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<SEC-DOCUMENT>0000950134-02-002825.txt : 20020415
<SEC-HEADER>0000950134-02-002825.hdr.sgml : 20020415
ACCESSION NUMBER:		0000950134-02-002825
CONFORMED SUBMISSION TYPE:	10-K405
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20011231
FILED AS OF DATE:		20020328

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:		1934 Act
		SEC FILE NUMBER:	001-08033
		FILM NUMBER:		02590463

	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>d95424e10-k405.txt
<DESCRIPTION>FORM 10-K FOR FISCAL YEAR END DECEMBER 31, 2001
<TEXT>
<PAGE>

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

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------

                                   FORM 10-K

<Table>
<C>          <S>
(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, 2001



                                   OR




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

                         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
        Incorporation or Organization)                      Identification No.)
</Table>

                             BANK OF AMERICA, N.A.
                                TRUST DEPARTMENT
                                P.O. BOX 830650
                              DALLAS, TEXAS 75202
               (Address of Principal Executive Offices; Zip Code)

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

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

<Table>
<Caption>
             TITLE OF EACH CLASS                 NAME OF EACH EXCHANGE ON WHICH REGISTERED
             -------------------                 -----------------------------------------
<S>                                            <C>
         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, 2002, there were 46,608,796 Units of Beneficial Interest of the
Trust outstanding with an aggregate market value on that date of $241,899,651.

                      DOCUMENTS INCORPORATED BY REFERENCE

     "Units of Beneficial Interest" at page 1; "Trustee's Discussion and
Analysis for the Three-Year Period Ended December 31, 2001" at pages 7 through
8; "Results of the 4th Quarters of 2001 and 2000" 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, 2001 are incorporated herein by reference for Item 5, Item 7 and Item 8 of
Part II of this Report.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

                               TABLE OF CONTENTS

<Table>
<Caption>
                                                                        PAGE
                                                                        ----
<S>       <C>                                                           <C>
                                   PART I
ITEM 1.   Business....................................................    2
ITEM 2.   Properties..................................................    3
          PRODUCING ACREAGE, WELLS AND DRILLING.......................    3
          OIL AND GAS PRODUCTION......................................    5
          PRICING INFORMATION.........................................    5
          OIL AND GAS RESERVES........................................    6
          REGULATION..................................................    8
          Federal Natural Gas Regulation..............................    9
          State Regulation............................................    9
          Other Regulation............................................    9
ITEM 3.   Legal Proceedings...........................................    9
ITEM 4.   Submission of Matters to a Vote of Security Holders.........   10

                                  PART II
ITEM 5.   Market for Units of the Trust and Related Security Holder
          Matters.....................................................   10
ITEM 6.   Selected Financial Data.....................................   10
ITEM 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operation....................................   10
ITEM 7A.  Quantitative and Qualitative Disclosures about Market
          Risk........................................................   10
ITEM 8.   Financial Statements and Supplementary Data.................   10
ITEM 9.   Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure....................................   11

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

                                  PART IV
ITEM 14.  Exhibits, Financial Statement Schedules and Reports on Form
          8-K.........................................................   12
</Table>

                          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.

                                        1
<PAGE>

                                     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 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

                                        2
<PAGE>

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.

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),

                                        3
<PAGE>

Sand Hills (McKnight), Sand Hills (Tubb), University-Waddell (Devonian) and
Waddell. At December 31, 2001, the Waddell Ranch properties contained 750 gross
(332 net) productive oil wells, 182 gross (87 net) productive gas wells and 336
gross (147 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. There were 11 gross (.76 net) wells
drilled and completed on the Waddell Ranch properties during 2001. At December
31, 2001 there were 8 gross (3.75 net) wells in progress on the Waddell Ranch
properties. During 2000 there were no wells drilled on the Waddell Ranch
properties. 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.

