The Trustee has been advised by BROG that for the period August 1,
1993 through June 30, 2001, the oil from the Waddell Ranch properties is being
sold under a competitive bid to independent third parties.

         Gas. The gas produced from the Waddell Ranch properties is processed
through a natural gas processing plant and sold at the tailgate of the plant.
Plant products are marketed by Burlington Resources Hydrocarbons Inc., an
indirect subsidiary of BRI. The processor of the gas (Warren Petroleum Company,
L.P.) receives 15% of the liquids and residue gas as a fee for gathering,
compression, treating and processing the gas.

                              OIL AND GAS RESERVES

         The following are definitions adopted by the Securities and Exchange
Commission ("SEC") and the Financial Accounting Standards Board which are
applicable to terms used within this Item:

         "Proved reserves" are those estimated quantities of crude oil, natural
gas and natural gas liquids, which, upon analysis of geological and engineering
data, appear with reasonable certainty to be recoverable in the future from
known oil and gas reservoirs under existing economic and operating conditions.

         "Proved developed reserves" are those proved reserves which can be
expected to be recovered through existing wells with existing equipment and
operating methods.

         "Proved undeveloped reserves" are those proved reserves which are
expected to be recovered from new wells on undrilled acreage, or from existing
wells where a relatively major expenditure is required.

         "Estimated future net revenues" are computed by applying current prices
of oil and gas (with consideration of price changes only to the extent provided
by contractual arrangements and allowed by federal regulation) to estimated
future production of proved oil and gas reserves as of the date of the latest
balance sheet presented, less estimated future expenditures (based on current
costs) to be incurred in developing and producing the proved reserves, and
assuming continuation of existing economic conditions.


                                       5
<PAGE>   8

         "Estimated future net revenues" are sometimes referred to herein as
"estimated future net cash flows."

         "Present value of estimated future net revenues" is computed using the
estimated future net revenues and a discount factor of 10%.

         The independent petroleum engineers' reports as to the proved oil and
gas reserves attributable to the Royalties conveyed to the Trust were obtained
from Cawley, Gillespie & Associates, Inc. The following table presents a
reconciliation of proved reserve quantities from January 1, 1998 through
December 31, 2000 (in thousands):

<TABLE>
<CAPTION>
                                         WADDELL RANCH                TEXAS ROYALTY
                                          PROPERTIES                    PROPERTIES                     TOTAL
                                   --------------------------    -------------------------   ---------------------------
                                      OIL             GAS          OIL             GAS         OIL              GAS
                                     (Bbls)          (Mcf)        (Bbls)          (Mcf)       (Bbls)           (Mcf)
                                   -----------     ----------    ----------     ----------   ----------      -----------
<S>                                <C>             <C>           <C>            <C>          <C>             <C>
January 1, 1998 .................     5,023          24,175         4,441          4,629        9,464          28,804
Extensions, discoveries, and
other additions .................        10               4           -0-            -0-           10               4
Revisions of previous estimates..    (2,231)         (6,123)         (285)           100       (2,516)         (6,023)
Production ......................       (87)           (667)         (370)          (766)        (457)         (1,433)
                                    -------         -------       -------        -------      -------         -------
December 31, 1998 ...............     2,715          17,389         3,786          3,963        6,501          21,352
Extensions, discoveries, and
other additions .................        15              49           -0-            -0-           15              49
Revisions of previous estimates..     3,357           8,320           667          2,375        4,024          10,695
Production ......................      (601)         (2,754)         (308)          (710)        (909)         (3,464)
                                    -------         -------       -------        -------      -------         -------
December 31, 1999 ...............     5,486          23,004         4,145          5,628        9,631          28,632
Extensions, discoveries, and
other additions .................       314           1,106             0              0          314           1,106
Revisions of previous estimates..     1,095           9,088            97          1,012        1,192          10,099
Production ......................      (584)         (2,655)         (335)          (692)        (919)         (3,346)
                                    -------         -------       -------        -------      -------         -------
December 31, 2000 ...............     6,311          30,543         3,907          5,948       10,218          36,491
                                    =======         =======       =======        =======      =======         =======
</TABLE>

         Estimated quantities of proved developed reserves of crude oil and
natural gas as of December 31, 2000, 1999 and 1998 were as follows (in
thousands):

<TABLE>
<CAPTION>
                                                    CRUDE OIL               NATURAL GAS
                                                      (Bbls)                    (Mcf)
                                               ---------------------    ---------------------
<S>                                            <C>                      <C>
                  December 31, 2000 .......           8,937                    31,665
                  December 31, 1999 .......           8,200                    24,248
                  December 31, 1998 .......           5,476                    17,444
</TABLE>

The Financial Accounting Standards Board requires supplemental disclosures for
oil and gas producers based on a standardized measure of discounted future net
cash flows relating to proved oil and gas reserve quantities. Under this
disclosure, future cash inflows are computed by applying year-end prices of oil
and gas relating to the enterprise's proved reserves to the year-end quantities
of those reserves. Future price changes are only considered to the extent
provided by contractual arrangements in existence at year end. The standardized
measure of discounted future net cash flows is achieved by using a discount rate
of 10% a year to reflect the timing of future cash flows relating to proved oil
and gas reserves.

Estimates of proved oil and gas reserves are by their very nature imprecise.
Estimates of future net revenue attributable to proved reserves are sensitive to
the unpredictable prices of oil and gas and other variables.


                                       6
<PAGE>   9

         The 2000, 1999 and 1998 change in the standardized measure of
discounted future net cash flows related to future royalty income from proved
reserves discounted at 10% is as follows (in thousands):

<TABLE>
<CAPTION>
                                       WADDELL RANCH                          TEXAS ROYALTY
                                         PROPERTIES                             PROPERTIES
                             -----------------------------------   -----------------------------------
                               2000         1999          1998       2000         1999          1998
                             --------     --------      --------   --------     ---------     --------
<S>                          <C>          <C>          <C>          <C>          <C>          <C>
January 1 ................   $ 102,088    $  25,043    $  63,179    $  52,126    $  22,031    $  40,956
Extensions, discoveries,
and other additions.......      10,281          226           81            0            0            0
Accretion of discount ....      10,209        2,504        6,318        5,213        2,203        4,096
Revisions of previous
estimates and other ......     116,353       88,598      (39,982)      19,379       33,627      (16,796)
Royalty income ...........     (24,902)     (14,283)      (4,553)     (10,934)      (5,735)      (6,225)
                             ---------    ---------    ---------    ---------    ---------    ---------
December 31 ..............   $ 214,029    $ 102,088    $  25,043    $  65,784    $  52,126    $  22,031

<CAPTION>

                                            TOTAL
                             ------------------------------------
                               2000          1999         1998
                             ---------    ----------    ---------
<S>                           <C>          <C>          <C>
January 1 ................    $ 154,214    $  47,074    $ 104,135
Extensions, discoveries,
and other additions.......       10,281          226           81
Accretion of discount ....       15,422        4,707       10,414
Revisions of previous
estimates and other ......      135,732      122,225      (56,778)
Royalty income ...........      (35,836)     (20,018)     (10,778)
                              ---------    ---------    ---------
December 31 ..............    $ 279,813    $ 154,214    $  47,074
</TABLE>

         Oil and gas prices of $24.65 and $26.46 per barrel and $8.98 and $7.03
per Mcf were used to determine the estimated future net revenues from the
Waddell Ranch properties and the Texas Royalty properties, respectively, at
December 31, 2000. The extension, discoveries and other additions for the
Waddell Ranch properties are proved reserves related to the Waddell (Greyburg)
and Running WN (Wolfcamp) fields. The upward revisions of both reserves and
discounted future net cash flows for the Waddell Ranch properties and the Texas
Royalty properties are due to increases in oil and gas prices from 1999 to 2000.

         Oil and gas prices of $24.05 and $24.19 per barrel and $2.74 and $3.18
per Mcf, respectively, were used to determine the estimated future net revenues
from the Waddell Ranch properties and the Texas Royalty properties,
respectively, at December 31, 1999. The extension, discoveries and other
additions for the Waddell Ranch properties are proved developed producing
reserves related to the RM (Clearfork) field. The upward revisions of both
reserves and discounted future net cash flows for the Waddell Ranch properties
and the Texas Royalty properties were due to increases in oil and gas prices
from 1998 to 1999.

         Oil and gas prices of $8.56 and $9.96 per barrel and $1.74 and $1.88
per Mcf, respectively, were used to determine the estimated future net revenues
from the Waddell Ranch properties and the Texas Royalty properties at December
31, 1998.