     BROG has advised the Trustee that the total amount of capital expenditures
for 2001 with regard to the Waddell Ranch properties totalled $9.507 million.
Capital expenditures include the cost of remedial and maintenance activities.
This amount spent is approximately $1.493 million less than the budgeted amount
projected by BROG for 2001. BROG has advised the Trustee that the capital
expenditures budget for 2002 totals approximately $9.600 million, of which
approximately $0 is attributable to the 2002 drilling program, and $9.6 million
to workovers and recompletions. Accordingly, there is a minor increase in
capital expenditures for 2002 as compared with the 2001 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 ("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

                                        4
<PAGE>

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,
2001, excluding portions attributable to the adjustments discussed below, were
as follows:

<Table>
<Caption>
                             WADDELL RANCH PROPERTIES            TEXAS ROYALTY PROPERTIES                     TOTAL
                       ------------------------------------   ------------------------------   ------------------------------------
                          2001         2000         1999        2001       2000       1999        2001         2000         1999
                       ----------   ----------   ----------   --------   --------   --------   ----------   ----------   ----------
<S>                    <C>          <C>          <C>          <C>        <C>        <C>        <C>          <C>          <C>
ROYALTIES:
  Production
    Oil (barrels)....     577,243      584,269      601,148    363,959    335,160    308,204      941,202      919,429      909,352
    Gas (Mcf)........   3,109,734    2,654,731    2,754,393    765,852    691,714    709,815    3,875,586    3,346,445    3,464,208
UNDERLYING
  PROPERTIES:
  Production
    Oil (barrels)....   1,032,678    1,119,835    1,309,396    402,305    366,275    365,502    1,434,983    1,486,110    1,674,898
    Gas (Mcf)........   5,572,143    5,134,829    6,066,149    869,155    755,194    841,018    6,441,298    5,890,023    6,907,167
  Average Price
    Oil/barrel.......  $    25.64   $    28.28   $    14.26   $  23.68   $  26.58   $  14.40   $    24.88   $    27.66   $    14.29
    Gas/Mcf..........  $     4.68   $     3.65   $     2.11   $   4.34   $   3.58   $   2.09   $     4.70   $     3.63   $     2.11
</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.

                              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, 2002, 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.

                                        5
<PAGE>

                              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.

     "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, 1999 through
December 31, 2001 (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, 1999.............................   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
Extensions, discoveries, and other
  additions.................................       0        0       0        0        0        0
Revisions of previous estimates.............  (1,960)  (7,311)     60      613   (1,890)  (6,698)
Production..................................    (577)  (3,110)   (364)    (766)    (941)  (3,876)
                                              ------   ------   -----    -----   ------   ------
December 31, 2001...........................   3,774   20,122   3,603    5,795    7,377   25,917
                                              ======   ======   =====    =====   ======   ======
</Table>

                                        6
<PAGE>

     Estimated quantities of proved developed reserves of crude oil and natural
gas as of December 31, 2001, 2000 and 1999 were as follows (in thousands):

<Table>
<Caption>
                                                              CRUDE OIL   NATURAL GAS
                                                               (BBLS)        (MCF)
                                                              ---------   -----------
<S>                                                           <C>         <C>
December 31, 2001...........................................    6,614       23,280
December 31, 2000...........................................    8,937       31,665
December 31, 1999...........................................    8,200       24,248
</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.

     The 2001, 2000 and 1999 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 PROPERTIES         TEXAS ROYALTY PROPERTIES                   TOTAL
                              -------------------------------   -----------------------------   -------------------------------
                                2001        2000       1999       2001       2000      1999       2001        2000       1999
                              ---------   --------   --------   --------   --------   -------   ---------   --------   --------
<S>                           <C>         <C>        <C>        <C>        <C>        <C>       <C>         <C>        <C>
January 1...................  $ 214,029   $102,088   $ 25,043   $ 65,784   $ 52,126   $22,031   $ 279,813   $154,214   $ 47,074
Extensions, discoveries, and
  other additions...........          0     10,281        226          0          0         0           0     10,281        226
Accretion of discount.......     21,403     10,209      2,504      6,578      5,213     2,203      27,981     15,422      4,707
Revisions of previous
  estimates and other.......   (147,806)   116,353     88,598    (26,370)    19,379    33,627    (174,176)   135,732    122,225
Royalty income..............    (28,343)   (24,902)   (14,283)   (11,473)   (10,934)   (5,735)    (39,816)   (35,836)   (20,018)
                              ---------   --------   --------   --------   --------   -------   ---------   --------   --------
December 31.................  $  59,283   $214,029   $102,088   $ 34,519   $ 65,784   $52,126   $  93,802   $279,813   $154,214
                              =========   ========   ========   ========   ========   =======   =========   ========   ========
</Table>