         The following presents estimated future net revenue and the present
value of estimated future net revenue, for each of the years ended December 31,
2000, 1999 and 1998 (in thousands except amounts per Unit):

<TABLE>
<CAPTION>
                                              2000                 1999                   1998
                                    --------------------- ---------------------- --------------------
                                     ESTIMATED   PRESENT   ESTIMATED    PRESENT  ESTIMATED   PRESENT
                                    FUTURE NET  VALUE AT   FUTURE NET  VALUE AT  FUTURE NET  VALUE AT
                                      REVENUE      10%      REVENUE       10%     REVENUE      10%
                                    ----------  --------   ---------  ---------  --------- ---------
<S>                                 <C>        <C>        <C>         <C>        <C>       <C>
Total Proved
    Waddell Ranch properties .....   $405,530   $214,029   $184,957   $102,088   $ 50,322   $ 25,043
    Texas Royalty properties .....    138,860     65,784    113,838     52,126     43,290     22,031
                                     --------   --------   --------   --------   --------   --------
                  Total ..........   $544,390   $279,813   $298,795   $154,214   $ 93,612   $ 47,074
                                     ========   ========   ========   ========   ========   ========
Total Proved per Unit ............   $  11.68   $   6.00   $   6.41   $   3.31   $   2.01   $   1.01
                                     ========   ========   ========   ========   ========   ========
Proved Developed
    Waddell Ranch properties .....   $334,734   $187,575   $140,808   $ 85,612   $ 35,607   $ 22,032
    Texas Royalty properties .....    138,860     65,784    113,838     52,126     43,290     22,031
                                     --------   --------   --------   --------   --------   --------
                  Total ..........   $473,594   $253,359   $254,646   $137,738   $ 78,897   $ 44,063
                                     ========   ========   ========   ========   ========   ========
</TABLE>

         Reserve quantities and revenues shown in the preceding tables for the
Royalties were estimated from projections of reserves and revenue attributable
to the combined Southland Royalty and Trust interests in the Waddell Ranch
properties and Texas Royalty properties. Reserve quantities attributable to the
Royalties were estimated by allocating to the Royalties a portion of the total
estimated net reserve quantities of the interests, based upon gross revenue less
production taxes. Because the reserve quantities attributable to the Royalties
are estimated using an allocation of the reserves, any changes in prices or
costs will result in changes in the estimated reserve quantities allocated to
the Royalties. Therefore, the reserve quantities estimated will vary if
different future price and cost assumptions occur.


                                       7
<PAGE>   10

         Proved reserve quantities are estimates based on information available
at the time of preparation and such estimates are subject to change as
additional information becomes available. The reserves actually recovered and
the timing of production of those reserves may be substantially different from
the original estimate. Moreover, the present values shown above should not be
considered as the market values of such oil and gas reserves or the costs that
would be incurred to acquire equivalent reserves. A market value determination
would include many additional factors.

                                   REGULATION

         Many aspects of the production, pricing and marketing of crude oil and
natural gas are regulated by federal and state agencies. Legislation affecting
the oil and gas industry is under constant review for amendment or expansion,
frequently increasing the regulatory burden on affected members of the industry.

         Exploration and production operations are subject to various types of
regulation at the federal, state and local levels. Such regulation includes
requiring permits for the drilling of wells, maintaining bonding requirements in
order to drill or operate wells, and regulating the location of wells, the
method of drilling and casing wells, the surface use and restoration of
properties upon which wells are drilled and the plugging and abandonment of
wells. Natural gas and oil operations are also subject to various conservation
laws and regulations that regulate the size of drilling and spacing units or
proration units and the density of wells which may be drilled and unitization or
pooling of oil and gas properties. In addition, state conservation laws
establish maximum allowable production from natural gas and oil wells, generally
prohibit the venting or flaring of natural gas and impose certain requirements
regarding the ratability of production. The effect of these regulations is to
limit the amounts of natural gas and oil that can be produced and to limit the
number of wells or the locations which can be drilled.

FEDERAL NATURAL GAS REGULATION

         The Federal Energy Regulatory Commission (the "FERC") is primarily
responsible for federal regulation of natural gas. The interstate transportation
and sale for resale of natural gas is subject to federal governmental
regulation, including regulation of transportation and storage tariffs and
various other matters, by FERC. The Natural Gas Wellhead Decontrol Act of 1989
("Decontrol Act") terminated federal price controls on wellhead sales of
domestic natural gas on January 1, 1993. Consequently, sales of natural gas may
be made at market prices, subject to applicable contract provisions. The FERC's
jurisdiction over natural gas transportation and storage was unaffected by the
Decontrol Act.

         Sales of natural gas are affected by the availability, terms and cost
of transportation. The price and terms for access to pipeline transportation
remain subject to extensive federal and state regulation. Several major
regulatory changes have been implemented by Congress and the FERC from 1985 to
the present that affect the economics of natural gas production, transportation,
and sales. In addition, the FERC continues to promulgate revisions to various
aspects of the rules and regulations affecting those segments of the natural gas
industry, most notably interstate natural gas transmission companies, that
remain subject to the FERC's jurisdiction. These initiatives may also affect the
intrastate transportation of gas under certain circumstances. The stated purpose
of many of these regulatory changes is to promote competition among the various
sectors of the natural gas industry and these initiatives generally reflect more
light-handed regulation of the natural gas industry. The ultimate impact of the
rules and regulations issued by the FERC since 1985 cannot be predicted. In
addition, many aspects of these regulatory developments have not become final
but are still pending judicial and FERC final decisions.

         Additional proposals and proceedings that might affect the natural gas
industry are considered from time to time by Congress, the FERC, state
regulatory bodies and the courts. The Trust cannot predict when or if any such
proposals might become effective, or their effect, if any, on the Trust. The
natural gas industry historically has been very heavily regulated; therefore,
there is no assurance that the less stringent regulatory approach recently
pursued by the FERC and Congress will continue.

         Sales of crude oil, condensate and gas liquids are not currently
regulated and are made at market prices. Crude oil prices are affected by a
variety of factors. Since domestic crude price controls were lifted in 1981, the
principal factors influencing the prices received by producers of domestic crude
oil have been the pricing and production of the members of the Organization of
Petroleum Export Countries (OPEC).


                                        8
<PAGE>   11

STATE REGULATION

         The various states regulate the production and sale of oil and natural
gas, including imposing requirements for obtaining drilling permits, the method
of developing new fields, the spacing and operation of wells and the prevention
of waste of oil and gas resources. The rates of production may be regulated and
the maximum daily production allowables from both oil and gas wells may be
established on a market demand or conservation basis, or both.

OTHER REGULATION

         The petroleum industry is also subject to compliance with various other
federal, state and local regulations and laws, including, but not limited to,
environmental protection, occupational safety, resource conservation and equal
employment opportunity. The Trustee does not believe that compliance with these
laws by the operating parties will have any material adverse effect on Unit
holders.

ITEM 3. LEGAL PROCEEDINGS

         There are no material pending legal proceedings to which the Trust is a
party or of which any of its property is the subject.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of Unit holders, through the
solicitation of proxies or otherwise, during the fourth quarter ended December
31, 2000.

                                     PART II

ITEM 5. MARKET FOR UNITS OF THE TRUST AND RELATED SECURITY HOLDER MATTERS

         The information under "Units of Beneficial Interest" at page 1 of the
Trust's Annual Report to security holders for the year ended December 31, 2000,
is herein incorporated by reference.