     Oil and gas prices of $17.05 and $17.62 per barrel and $2.15 and $1.93 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,
2001. The extension, discoveries and other additions for the Waddell Ranch
properties are proved reserves related to the Sand Hills (Tubbs) Unit. The
downward revisions of both reserves and discounted future net cash flows for the
Waddell Ranch properties and the Texas Royalty properties are due to decreases
in oil and gas prices from 2000 to 2001.

     Oil and gas prices of $24.65 and $26.46 per barrel and $8.98 and $7.03 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, 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 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.

                                        7
<PAGE>

     The following presents estimated future net revenue and the present value
of estimated future net revenue, for each of the years ended December 31, 2001,
2000 and 1999 (in thousands except amounts per Unit):

<Table>
<Caption>
                                        2001                    2000                    1999
                                ---------------------   ---------------------   ---------------------
                                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....   $102,860    $59,283     $405,530    $214,029    $184,957    $102,088
  Texas Royalty properties....     71,482     34,519      138,860      65,784     113,838      52,126
                                 --------    -------     --------    --------    --------    --------
          Total...............   $174,342    $93,102     $544,390    $279,813    $298,795    $154,214
                                 ========    =======     ========    ========    ========    ========
Total Proved per Unit.........   $   3.74    $  2.01     $  11.68    $   6.00    $   6.41    $   3.31
                                 ========    =======     ========    ========    ========    ========
Proved Developed
  Waddell Ranch properties....   $ 84,996    $52,778     $334,734    $187,575    $140,808    $ 85,612
  Texas Royalty properties....     71,482     34,519      138,860      65,784     113,838      52,126
                                 --------    -------     --------    --------    --------    --------
          Total...............   $156,478    $87,297     $473,594    $253,359    $254,646    $137,738
                                 ========    =======     ========    ========    ========    ========
</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.

     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.

                                        8
<PAGE>

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.

     New 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).

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.

                                        9
<PAGE>

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, 2001.

                                    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, 2001,
is herein incorporated by reference.

ITEM 6.  SELECTED FINANCIAL DATA

<Table>
<Caption>
                                                FOR THE YEAR ENDED DECEMBER 31,
                              -------------------------------------------------------------------
                                 2001          2000          1999          1998          1997
                              -----------   -----------   -----------   -----------   -----------
<S>                           <C>           <C>           <C>           <C>           <C>
Royalty income..............  $39,816,141   $35,835,746   $18,799,659   $10,777,901   $22,598,873
Distributable income........   39,473,395    35,545,141    18,471,842    10,414,382    22,190,115
Distributable income per
  Unit......................     0.846908      0.762627      0.396317      0.223443      0.476092
Distributions per Unit......     0.846908      0.762627      0.396317      0.223443      0.476092
Total assets, December 31...  $ 4,213,606   $ 5,651,376   $ 5,305,223   $ 3,861,776   $ 5,220,786
</Table>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATION

     The "Trustee's Discussion and Analysis for the Three Year Period Ended
December 31, 2001" and "Results of the 4th Quarters of 2001 and 2000" at pages 7
through 9 of the Trust's Annual Report to security holders for the year ended
December 31, 2001 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
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, 2001, are herein incorporated by reference.

                                        10
<PAGE>

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, 2001.

                                    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, 2001, 2000 and 1999, the Trustee
received total remuneration as follows:

<Table>
<Caption>
                                                      CAPACITIES IN       CASH
NAME OF INDIVIDUAL OR NUMBER OF PERSONS IN GROUP      WHICH SERVED    COMPENSATION   YEAR
- ------------------------------------------------      -------------   ------------   ----
<S>                                                   <C>             <C>            <C>
Bank of America, N.A................................     Trustee        $40,272(1)   1999
                                                                        $57,680(1)   2000
                                                                        $53,796(1)   2001
</Table>

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

(1) Under the Trust Indenture, the Trustee is entitled to an administrative fee
    for its administrative services, preparation of quarterly and annual
    statements 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.

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, 2002, 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)..............................  5,000,000,000 Units         10.73%
One Bush Street, Suite 800
San Francisco, CA 94104
</Table>

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

(1) This information was provided to the Securities and Exchange Commission and
    to the Trust in a Form 4 dated January 6, 1994, filed with the Securities
    and Exchange Commission by Southland Royalty, a wholly-owned subsidiary of
    BRI, and in Amendment 5 to Schedule 13D and Schedule 13E-3 dated December
    28, 1993, filed with the Securities and Exchange Commission by Southland
    Royalty and BRI. Such Units were reported to be owned directly by Southland
    Royalty, now BROG.

    The Form 4 filed by Southland Royalty and the Schedule 13D and Schedule
    13E-3 filed by Southland Royalty and BRI with the Securities and Exchange
    Commission may be reviewed for more detailed information concerning the
    matters summarized herein.

                                        11
<PAGE>

(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. Subsequent to the filing
    of such Schedule 13G, McMorgan has informed the Trust that it is no longer
    the beneficial owner of such Units.

    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.

     (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, 2002, an aggregate of 193,796 Units with no right to vote
88,794 of these Units, shared right to vote 2,002 of these Units and sole right
to vote 103,000 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, 2001,
2000 and 1999 and Item 12(b) for information concerning Units owned by Bank of
America, N.A. in various fiduciary capacities.

                                    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, 2001:

        Independent Auditors' Report

        Statements of Assets, Liabilities and Trust Corpus at December 31, 2001
        and 2000

        Statements of Distributable Income for Each of the Three Years in the
        Period Ended December 31, 2001

        Statements of Changes in Trust Corpus for Each of the Three Years in the
        Period Ended December 31, 2001

        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.

                                        12
<PAGE>

     3. Exhibits

<Table>
<Caption>
EXHIBIT
NUMBER                                  EXHIBIT
- -------                                 -------
<C>      <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, 2001.**
(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, 2001,
there were no reports on Form 8-K filed by the Trust.

                                        13
<PAGE>

                                   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 26, 2002

              (The Trust has no directors or executive officers.)

                                        14
<PAGE>

                               INDEX TO EXHIBITS

<Table>
<Caption>
EXHIBIT
NUMBER                                  EXHIBIT
- -------                                 -------
<C>      <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, 2001.**
(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>3
<FILENAME>d95424ex13.txt
<DESCRIPTION>ANNUAL REPORT TO SECURITY HOLDERS
<TEXT>
<PAGE>
                          ANNUAL REPORT TO SHAREHOLDERS

                                                                      EXHIBIT 13


                                  [COVER PAGE]

                       [PERMIAN BASIN ROYALTY TRUST LOGO]

           PERMIAN BASIN ROYALTY TRUST ANNUAL REPORT & FORM 10-K 2001




                           [MAP OF COUNTIES IN TEXAS]


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




<PAGE>
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
                                                      -----------------------------------
                                                                                                    DISTRIBUTIONS
2001                                                     HIGH                     LOW                   PAID
                                                      -----------             -----------          ----------------
<S>                                                   <C>                     <C>                  <C>
First Quarter.....................................    $     6.700             $    5.625           $        .256445
Second Quarter....................................          6.850                  5.000                    .256094
Third Quarter.....................................          6.530                  5.500                    .179718
Fourth Quarter....................................          5.950                  5.200                    .154651
                                                                                                   ----------------
          Total for 2001..........................                                                 $        .846908
                                                                                                   ================

2000
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
                                                                                                   ================
</Table>

         Approximately 2,118 Unit holders of record held the 46,608,796 Units of
the Trust at December 31, 2001.