ITEM 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                            FOR THE YEAR ENDED DECEMBER 31,
                                        ------------------------------------------------------------------------
                                            2000           1999            1998           1997           1996
                                        -----------     ----------      ----------     ----------     ----------
<S>                                     <C>             <C>             <C>            <C>            <C>
Royalty income .....................    $35,835,746    $18,799,659     $10,777,901    $22,598,873    $19,930,354
Distributable income ...............     35,545,141     18,471,842      10,414,382     22,190,115     19,488,574
Distributable income per Unit ......       0.762627       0.396317        0.223443       0.476092       0.418131
Distributions per Unit .............       0.762627       0.396317        0.223443       0.476092       0.418131
Total assets, December 31 ..........    $ 5,651,376    $ 5,305,223     $ 3,861,776    $ 5,220,786    $ 5,913,931
</TABLE>

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATION

         The "Trustee's Discussion and Analysis for the Three Year Period Ended
December 31, 2000" and "Results of the 4th Quarters of 2000 and 1999" at pages 7
through 9 of the Trust's Annual Report to security holders for the year ended
December 31, 2000 is herein incorporated by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Trust is a passive entity and other than the Trust's ability to
periodically borrow money as necessary to pay expenses, liabilities and
obligations of the Trust that cannot be paid out of cash held by the Trust, the
Trust is prohibited from engaging in borrowing transactions. The amount of any
such borrowings is unlikely to be material to the Trust. The Trust periodically
holds short term investments acquired with funds held by the Trust pending


                                        9
<PAGE>   12

distribution to Unit holders and funds held in reserve for the payment of Trust
expenses and liabilities. Because of the short-term nature of these borrowings
and investments and certain limitations upon the types of such investments which
may be held by the Trust, the Trustee believes that the Trust is not subject to
any material interest rate risk. The Trust does not engage in transactions in
foreign currencies which could expose the Trust or Unit holders to any foreign
currency related market risk. The Trust invests in no derivative financial
instruments and has no foreign operations or long-term debt instruments.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The Financial Statements of the Trust and the notes thereto at page 10
et seq. of the Trust's Annual Report to security holders for the year ended
December 31, 2000, are herein incorporated by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

         There have been no changes in accountants and no disagreements with
accountants on any matter of accounting principles or practices or financial
statement disclosures during the twenty-four months ended December 31, 2000.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The Trust has no directors or executive officers. The Trustee is a
corporate trustee which may be removed, with or without cause, at a meeting of
the Unit holders, by the affirmative vote of the holders of a majority of all
the Units then outstanding.

ITEM 11. EXECUTIVE COMPENSATION

         During the years ended December 31, 2000, 1999, and 1998, the Trustee
received total remuneration as follows:

<TABLE>
<CAPTION>
             NAME OF INDIVIDUAL OR NUMBER                CAPACITIES IN            CASH
                OF PERSONS IN GROUP                       WHICH SERVED         COMPENSATION         YEAR
             ----------------------------                -------------         ------------         ----
<S>                                                      <C>                   <C>                  <C>
Bank of America, N.A ................................       Trustee              $54,761(1)         1998
                                                                                 $40,272(1)         1999
                                                                                 $57,680(1)         2000
</TABLE>

- --------------------
(1)      Under the Trust Indenture, the Trustee is entitled to an administrative
         fee for its administrative services, preparation of quarterly and
         annual statement with attention to tax and legal matters of: (i) 1/20
         of 1% of the first $100 million and (ii) Trustee's standard hourly rate
         in excess of 300 hours annually. The administrative fee is subject to
         reduction by a credit for funds provision.


                                       10
<PAGE>   13

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

           (a) Security Ownership of Certain Beneficial Owners. The following
table sets forth as of March 1, 2001, information with respect to each person
known to own beneficially more than 5% of the outstanding Units of the Trust:

<TABLE>
<CAPTION>
                                                              AMOUNT AND NATURE OF
                 NAME AND ADDRESS                             BENEFICIAL OWNERSHIP              PERCENT OF CLASS
                 ----------------                             ---------------------             ----------------
<S>                                                           <C>                               <C>
Burlington Resources Oil & Gas Company(1)                       27,577,741 Units                     59.17%
   5051 Westheimer
   Suite 1400
   Houston, Texas 77056-2124

McMorgan & Company (2)                                          5,000,000 Units                      10.73%
   One Bush Street
   Suite 800
   San Francisco, CA 94104

Alpine Capital, L.P.(3)                                         4,260,800 Units                       9.10%
   201 Main Street
   Suite 3100
   Fort Worth, Texas 76102
</TABLE>

- ----------------------
(1)      This information was provided to the Securities and Exchange Commission
         and to the Trust in a Schedule 13G filed with the Securities and
         Exchange Commission on July 12, 1999 on behalf of McMorgan & Company,
         an investment adviser registered under the Investment Advisers Act of
         1940, (McMorgan), Thomas Allan Morton ("Morton"), and Terry Allen
         O'Toole ("O'Toole"). Such Schedule 13G reports that McMorgan, Morton,
         and O'Toole have beneficial ownership of such Units. It is reported in
         such Schedule 13G that McMorgan, Morton, and O'Toole have sole voting
         and sole dispositive power with regard to such Units. Morton and
         O'Toole filed in their capacities as control persons of McMorgan and
         disclaimed beneficial ownership to such Units involved in such Schedule
         13G. The address of Morton and O'Toole is One Bush Street, Suite 800,
         San Francisco, California 94104.

(2)      This information was provided to the Securities and Exchange Commission
         and to the Trust in a Schedule 13G filed with the Securities and
         Exchange Commission on July 12, 1999 on behalf of McMorgan & Company,
         an investment adviser registered under the Investment Advisers Act of
         1940, (McMorgan), Thomas Allan Morton ("Morton"), and Terry Allen
         O'Toole ("O'Toole"). Such Schedule 13G reports that McMorgan, Morton,
         and O'Toole have beneficial ownership of such Units. It is reported in
         such Schedule 13G that McMorgan, Morton, and O'Toole have sole voting
         and sole dispositive power with regard to such Units. Morton and
         O'Toole filed in their capacities as control persons of McMorgan and
         disclaimed beneficial ownership to such Units involved in such Schedule
         13G. The address of Morton and O'Toole is One Bush Street, Suite 800,
         San Francisco, California 94104.

         The Schedule 13G filed with the Securities and Exchange Commission on
         behalf of McMorgan, Morton, and O'Toole may be reviewed for more
         detailed information concerning the matters summarized herein.

(3)      This information was provided to the Securities and Exchange Commission
         and to the Trust in a Schedule 13D filed with the Securities and
         Exchange Commission on behalf of Alpine Capital L.P., a Texas limited
         partnership, ("Alpine"), Robert W. Bruce III ("Bruce"), Algenpar, Inc.,
         a Texas corporation, ("Algenpar") and J. Taylor Crandall ("Crandall"),
         on August 6, 1999, as amended by a Schedule 13D/A filed on October 5,
         1999, as further amended by a Schedule 13D/A filed December 21, 1999,
         and as further amended by a Schedule 13D/A filed February 25, 2000.

         The Schedule 13D/A filed on February 25, 2000, was filed on behalf of
         The Ann T. and Robert M. Bass Foundation, a Texas non-profit
         corporation, (the "Foundation"), Ann T. Bass ("A. Bass"), and Robert M.
         Bass ("R. Bass"), in addition to Alpine, Bruce, Algenpar, and Crandall
         and relates to a total of 4,335,200 Units, of which 4,260,800 Units
         were acquired by Alpine and 74,400 Units were acquired by the


                                       11
<PAGE>   14

         Foundation. The source of funds for the Units acquired by Alpine was
         working capital of Alpine. The source of funds for the Units acquired
         by the Foundation was working capital of the Foundation.

         The address of Algenpar and Crandall is 201 Main Street, Suite 3100,
         Fort Worth, Texas 76102. The address of Bruce is 96 Spring Street,
         South Salem, New York 10590. The address of the Foundation and of R.
         Bass is 201 Main Street, Suite 3100, Fort Worth, Texas 76102. The
         address of A. Bass is 6221 Westover Drive, Fort Worth, Texas 76107.

         It is reported that Bruce and Algenpar are the two general partners of
         Alpine, and Crandall is the President and sole stockholder of Algenpar.
         It is further reported that, because of these relationships, Bruce,
         Algenpar, and Crandall may be deemed to be beneficial owners of the
         Units acquired by Alpine as set forth in the next paragraph. It is
         reported that Bruce is a principal of The Bruce Management Co., Inc.
         which has shared investment discretion over the Units owned by the
         Foundation, and that Crandall, A. Bass, and R. Bass are directors of
         the Foundation. It is further reported that, because of these
         relationships, Bruce, Crandall, A. Bass, and R. Bass may be deemed to
         be beneficial owners of the Units acquired by the Foundation as set
         forth in the next paragraph.

         It is reported that as of February 22, 2000, of such 4,335,200 Units,
         (i) Alpine had sole voting and dispositive power with regard to
         4,260,800 of such Units or 9.1% of the outstanding Units; (ii) the
         Foundation had sole voting and dispositive power with regard to 74,400
         of such Units or .2% of the outstanding Units; (iii) Bruce and Crandall
         each shared voting and dispositive power with regard to all of such
         4,335,200 Units or 9.3% of the outstanding Units; (iv) Algenpar had
         shared voting and dispositive power with regard to 4,260,800 of such
         Units or 9.1% of the outstanding Units; and (v) A. Bass and R. Bass
         each shared voting and dispositive power with regard to 74,400 of such
         Units or .2% of the outstanding Units.