                                       1
<PAGE>
TO UNIT HOLDERS

         We are pleased to present the twenty-second 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, 2001, 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,
2001, was $39,816,141 and interest income earned for the same period was
$77,977. General and administrative expenses amounted to $420,723. A total of
$39,473,395, or $.846908 per Unit, was distributed to Unit holders during 2001.
A discussion of factors affecting the distributions for 2001 may be found in the
Trustee's Discussion and Analysis section of this report and the accompanying
Form 10-K.

         As of December 31, 2001, the Trust's proved reserves were estimated at
7,377,792 Bbls of oil and 25,917 Mcf of gas. The estimated future net revenues
from proved reserves at December 31, 2001, amount to $174,342,000 or $3.74 per
Unit. The present value of estimated future net revenues discounted at 10% at
December 31, 2001, was $93,102,000 or $2.01 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
2001, 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>

         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, 2002, and for the year ending December 31, 2002. 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>
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, 2001, is approximately 7.4
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 750 gross (332 net) productive
oil wells, 182 gross (87 net) productive gas wells and 336 gross (147 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 2001 totaled
approximately $9.5 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 2002 capital expenditures budget
should total approximately $9.6 million of which $0 is attributable to the
drilling program and $9.6 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, 2001, was computed as shown in the table on the next page.




                                       4
<PAGE>
<Table>
<Caption>
                                                                           YEAR ENDED DECEMBER 31,
                                                -------------------------------------------------------------------------------
                                                          2001                      2000                       1999
                                                ------------------------  -------------------------   -------------------------
                                                  Waddell       Texas       Waddell       Texas        Waddell        Texas
                                                   Ranch       Royalty       Ranch       Royalty        Ranch        Royalty
                                                 Properties   Properties   Properties   Properties    Properties    Properties
                                                -----------  -----------  -----------   -----------   -----------   -----------
<S>                                             <C>          <C>          <C>           <C>           <C>           <C>
Gross Proceeds of Sales
From the Underlying Properties:
    Oil Proceeds .............................  $26,477,679  $ 9,524,586  $31,289,829   $ 9,770,732   $18,667,382   $ 5,261,863
    Gas Proceeds .............................   26,068,379    3,771,184   18,342,926     2,701,298    12,794,695     1,760,499
    Other Payments(a) ........................           --           --           --            --            --            --
                                                -----------  -----------  -----------   -----------   -----------   -----------
        Total ................................   52,546,058   13,295,770   49,632,755    12,472,030    31,462,077     7,022,362
                                                -----------  -----------  -----------   -----------   -----------   -----------
Less:
    Severance Tax
        Oil ..................................    1,108,968      374,204    1,288,522       373,643       726,944       186,846
        Gas ..................................    1,160,095      239,337    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 ..........................    9,086,468      605,125    9,318,915       442,523     9,687,476       525,035
        Other Payments .......................       50,000           --           --            --       132,166       180,000
    Capital Expenditures .....................    3,350,003           --    4,606,227            --     1,052,769            --
                                                -----------  -----------  -----------   -----------   -----------   -----------
             Total ...........................   14,755,534    1,218,666   16,430,272       962,678    12,417,883       985,260
                                                -----------  -----------  -----------   -----------   -----------   -----------
    Net Profits ..............................   37,790,525   12,077,104   33,202,483    11,509,352    19,044,194     6,037,102
    Net Overriding Royalty Interest ..........           75%          95%          75%           95%           75%           95%
                                                -----------  -----------  -----------   -----------   -----------   -----------
Royalty Income ...............................   28,342,893   11,473,248   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 ....  $28,342,893  $11,473,248   24,901,862    10,933,884   $13,064,414   $ 5,735,247
                                                ===========  ===========  ===========   ===========   ===========   ===========
</Table>