         The Schedule 13D and its amendments filed with the Securities and
         Exchange Commission may be reviewed for more detailed information
         concerning the matters summarized herein.

         (b) Security Ownership of Management. The Trustee owns beneficially no
securities of the Trust. In various fiduciary capacities, Bank of America, N.A.
owned as of March 1, 2001, an aggregate of 249,995 Units with no right to vote
139,196 of these Units, shared right to vote 4,000 of these Units and sole right
to vote 106,799 of these Units. Bank of America, N.A., disclaims any beneficial
interests in these Units. The number of Units reflected in this paragraph
includes Units held by all branches of Bank of America, N.A.

         (c) Change In Control. The Trustee knows of no arrangements which may
subsequently result in a change in control of the Trust.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The Trust has no directors or executive officers. See Item 11 for the
remuneration received by the Trustee during the years ended December 31, 2000,
1999 and 1998 and Item 12(b) for information concerning Units owned by Bank of
America, N.A. in various fiduciary capacities.


                                       12
<PAGE>   15
                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

           The following documents are filed as a part of this Report:

1.         Financial Statements

           Included in Part II of this Report by reference to the Annual Report
of the Trust for the year ended December 31, 2000:

                  Independent Auditors' Report

                  Statements of Assets, Liabilities and Trust Corpus at December
                  31, 2000 and 1999

                  Statements of Distributable Income for Each of the Three Years
                  in the Period Ended December 31, 2000

                  Statements of Changes in Trust Corpus for Each of the Three
                  Years in the Period Ended December 31, 2000

                  Notes to Financial Statements

2.         Financial Statement Schedules

           Financial statement schedules are omitted because of the absence of
conditions under which they are required or because the required information is
given in the financial statements or notes thereto.

3.         Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER            EXHIBIT
- ------            -------
<S>              <C>
   (4)(a)     -- Permian Basin Royalty Trust Indenture dated November 3,
                 1980, between Southland Royalty Company 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.*

    (b)       -- Net Overriding Royalty Conveyance (Permian Basin Royalty
                 Trust) from Southland Royalty Company 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.*

    (c)       -- Net Overriding Royalty Conveyance (Permian Basin Royalty
                 Trust -- Waddell Ranch) from Southland Royalty Company 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.*

    (13)      -- Registrant's Annual Report to security holders for fiscal
                 year ended December 31, 2000.**
</TABLE>


                                       13
<PAGE>   16



<TABLE>
<S>              <C>
    (23)      -- Consent of Cawley, Gillespie & Associates, Inc., reservoir
                 engineer.**
</TABLE>

- --------------------
*        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., P.O. Box 830650, Dallas, Texas 75283-0650.

**       Filed herewith.

                               REPORTS ON FORM 8-K

           During the last quarter of the Trust's fiscal year ended December 31,
2000, there were no reports on Form 8-K filed by the Trust.


                                       14
<PAGE>   17


                                    SIGNATURE

           PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) 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.

                                       PERMIAN BASIN ROYALTY TRUST

                                       BY:  BANK OF AMERICA, N.A., Trustee



                                       By         /s/ RON E. HOOPER
                                         ----------------------------------
                                                      Ron E. Hooper
                                                      Senior Vice President


Date: March 29, 2001

              (The Trust has no directors or executive officers.)


                                       15
<PAGE>   18
                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                             EXHIBIT
- -------                             -------
<S>              <C>
   (4)(a)     -- Permian Basin Royalty Trust Indenture dated November 3,
                 1980, between Southland Royalty Company 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.*

    (b)       -- Net Overriding Royalty Conveyance (Permian Basin Royalty
                 Trust) from Southland Royalty Company 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.*

    (c)       -- Net Overriding Royalty Conveyance (Permian Basin Royalty
                 Trust -- Waddell Ranch) from Southland Royalty Company 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.*

    (13)      -- Registrant's Annual Report to security holders for fiscal
                 year ended December 31, 2000.**

    (23)      -- Consent of Cawley, Gillespie & Associates, Inc., reservoir
                 engineer.**
</TABLE>

- --------------------
*        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., P.O. Box 830650, Dallas, Texas 75283-0650.

**       Filed herewith.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>2
<FILENAME>d85529ex13.txt
<DESCRIPTION>ANNUAL REPORT FOR FISCAL YEAR ENDED 12/31/00
<TEXT>

<PAGE>   1
                          ANNUAL REPORT TO SHAREHOLDERS


                                                                      EXHIBIT 13


                                  [COVER PAGE]

                       [PERMIAN BASIN ROYALTY TRUST LOGO]

           PERMIAN BASIN ROYALTY TRUST ANNUAL REPORT & FORM 10-K 2000




                           [MAP OF COUNTIES IN TEXAS]


           TEXAS ROYALTY PROPERTIES ARE LOCATED IN 35 TEXAS COUNTIES.
              WADDELL RANCH PROPERTIES ARE LOCATED IN CRANE COUNTY.


<PAGE>   2

THE TRUST

           The Permian Basin Royalty Trust's (the "Trust") principal assets are
comprised of a 75% net overriding royalty interest carved out by Southland
Royalty Company ("Southland") from its fee mineral interest in the Waddell Ranch
properties in Crane County, Texas ("Waddell Ranch properties"), and a 95% net
overriding royalty interest carved out by Southland from its major producing
royalty properties in Texas ("Texas Royalty properties"). The interests out of
which the Trust's net overriding royalty interests were carved were in all cases
less than 100%. The Trust's net overriding royalty interests represent burdens
against the properties in favor of the Trust without regard to ownership of the
properties from which the overriding royalty interests were carved. The net
overriding royalties above are collectively referred to as the "Royalties." The
properties and interests form which the Royalties were carved and which the
Royalties now burden are collectively referred to as the "Underlying
Properties."

           The Trust has been advised that effective January 1, 1996, Southland
was merged with and into Meridian Oil Inc. ("Meridian"), a Delaware corporation,
with Meridian being the surviving corporation. Meridian succeeded to the
ownership of all the assets, has the rights, powers, and privileges, and assumed
all of the liabilities and obligations of Southland. Effective July 11, 1996,
Meridian changed its name to Burlington Resources Oil & Gas Company ("BROG").
Any reference to BROG hereafter for periods prior to the occurrence of the
aforementioned name change or merger should, as applicable, be construed to be a
reference to Meridian or Southland. Further, BROG notified the Trust that, on
February 14, 1997, the Texas Royalty properties that are subject to the Net
Overriding Royalty Conveyance dated November 1, 1980 ("Texas Royalty
Conveyance"), were sold to Riverhill Energy Corporation ("Riverhill Energy") of
Midland, Texas.

UNITS OF BENEFICIAL INTEREST

           Units of Beneficial Interest ("Units") of the Trust are traded on the
New York Stock Exchange with the symbol PBT. Quarterly high and low sales prices
and the aggregate amount of monthly distributions paid each quarter during the
Trust's two most recent years were as follows:

<TABLE>
<CAPTION>
                                             SALES PRICE
                                     ---------------------------
2000                                     HIGH           LOW        DISTRIBUTIONS
- ------------                         ------------   ------------   -------------
<S>                                  <C>            <C>            <C>
First Quarter ....................   $     5.6250   $     4.3125   $    .134440
Second Quarter ...................         5.1250         4.2500        .190844
Third Quarter ....................         5.8125         4.7500        .203032
Fourth Quarter ...................         6.6250         5.2500        .234311
                                     ------------   ------------   ------------
     Total for 2000 ..............                                 $    .762627
                                                                   ============

1999
- ------------
First Quarter ....................   $      4.500   $      3.875   $    .035064
Second Quarter ...................          4.563          3.938        .082509
Third Quarter ....................          5.938          4.063        .127116
Fourth Quarter ...................          5.875          4.938        .151628
                                     ------------   ------------   ------------
     Total for 1999 ..............                                 $    .396317
                                                                   ============
</TABLE>

           Approximately 2,473 Unit holders of record held the 46,608,796 Units
of the Trust at December 31, 2000. Distribution of ownership of Units is
presented in the following table:


                                       1
<PAGE>   3

TO UNIT HOLDERS

           We are pleased to present the twenty-first Annual Report of the
Trust. The report includes a copy of the Trust's Annual Report on Form 10-K to
the Securities and Exchange Commission for the year ended December 31, 2000,
without exhibits. Both the report and accompanying Form 10-K contain important
information concerning the Trust's properties, including the oil and gas
reserves attributable to the Royalties owned by the Trust. Production figures,
drilling activity and certain other information included in this report have
been provided to the Trust by BROG (formerly Meridian and Southland).