<Table>
<Caption>
                                                                       YEAR ENDED DECEMBER 31,
                                                   -------------------------------------------------------------
                                                               1998                             1997
                                                   -----------------------------    ----------------------------
                                                     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 ..............................   $ 18,821,076     $  5,404,598    $ 27,099,891    $  8,427,062
     Gas Proceeds ..............................     13,769,872        1,880,571      17,105,677       2,318,393
     Other Payments(a) .........................             --          540,543              --              --
                                                   ------------     ------------    ------------    ------------
        Total ..................................     32,590,948        7,825,712      44,205,568      10,745,455
                                                   ------------     ------------    ------------    ------------
Less:
     Severance Tax
        Oil ....................................        725,100          196,770       1,037,862         320,447
        Gas ....................................     (1,229,730)         104,759       1,232,298         135,717
        Other ..................................             --               --              --              --
     Lease Operating Expense and Property Tax
        Oil and Gas ............................     14,096,881          790,246      12,239,689         597,508
        Other Payments .........................             --               --          50,297
     Capital Expenditures ......................     15,874,193               --      11,789,849              --
                                                   ------------     ------------    ------------    ------------
              Total ............................     29,396,444        1,091,775      26,349,995       1,053,672
                                                   ------------     ------------    ------------    ------------
     Net Profits ...............................      3,194,504        6,733,937      17,855,573       9,691,783
     Net Overriding Royalty Interest ...........             75%              95%             75%             95%
                                                   ------------     ------------    ------------    ------------
Royalty Income .................................      2,395,878        6,397,240      13,391,679       9,207,194
Negative Revenue (b) ...........................      1,218,732               --              --              --
Litigation Settlement (c) ......................        766,051               --              --              --
                                                   ------------     ------------    ------------    ------------
     Total Royalty Income for Distribution .....   $  4,380,661     $  6,397,240    $ 13,391,679    $  9,207,194
                                                   ============     ============    ============    ============
</Table>



                                       5
<PAGE>

- ----------

(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.

(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>
DISCUSSION AND ANALYSIS

Trustee's Discussion and Analysis for the Three-Year Period Ended December 31,
2001

         Royalty income received by the Trust for the three-year period ended
December 31, 2001, is reported in the following table:

<Table>
<Caption>
                                               YEAR ENDED DECEMBER 31,
                                      -----------------------------------------
       ROYALTIES                         2001           2000           1999
                                      -----------    -----------    -----------
<S>                                   <C>            <C>            <C>
       Total Revenue ..............   $39,816,141    $35,835,746    $18,799,659
                                              100%           100%           100%
       Oil Revenue ................    22,466,757     24,901,862     12,202,023
                                               56%            70%            65%
       Gas Revenue ................    17,349,384     10,933,884      6,597,626
                                               44%            32%            35%
       Total Revenue/Unit .........   $   .854327    $   .768862    $   .403350
</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 2001, 2000 and 1999 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,
                                                  ---------------------------------
       ROYALTIES                                    2001        2000        1999
                                                  ---------   ---------   ---------
<S>                                               <C>         <C>         <C>
       Oil Sales (Bbls) .......................     941,202     919,429     909,352
       Gas Sales (Mcf) ........................   3,875,586   3,346,445   3,464,208

       UNDERLYING PROPERTIES
       Oil
                  Total Oil Sales (Bbls) ......   1,434,983   1,486,110   1,674,898
                  Average Per Day (Bbls) ......       3,931       4,072       4,589
                  Average Price/Bbl ...........   $   24.88   $   27.66   $   14.29

       Gas
                  Total Gas Sales (Mcf) .......   6,441,298   5,890,023   6,907,167
                  Average Per Day (Mcf) .......      17,593      16,137      18,924
                  Average Price/Mcf ...........   $    4.70   $    3.63   $    2.11
</Table>

         The average price of oil decreased to $24.88 per barrel in 2001, down
from $27.66 per barrel in 2000. In addition, the average price of gas rose from
$3.63 per Mcf in 2000 to $4.70 per Mcf in 2001.

         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. Total oil production decreased approximately 3.5% from
2000 to 2001 primarily due to lower capital expenditures in previous years.
Total gas sales increased approximately 9% from 2000 to 2001 primarily due to a
increase in capital expenditures for gas wells.

         Total capital expenditures in 2001 used in the net overriding royalty
calculation were approximately $3.4 million compared to $4.6 million in 2000 and
$1.1 million in 1999. During 2001, there were 11 gross (.76 net) wells drilled
and





                                       7
<PAGE>

completed on the Waddell Ranch properties. At December 31, 2001, there were 8
gross (3.75 net) wells in progress on the Waddell Ranch properties.

         In 2001, lease operating expense and property taxes on the Waddell
Ranch properties amounted to approximately $9.1 million, which amount was
approximately the same as in 2000.

         The Trustee has been advised by BROG that for the period August 1,
1993, through June 30, 2002, the oil from the Waddell Ranch was sold under a
competitive bid to a third party.

         During 2001, the monthly royalty receipts were invested by the Trustee
in U.S. Treasury securities until the monthly distribution date, and earned
interest totaled $77,977. Interest income for 2000 and 1999 was $85,348 and
$27,331, respectively.

         General and administrative expenses in 2001 were $420,723 compared to
$375,953 in 2000 and $355,148 in 1999.

         Distributable income for 2001 was $39,473,395, or $.846909 per Unit.

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

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

RESULTS OF THE FOURTH QUARTERS OF 2001 AND 2000

         Royalty income received by the Trust for the fourth quarter of 2001
amounted to $7,247,490 or $.154651 per Unit. For the fourth quarter of 2000, the
Trust received royalty income of $10,938,461 or $.234686 per Unit. Interest
income for the fourth quarter of 2001 amounted to $9,925 compared to $28,872 for
the fourth quarter of 2000. The decrease in interest income can be attributed
primarily to a decrease in interest rates. General and administrative expenses
totaled $49,388 for the fourth quarter of 2001 compared to $46,306 for the
fourth quarter of 2000.

         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 2000 are as follows:

<Table>
<Caption>
                                                              FOURTH QUARTER
                                                           ---------------------
                                                             2001        2000
                                                           ---------   ---------
<S>                                                        <C>         <C>
                  ROYALTIES
                            Oil Sales (Bbls) ...........     226,307     261,030
                            Gas Sales (Mcf) ............     943,738     873,994

                  UNDERLYING PROPERTIES
                            Total Oil Sales (Bbls) .....     350,921     376,705
                            Average Per Day (Bbls) .....       3,814       4,095
                            Average Price/Bbls .........   $   22.52   $   29.18
                            Total Gas Sales (Mcf) ......   1,610,652   1,360,733
                            Average Per Day (Mcf) ......      17,507      14,791
                            Average Price/Mcf ..........   $    2.63   $    4.45
</Table>

         The posted price of oil decreased for the fourth quarter of 2001
compared to the fourth quarter of 2000, resulting in an average price per barrel
of $22.52 compared to $29.18 in the same period of 2000. The average price of
gas increased




                                       8
<PAGE>

for the fourth quarter of 2001 compared to the same period in 2000, resulting in
an average price per Mcf of $2.63 compared to $4.45 in the fourth quarter of
2000.

         The Trustee has been advised that oil sales decreased in 2001 compared
to the same period in 2000 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 2001 compared to the same period
in 2000 due to the same factors.

         The Trust has been advised that 1 gross (.38 net) well was drilled and
completed during the three months ended December 31, 2001, and there were 8
gross (3.75 net) wells in progress.





                                       9
<PAGE>
                           PERMIAN BASIN ROYALTY TRUST
                              FINANCIAL STATEMENTS

               STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS
                           DECEMBER 31, 2001 AND 2000

<Table>
<Caption>
ASSETS                                                         2001         2000
                                                            ----------   ----------
<S>                                                         <C>          <C>
Cash and Short-term Investments .........................   $1,842,420   $3,056,122
Net Overriding Royalty Interests in Producing Oil and
        Gas Properties - Net (Notes 2 and 3) ............    2,371,187    2,595,254
                                                            ----------   ----------
                                                            $4,213,606   $5,651,376
                                                            ==========   ==========
LIABILITIES AND TRUST CORPUS
Distribution Payable to Unit Holders ....................   $1,842,420   $3,056,122
Trust Corpus - 46,608,796 Units of Beneficial Interest
        Authorized and Outstanding ......................    2,371,187    2,595,254
                                                            ----------   ----------
                                                            $4,213,606   $5,651,376
                                                            ==========   ==========
</Table>