           As more particularly explained in the Notes to the Financial
Statements appearing in this report and in Item 1 of the accompanying Form 10-K,
Bank of America, N.A., as Trustee, has the primary function under the Trust
Indenture of collecting the monthly net proceeds attributable to the Royalties
and making monthly distributions to the Unit holders, after deducting Trust
administrative expenses and any amounts necessary for cash reserves.

           Royalty income received by the Trustee for the year ended December
31, 2000, was $35,835,746 and interest income earned for the same period was
$85,348. General and administrative expenses amounted to $375,953. A total of
$35,545,141, or $.762627 per Unit, was distributed to Unit holders during 2000.
A discussion of factors affecting the distributions for 2000 may be found in the
Trustee's Discussion and Analysis section of this report and the accompanying
Form 10-K.

           As of December 31, 2000, the Trust's proved reserves were estimated
at 10,218,000 Bbls of oil and 36,491 Mcf of gas. The estimated future net
revenues from proved reserves at December 31, 2000, amount to $544,340,000 or
$11.70 per Unit. The present value of estimated future net revenues discounted
at 10% at December 31, 2000, was $279,813,000 or $6.00 per Unit. The computation
of future net revenues is made following guidelines prescribed by the Financial
Accounting Standards Board (explained in Item 2 of the accompanying Form 10-K)
based on year-end prices and costs.

           As has been previously reported, Southland advised the Trust that it
became operator of record of the Waddell Ranch properties on May 1, 1991.
Meridian, as successor by merger, became the operator of record effective
January 1, 1996. Meridian changed its name to Burlington Resources Oil & Gas
Company in 1996. All field, technical and accounting operations, however, have
been carried out by Coastal Management Corporation ("CMC") and Riverhill Capital
Corporation ("Riverhill Capital"), but remain under the direction of BROG.

           As was previously reported, in February 1997, BROG sold its interest
in the Texas Royalty properties that are subject to the Texas Royalty Conveyance
to Riverhill Energy, which at the time was a wholly-owned subsidiary of
Riverhill Capital and an affiliate of CMC. Subsequently, the Trustee was advised
that Schlumberger Technology Corporation ("STC") acquired all of the shares of
Riverhill Capital. The Trustee has been advised that, as part of this
transaction, ownership of Riverhill Energy's interests in the Texas Royalty
properties referenced above remain in Riverhill Energy, which was owned by the
former shareholders of Riverhill Capital. CMC will continue to perform all
accounting operations pertaining to the Texas Royalty properties under the
direction of Riverhill Energy.

           The Omnibus Budget Reconciliation Act of 1990 allows percentage
depletion on proven properties acquired after October 11, 1990. For Units
acquired after such date, Unit holders would normally compute both percentage
depletion and cost depletion from each property, and claim the larger amount as
a deduction on their income tax returns. However, the Trustee and its
accountants have estimated the percentage depletion for January through December
2000, and it appears that cost depletion will exceed percentage depletion for
all Unit holders.

           Royalty income is generally considered portfolio income under the
passive loss rules enacted by the Tax Reform Act of 1986. Therefore, in general,
it appears that Unit holders should not consider the taxable income from the
Trust to be passive income in determining net passive income or loss. Unit
holders should consult their tax advisors for further information.


                                       2
<PAGE>   4

           Unit holders of record will continue to receive an individualized tax
information letter for each of the quarters ending March 31, June 30 and
September 30, 2001, and for the year ending December 31, 2001. Unit holders
owning Units in nominee name may obtain monthly tax information from the Trustee
upon request.

                                      Bank of America, N.A., Trustee



                                      By:        /s/ RON E. HOOPER
                                         ---------------------------------
                                                     Ron E. Hooper
                                                     Senior Vice President


                                       3
<PAGE>   5


DESCRIPTION OF THE PROPERTIES

           The net overriding royalty interests held by the Trust are carved out
of high-quality producing oil and gas properties located primarily in West
Texas. A production index for oil and gas properties is the number of years
derived by dividing remaining reserves by current production. The production
index for the Trust properties based on the reserve report prepared by
independent petroleum engineers as of December 31, 2000, is approximately 10.3
years.

           The net overriding royalty interest in the Waddell Ranch properties
is the largest asset of the Trust. The mineral interests in the Waddell Ranch,
from which such net overriding royalty interest was carved, vary from 37.5% to
50.0% in 78,175 gross (34,205 net) acres, containing 792 gross (328 net)
productive oil wells, 175 gross (73 net) productive gas wells and 336 gross (133
net) injection wells.

           Six major fields on the Waddell Ranch properties account for more
than 90% of the total production. In the six fields, there are 12 producing
zones ranging in depth from 2,800 to 10,600 feet. Most prolific of these zones
are the Grayburg and San Andres, which produce from depths between 2,800 and
3,400 feet. Productive from the San Andres are the Sand Hills (Judkins) gas
field and the Sand Hills (McKnight) oil field.

           The Dune and Waddell oil fields are productive from both the Grayburg
and San Andres formations. The Sand Hills (Tubb) oil fields produce from the
Tubb formation at depths averaging 4,300 feet, and the University Waddell
(Devonian) oil field is productive from the Devonian formation between 8,400 and
9,200 feet.

           All of the major oil fields on the Waddell Ranch properties are
currently being water flooded. Engineering studies and 3-D seismic evaluations
on these fields indicate the potential for increased production through infill
drilling, modifications of existing water flood techniques, installation of
larger capacity pumping equipment and tertiary recovery projects. Capital
expenditures for remedial and maintenance activities during 2000 totaled
approximately $8.6 million.

           The Texas Royalty properties, out of which the other net overriding
royalty was carved, are located in 33 counties across Texas. The Texas Royalty
properties consist of approximately 125 separate royalty interests containing
approximately 303,000 gross (51,000 net) producing acres. Approximately 41% of
the future net revenues discounted at 10% attributable to Texas Royalty
properties are located in the Wasson and Yates fields.

           BROG has informed the Trustee that the 2001 capital expenditures
budget should total approximately $11 million of which $4.7 million is
attributable to the drilling program and $5.5 million to workovers and
recompletions.

COMPUTATION OF ROYALTY INCOME RECEIVED BY THE TRUST

           The Trust's royalty income is computed as a percentage of the net
profit from the operation of the properties in which the Trust owns net
overriding royalty interests. The percentages of net profits are 75% and 95% in
the cases of the Waddell Ranch properties and the Texas Royalty properties,
respectively. Royalty income received by the Trust for the five years ended
December 31, 2000, was computed as shown in the table on the next page.


                                       4
<PAGE>   6


<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31,
                                                   ------------------------------------------------------------
                                                              2000                              1999
                                                   ----------------------------    ----------------------------
                                                     Waddell          Texas          Waddell          Texas
                                                      Ranch          Royalty          Ranch          Royalty
                                                    Properties      Properties      Properties      Properties
                                                   ------------    ------------    ------------    ------------
<S>                                                <C>             <C>             <C>             <C>
Gross Proceeds of Sales
From the Underlying Properties:
    Oil Proceeds ................................. $ 31,289,829    $  9,770,732    $ 18,667,382    $  5,261,863
    Gas Proceeds .................................   18,342,926       2,701,298      12,794,695       1,760,499
    Other Payments(a) ............................           --              --              --              --
                                                   ------------    ------------    ------------    ------------

        Total ....................................   49,632,755      12,472,030      31,462,077       7,022,362
                                                   ------------    ------------    ------------    ------------
Less:
    Severance Tax
        Oil ......................................    1,288,522         373,643         726,944         186,846
        Gas ......................................    1,189,617         146,512         773,689          77,379
        Other ....................................       26,991              --          44,839          16,000
    Lease Operating Expense and Property Tax
        Oil and Gas ..............................    9,318,915         442,523       9,687,476         525,035
        Other Payments ...........................           --              --         132,166         180,000
    Capital Expenditures .........................    4,606,227              --       1,052,769              --
                                                   ------------    ------------    ------------    ------------
            Total ................................   16,430,272         962,678      12,417,883         985,260
                                                   ------------    ------------    ------------    ------------
    Net Profits ..................................   33,202,483      11,509,352      19,044,194       6,037,102
    Net Overriding Royalty Interest ..............           75%             95%             75%             95%
                                                   ------------    ------------    ------------    ------------
Royalty Income ...................................   24,901,862      10,933,884      14,284,146       5,735,247
Negative Revenue (b) .............................           --              --       1,218,732              --
Litigation Settlement (c) ........................           --              --              --              --
                                                   ------------    ------------    ------------    ------------
     Total Royalty Income for Distribution .......   24,901,862      10,933,884    $ 13,064,414    $  5,735,247
                                                   ============    ============    ============    ============

<CAPTION>

                                                       YEAR ENDED DECEMBER 31,
                                                   ------------------------------
                                                               1998
                                                    -----------------------------
                                                      Waddell           Texas
                                                       Ranch           Royalty
                                                     Properties       Properties
                                                    ------------     ------------
<S>                                                 <C>              <C>
Gross Proceeds of Sales
From the Underlying Properties:
    Oil Proceeds .................................  $ 18,821,076     $  5,404,598
    Gas Proceeds .................................    13,769,872        1,880,571
    Other Payments(a) ............................            --          540,543
                                                    ------------     ------------

        Total ....................................    32,590,948        7,825,712
                                                    ------------     ------------
Less:
    Severance Tax
        Oil ......................................       725,100          196,770
        Gas ......................................    (1,229,730)         104,759
        Other ....................................            --               --
    Lease Operating Expense and Property Tax
        Oil and Gas ..............................    14,096,881          790,246
        Other Payments ...........................            --               --
    Capital Expenditures .........................    15,874,193               --
                                                    ------------     ------------
            Total ................................    29,396,444        1,091,775
                                                    ------------     ------------
    Net Profits ..................................     3,194,504        6,733,937
    Net Overriding Royalty Interest ..............            75%              95%
                                                    ------------     ------------
Royalty Income ...................................     2,395,878        6,397,240
Negative Revenue (b) .............................     1,218,732               --
Litigation Settlement (c) ........................       766,051               --
                                                    ------------     ------------
     Total Royalty Income for Distribution .......  $  4,380,661     $  6,397,240
                                                    ============     ============
</TABLE>

<TABLE>
<CAPTION>
                                                                         YEAR ENDED DECEMBER 31,
                                                         --------------------------------------------------------
                                                                    1997                          1996
                                                         --------------------------    --------------------------
                                                           Waddell        Texas          Waddell         Texas
                                                            Ranch        Royalty          Ranch         Royalty
                                                         Properties     Properties      Properties     Properties
                                                         -----------    -----------    -----------    -----------
<S>                                                      <C>            <C>            <C>            <C>
Gross Proceeds of Sales
From the Underlying Properties:
    Oil Proceeds .....................................   $27,099,891    $ 8,427,062    $26,720,538    $ 8,249,254
    Gas Proceeds .....................................    17,105,677      2,318,393     14,056,885      1,898,423
    Other Payments(a) ................................            --             --             --             --
                                                         -----------    -----------    -----------    -----------
        Total ........................................    44,205,568     10,745,455     40,777,423     10,147,677
                                                         -----------    -----------    -----------    -----------
Less:
    Severance Tax
        Oil ..........................................     1,037,862        320,447      1,103,059        315,491
        Gas ..........................................     1,232,298        135,717      1,041,208        114,812
        Other ........................................            --             --         63,954         24,970
    Lease Operating Expense and Property Tax
        Oil and Gas ..................................    12,239,689        597,508     12,209,663      1,637,143
        Other Payments ...............................        50,297
    Capital Expenditures .............................    11,789,849             --      9,989,064             --
                                                         -----------    -----------    -----------    -----------
            Total ....................................    26,349,995      1,053,672     24,406,948      2,092,416
                                                         -----------    -----------    -----------    -----------
     Net Profits .....................................    17,855,573      9,691,783     16,370,475      8,055,261
     Net Overriding Royalty Interest .................            75%            95%            75%            95%
                                                         -----------    -----------    -----------    -----------
Royalty Income .......................................    13,391,679      9,207,194     12,277,856      7,652,498
Negative Revenue (b) .................................            --             --             --             --
Litigation Settlement (c) ............................            --             --             --             --
                                                         -----------    -----------    -----------    -----------
     Total Royalty Income for Distribution ...........   $13,391,679    $ 9,207,194    $12,277,856    $ 7,652,498
                                                         ===========    ===========    ===========    ===========
</TABLE>

- ---------------------
     (a) The Trust received funds in 1998 from BROG which represented the
         Trust's portion of amounts that had been previously held in suspense by
         BROG relating to the Texas Royalty properties. The Trustee was advised
         that these amounts relate to revenues received by BROG prior to the
         conveyance of its interest in the Texas Royalty properties to Riverhill
         Energy in February 1997.


                                       5
<PAGE>   7

     (b) In calculating Trust royalty income for the months of June through
         December 1998, costs exceeded revenues for the Waddell Ranch properties
         underlying the Waddell Ranch Net Overriding Royalty Conveyance dated
         effective November 1, 1980 ("Waddell Ranch Conveyance"), by $1,218,732.
         Pursuant to the Waddell Ranch Conveyance, excess costs plus accrued
         interest must be recovered from future net proceeds relating to the
         underlying Waddell Ranch properties before the properties can again
         contribute to Trust royalty income. Cumulative excess amounts were
         fully recovered in February 1999.

     (c) In November 1998, the Trust received its portion of settlement proceeds
         totaling $766,051 from a class-action lawsuit.


                                       6
<PAGE>   8

DISCUSSION AND ANALYSIS

Trustee's Discussion and Analysis for the Three-Year Period Ended
December 31, 2000

     Royalty income received by the Trust for the three-year period ended
December 31, 2000, is reported in the following table:

<TABLE>
<CAPTION>
                                                   Year Ended December 31,
                                        ------------------------------------------
ROYALTIES                                  2000             1999           1998
- ---------                               ------------    -----------    -----------
<S>                                      <C>            <C>            <C>
Total Revenue ........................   $35,835,746    $18,799,659    $10,777,901
                                                 100%           100%           100%
Oil Revenue ..........................    24,901,862     12,202,023      5,788,953
                                                  70%            65%            54%
Gas Revenue ..........................    10,933,884      6,597,626      3,709,381
                                                  30%            35%            34%
Other Payments .......................            --             --        513,516
                                                  --             --              5%
Litigation Payment ...................            --             --        766,051
                                                  --             --              7%
Total Revenue/Unit ...................   $   .768862    $   .403350    $   .231242
</TABLE>

     Royalty income of the Trust for the calendar year is associated with actual
oil and gas production for the period November of the prior year through October
of the current year. Oil and gas sales for 2000, 1999 and 1998 for the Royalties
and the Underlying Properties, excluding portions attributable to the
adjustments discussed hereafter, are presented in the following table:

<TABLE>
<CAPTION>
                                                  Year Ended December 31,
                                             ---------------------------------
                                               2000        1999        1998
                                             ---------   ---------   ---------
<S>                                         <C>         <C>          <C>
ROYALTIES
Oil Sales (Bbls) .........................     919,429     909,352     457,010
Gas Sales (Mcf) ..........................   3,346,445   3,464,208   1,432,949

UNDERLYING PROPERTIES
Oil
  Total Oil Sales (Bbls) .................   1,486,110   1,674,898   1,909,702
  Average Per Day (Bbls) .................       4,072       4,589       5,232
  Average Price/Bbl ......................   $   27.66   $   14.29   $   12.69

Gas
  Total Gas Sales (Mcf) ..................   5,890,023   6,907,167   7,373,436
  Average Per Day (Mcf) ..................      16,137      18,924      20,201
  Average Price/Mcf ......................   $    3.63   $    2.11   $    2.12
</TABLE>

     The average price of oil increased to $27.66 per barrel in 2000, up from
$14.29 per barrel in 1999. During this period, oil prices climbed to decade
record highs from low levels in 1998. In addition, the average price of gas rose
dramatically from $2.11 per Mcf in 1999 to $3.63 per Mcf in 2000.

     Since the oil and gas sales attributable to the Royalties are based on an
allocation formula that is dependent on such factors as price and cost
(including capital expenditures), production amounts do not necessarily provide
a meaningful comparison. As discussed below, during 1998, there were certain
months in which costs exceeded revenues


                                       7
<PAGE>   9

on the Waddell Ranch properties. As a result, no royalty income was received for
those months. Production attributable to the Trust is calculated based on net
royalty income. As there was no royalty income, no production was reported for
the Waddell Ranch properties at the Trust level for those months. Production at
the Trust level for the Waddell Ranch properties was not recorded again until
February 1999 when the cumulative excess amounts had been recovered. Total oil
production decreased approximately 11% from 1999 to 2000 primarily due to lower
capital expenditures in previous years. Total gas sales decreased approximately
15% from 1999 to 2000 primarily due to a decrease in capital expenditures in
previous years and natural production decline.

     In the calculation of royalty income for the months of June through
December 1998, costs exceeded revenues for the Waddell Ranch properties by
$1,218,732. This impacted the January 1999 distributions to Unit holders.
Pursuant to the Waddell Ranch Conveyance, excess costs plus accrued interest
must be recovered from future net proceeds relating to the underlying Waddell
Ranch properties before they could again contribute to Trust royalty income.
Increased capital expenditures and declining oil and gas prices contributed to
this situation. Subsequently, in February 1999, BROG and CMC notified the
Trustee that revenues exceeded the cumulative excess costs by $22,506 and that
the underlying Waddell Ranch properties were again contributing to Trust royalty
income and production.

     Total capital expenditures in 2000 used in the net overriding royalty
calculation were approximately $5.1 million compared to $1.1 million in 1999 and
$15.9 million in 1998. During 2000, there were no wells drilled and completed on
the Waddell Ranch properties. At December 31, 2000, there were 10 gross (4.88
net) wells in progress on the Waddell Ranch properties.

     In 2000, lease operating expense and property taxes on the Waddell Ranch
properties amounted to approximately $9.3 million, which amount was
approximately the same as in 1999.

     The Trustee has been advised by BROG that for the period August 1, 1993,
through June 30, 2001, the oil from the Waddell Ranch was sold under a
competitive bid to a third party.

     During 2000, the monthly royalty receipts were invested by the Trustee in
U.S. Treasury securities until the monthly distribution date, and earned
interest totaled $85,348. Interest income for 1999 and 1998 was $27,331 and
$27,825, respectively.

     General and administrative expenses in 2000 were $375,953 compared to
$355,148 in 1999 and $391,344 in 1998.

     Distributable income for 2000 was $35,545,141, or $.762627 per Unit.

     Distributable income for 1999 was $18,471,842, or $.396317 per Unit.

     Distributable income for 1998 was $10,414,382, or $.223443 per Unit.

RESULTS OF THE FOURTH QUARTERS OF 2000 AND 1999

     Royalty income received by the Trust for the fourth quarter of 2000
amounted to $10,938,461 or $.234686 per Unit. For the fourth quarter of 1999,
the Trust received royalty income of $7,100,864 or $.152350 per Unit. Interest
income for the fourth quarter of 2000 amounted to $28,872 compared to $12,509
for the fourth quarter of 1999. The increase in interest income can be
attributed primarily to an increase in funds available for investment. General
and administrative expenses totaled $46,306 for the fourth quarter of 2000
compared to $46,173 for the fourth quarter of 1999.


                                       8
<PAGE>   10

     Royalty income for the Trust for the fourth quarter is associated with
actual oil and gas production during August through October from the Underlying
Properties. Oil and gas sales attributable to the Royalties and the Underlying
Properties for the quarter and the comparable period for 1999 are as follows:

<TABLE>
<CAPTION>
                                                                                   FOURTH QUARTER
                                                                           ----------------------------
                                                                              2000               1999
                                                                           ----------        ----------
<S>                                                                        <C>                <C>
               ROYALTIES
                  Oil Sales (Bbls)                                            261,030           235,216
                  Gas Sales (Mcf)                                             873,994           946,780

              UNDERLYING PROPERTIES
                  Total Oil Sales (Bbls)                                      376,705           379,585
                  Average Per Day (Bbls)                                        4,095             4,126
                  Average Price/Bbls                                       $    29.18        $    20.47
                  Total Gas Sales (Mcf)                                     1,360,733         1,623,387
                  Average Per Day (Mcf)                                        14,791            17,646
                  Average Price/Mcf                                        $     4.45        $     2.79
</TABLE>

     The posted price of oil increased for the fourth quarter of 2000 compared
to the fourth quarter of 1999, resulting in an average price per barrel of
$29.18 compared to $20.47 in the same period of 1999. The average price of gas
increased for the fourth quarter of 2000 compared to the same period in 1999,
resulting in an average price per Mcf of $4.45 compared to $2.79 in the fourth
quarter of 1999.

     The Trustee has been advised that oil sales decreased in 2000 compared to
the same period in 1999 primarily due to decreased capital expenditures in prior
periods and natural production declines. Gas sales from the Underlying
Properties decreased in the fourth quarter of 2000 compared to the same period
in 1999 due to the same factors.

     The Trust has been advised that no wells were drilled and completed during
the three months ended December 31, 2000, and there were 10 gross (4.88 net)
wells in progress.


                                       9
<PAGE>   11

                           PERMIAN BASIN ROYALTY TRUST
                              FINANCIAL STATEMENTS

               STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS
                           DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
ASSETS                                                                2000         1999
                                                                   ----------   ----------
<S>                                                                <C>          <C>
Cash and Short-term Investments ................................   $3,056,122   $2,415,245
Net Overriding Royalty Interests in Producing Oil and
  Gas Properties - Net (Notes 2 and 3) .........................    2,595,254    2,889,978
                                                                   ----------   ----------
                                                                   $5,651,376   $5,305,223
                                                                   ==========   ==========
LIABILITIES AND TRUST CORPUS
Distribution Payable to Unit Holders ...........................   $3,056,122   $2,415,245
Trust Corpus - 46,608,796 Units of Beneficial Interest
  Authorized and Outstanding ...................................    2,595,254    2,889,978
                                                                   ----------   ----------
                                                                   $5,651,376   $5,305,223
                                                                   ==========   ==========
</TABLE>

                       STATEMENTS OF DISTRIBUTABLE INCOME
                   FOR THE THREE YEARS ENDED DECEMBER 31, 2000

<TABLE>
<CAPTION>
                                                                2000           1999         1998
                                                             -----------   -----------   -----------
<S>                                                          <C>           <C>           <C>
Royalty Income (Notes 2 and 3) ...........................   $35,835,746   $18,799,659   $10,777,901
Interest Income ..........................................        85,348        27,331        27,825
                                                             -----------   -----------   -----------
                                                              35,921,094    18,826,990    10,805,726
Expenditures -- General and Administrative ...............       375,953       355,148       391,344
                                                             -----------   -----------   -----------
Distributable Income .....................................   $35,545,141   $18,471,842   $10,414,382
                                                             ===========   ===========   ===========
Distributable Income per Unit (46,608,796 Units) .........   $   .762627   $   .396317   $   .223443
                                                             ===========   ===========   ===========
</TABLE>

                      STATEMENTS OF CHANGES IN TRUST CORPUS
                   FOR THE THREE YEARS ENDED DECEMBER 31, 2000

<TABLE>
<CAPTION>
                                                                2000              1999           1998
                                                             ------------     -----------    ------------
<S>                                                          <C>             <C>             <C>
Trust Corpus, Beginning of Period ........................   $  2,889,978    $  3,336,583    $  3,496,594
Amortization of Net Overriding Royalty Interests
  (Notes 2 and 3) ........................................       (294,724)       (446,605)       (160,011)
Distributable Income .....................................     35,545,141      18,471,842      10,414,382
Distributions Declared ...................................     35,545,141     (18,471,842)    (10,414,382)
                                                             ============    ============    ============
Trust Corpus, End of Period ..............................   $  2,595,254    $  2,889,978    $  3,336,583
                                                             ============    ============    ============
</TABLE>

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

                                       10
<PAGE>   12

                           NOTES TO FINANCIAL STATEMENTS

1.   TRUST ORGANIZATION AND PROVISIONS

     The Permian Basin Royalty Trust ("Trust") was established as of November 1,
1980. Bank of America, N.A. ("Trustee") is Trustee for the Trust. Southland
Royalty Company ("Southland") conveyed to the Trust (1) a 75% net overriding
royalty in Southland's fee mineral interest in the Waddell Ranch in Crane
County, Texas ("Waddell Ranch properties") and (2) a 95% net overriding royalty
carved out of Southland's major producing royalty properties in Texas ("Texas
Royalty properties"). The net overriding royalties above are collectively
referred to as the "Royalties."

     On November 3, 1980, Units of Beneficial Interest ("Units") in the Trust
were distributed to the Trustee for the benefit of Southland shareholders of
record as of November 3, 1980, who received one Unit in the Trust for each share
of Southland common stock held. The Units are traded on the New York Stock
Exchange.

     The terms of the Trust Indenture provide, among other things, that:

     o    the Trust shall not engage in any business or commercial activity of
          any kind or acquire any assets other than those initially conveyed to
          the Trust;

     o    the Trustee may not sell all or any part of the Royalties unless
          approved by holders of 75% of all Units outstanding in which case the
          sale must be for cash and the proceeds promptly distributed;

     o    the Trustee may establish a cash reserve for the payment of any
          liability which is contingent or uncertain in amount;

     o    the Trustee is authorized to borrow funds to pay liabilities of the
          Trust; and

     o    the Trustee will make monthly cash distributions to Unit holders (see
          Note 2).

2.   NET OVERRIDING ROYALTY INTERESTS AND DISTRIBUTION TO UNIT HOLDERS

     The amounts to be distributed to Unit holders ("Monthly Distribution
Amounts") are determined on a monthly basis. The Monthly Distribution Amount is
an amount equal to the sum of cash received by the Trustee during a calendar
month attributable to the Royalties, any reduction in cash reserves and any
other cash receipts of the Trust, including interest, reduced by the sum of
liabilities paid and any increase in cash reserves. If the Monthly Distribution
Amount for any monthly period is a negative number, then the distribution will
be zero for such month. To the extent the distribution amount is a negative
number, that amount will be carried forward and deducted from future monthly
distributions until the cumulative distribution calculation becomes a positive
number, at which time a distribution will be made. Unit holders of record will
be entitled to receive the calculated Monthly Distribution Amount for each month
on or before ten business days after the monthly record date, which is generally
the last business day of each calendar month.

     The cash received by the Trustee consists of the amounts received by owners
of the interest burdened by the Royalties from the sale of production less the
sum of applicable taxes, accrued production costs, development and drilling
costs, 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.

     The initial carrying value of the Royalties ($10,975,216) represented
Southland's historical net book value at the date of the transfer to the Trust.
Accumulated amortization as of December 31, 2000 and 1999, aggregated $8,379,962
and $8,085,238, respectively.


                                       11
<PAGE>   13

3.   BASIS OF ACCOUNTING

     The financial statements of the Trust are prepared on the following basis:

     o    Royalty income recorded is the amount computed and paid by the working
          interest owner to the Trustee on behalf of the Trust.

     o    Trust expenses recorded are based on liabilities paid and cash
          reserves established out of cash received or borrowed funds for
          liabilities and contingencies.

     o    Distributions to Unit holders are recorded when declared by the
          Trustee.

     The financial statements of the Trust differ from financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America 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 prepared in accordance with
accounting principles generally accepted in the United States of America.
Amortization of the Royalties calculated on a unit-of-production basis is
charged directly to trust corpus.

     The Financial Accounting Standards Board ("FASB") issued, in June 1998,
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended by SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities -- Deferral of the
Effective Date of FASB Statement No. 133" and SFAS No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities -- an amendment of
FASB Statement No. 133", which establishes accounting and reporting standards
for derivative instruments. These standards are effective for the Trust January
1, 2001. The Trustee does not believe the adoption of these standards has had or
will have an impact on the financial statements of the Trust.

4.   FEDERAL INCOME TAX

     For 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 rather than 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 of the Trust 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. As a result of the Tax Reform Act of
1986, royalty income will generally be treated as portfolio income and will not
offset passive losses.

5.   SIGNIFICANT CUSTOMERS

     Information as to significant purchasers of oil and gas production
attributable to the Trust's economic interests is included in Item 2 of the
Trust's Annual Report on Form 10-K which is included in this report.

6.   PROVED OIL AND GAS RESERVES (UNAUDITED)

     Proved oil and gas reserve information is included in Item 2 of the Trust's
Annual Report on Form 10-K which is included in this report.


                                       12
<PAGE>   14

7.   QUARTERLY SCHEDULE OF DISTRIBUTABLE INCOME (UNAUDITED)

     The following is a summary of the unaudited quarterly schedule of
distributable income for the two years ended December 31, 2000 (in thousands,
except per Unit amounts):

<TABLE>
<CAPTION>
                                                                          DISTRIBUTABLE
                                                                           INCOME AND
                                               ROYALTY   DISTRIBUTABLE    DISTRIBUTION
2000                                           INCOME       INCOME          PER UNIT
- -------------                                  -------   -------------    -------------
<S>                                            <C>       <C>              <C>
First Quarter ..............................   $ 6,373     $ 6,266          $0.134440
Second Quarter .............................     9,037       8,895           0.190844
Third Quarter ..............................     9,487       9,463           0.203032
Fourth Quarter .............................    10,939      10,921           0.234311
                                               -------     -------          ---------
     Total .................................   $35,836     $35,545          $ .762627
                                               =======     =======          =========
</TABLE>

<TABLE>
<CAPTION>
                                                                          DISTRIBUTABLE
                                                                           INCOME AND
                                               ROYALTY   DISTRIBUTABLE    DISTRIBUTION
1999                                            INCOME      INCOME          PER UNIT
- -------------                                  -------   -------------    -------------
<S>                                            <C>       <C>              <C>
First Quarter ..............................   $ 1,776     $ 1,634          $0.035064
Second Quarter .............................     3,957       3,846           0.082509
Third Quarter ..............................     5,966       5,925           0.127116
Fourth Quarter .............................     7,101       7,067           0.151628
                                               -------     -------          ---------
     Total .................................   $18,800     $18,472          $0.396317
                                               =======     =======          =========
</TABLE>


                                       13
<PAGE>   15

INDEPENDENT AUDITORS' REPORT

Bank of America, N.A., AS TRUSTEE FOR THE PERMIAN BASIN ROYALTY TRUST:

We have audited the accompanying statements of assets, liabilities and trust
corpus of the Permian Basin Royalty Trust (the "Trust") as of December 31, 2000
and 1999, and the related statements of distributable income and changes in
trust corpus for each of the three years in the period ended December 31, 2000.
These financial statements are the responsibility of the Trustee. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

As described in Note 3 to the financial statements, these statements were
prepared on a modified cash basis of accounting, which is a comprehensive basis
of accounting other than accounting principles generally accepted in the United
States of America.

In our opinion, such financial statements present fairly, in all material
respects, the assets, liabilities and trust corpus of the Trust at December 31,
2000 and 1999, and the distributable income and changes in trust corpus for each
of the three years in the period ended December 31, 2000, on the basis of
accounting described in Note 3.


     /s/ DELOITTE & TOUCHE LLP
- --------------------------------------------

Dallas, Texas
March 20, 2001


                                       14
<PAGE>   16

                                   PERMIAN BASIN ROYALTY TRUST
                                   901 Main Street, Suite 1700
                                   P.O. Box 830650
                                   Dallas, Texas 75202
                                   Bank of America, N.A., Trustee

                                   AUDITORS
                                   Deloitte & Touche LLP
                                   Dallas, Texas

                                   LEGAL COUNSEL
                                   Thompson & Knight L.L.P.
                                   Dallas, Texas

                                   TAX COUNSEL
                                   Winstead, Sechrist Minick
                                   Houston, Texas

                                   TRANSFER AGENT
                                   Mellon Investor Services LLC
                                   Ridgefield Park, New Jersey


                                       15

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>3
<FILENAME>d85529ex23.txt
<DESCRIPTION>CONSENT OF CAWLEY, GILLESPIE & ASSOCIATES, INC.
<TEXT>

<PAGE>   1

                 CONSENT OF CAWLEY, GILLESPIE & ASSOCIATES INC.

                                                                      EXHIBIT 23

                                  [LETTERHEAD]

                                 March 21, 2001

Permian Basin Royalty Trust
Bank of America, N.A., Trustee
901 Main Street
Dallas, Texas

Gentlemen:

     Cawley, Gillespie & Associates, Inc. hereby consents to the use of the oil
and gas reserve information in the Permian Basin Royalty Trust Securities and
Exchange Commission Form 10-K for the year ending December 31, 2000 and in the
Permian Basin Royalty Trust Annual Report for the year ending December 31, 2000,
based on reserve reports dated March 20, 2001 prepared by Cawley, Gillespie &
Associates, Inc.


                                 Submitted,

                                      /s/ CAWLEY, GILLESPIE & ASSOCIATES
                                 --------------------------------------------
                                          CAWLEY, GILLESPIE & ASSOCIATES, INC.
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