                       STATEMENTS OF DISTRIBUTABLE INCOME
                   FOR THE THREE YEARS ENDED DECEMBER 31, 2001

<Table>
<Caption>
                                                          2001          2000          1999
                                                       -----------   -----------   -----------
<S>                                                    <C>           <C>           <C>
Royalty Income (Notes 2 and 3) .....................   $39,816,141   $35,835,746   $18,799,659
Interest Income ....................................        77,977        85,348        27,331
                                                       -----------   -----------   -----------
                                                        39,894,118    35,921,094    18,826,990
Expenditures -- General and Administrative .........       420,723       375,953       355,148
                                                       -----------   -----------   -----------
Distributable Income ...............................   $39,473,395   $35,545,141   $18,471,842
                                                       ===========   ===========   ===========
Distributable Income per Unit (46,608,796 Units) ...   $   .846908   $   .762627   $   .396317
                                                       ===========   ===========   ===========
</Table>


                      STATEMENTS OF CHANGES IN TRUST CORPUS
                   FOR THE THREE YEARS ENDED DECEMBER 31, 2001

<Table>
<Caption>
                                                           2001            2000            1999
                                                       ------------    ------------    ------------
<S>                                                    <C>             <C>             <C>
Trust Corpus, Beginning of Period ..................   $  2,595,254    $  2,889,978    $  3,336,583
Amortization of Net Overriding Royalty Interests
       (Notes 2 and 3) .............................       (224,067)       (294,724)       (446,605)
Distributable Income ...............................     39,473,395      35,545,141      18,471,842
Distributions Declared .............................    (39,473,395)    (35,545,141)    (18,471,842)
                                                       ============    ============    ============
Trust Corpus, End of Period ........................   $  2,371,187    $  2,595,254    $  2,889,978
                                                       ============    ============    ============
</Table>

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



                                       10
<PAGE>

                          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 10 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, 2001 and 2000, aggregated $8,604,029
and $8,379,962, respectively.



                                       11
<PAGE>

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.

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>
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, 2001 (in thousands,
except per Unit amounts):

<Table>
<Caption>
                                                                                                    DISTRIBUTABLE
                                                                                                     INCOME AND
                                                               ROYALTY          DISTRIBUTABLE       DISTRIBUTION
2001                                                           INCOME              INCOME             PER UNIT
                                                         -----------------   -----------------   -----------------
<S>                                                      <C>                 <C>                 <C>
First Quarter.......................................     $          12,092   $          11,953   $         .256445
Second Quarter......................................                12,043              11,936             .256094
Third Quarter.......................................                 8,433               8,376             .179718
Fourth Quarter......................................                 7,247               7,208             .154651
                                                         -----------------   -----------------   -----------------
           Total....................................     $          39,816   $          39,473   $         .846908
                                                         =================   =================   =================
</Table>

<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   $        0.762627
                                                         =================   =================   =================
</Table>



                                       13
<PAGE>
                          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,
2001 and 2000, and the related statements of distributable income and changes in
trust corpus for each of the three years in the period ended December 31, 2001.
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, 2001 and 2000, and the distributable income and changes in trust
corpus for each of the three years in the period ended December 31, 2001, on the
basis of accounting described in Note 3.



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

Deloitte & Touche LLP
Dallas, Texas
March 22, 2002



                                       14
<PAGE>
                    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, Sechrest Minick
                    Houston, Texas

                    TRANSFER AGENT
                    Mellon Investor Services LLC
                    Ridgefield Park, New Jersey




                                       15

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>4
<FILENAME>d95424ex23.txt
<DESCRIPTION>CONSENT OF CAWLEY, GILLESPIE & ASSOCIATES, INC.
<TEXT>
<PAGE>


                 CONSENT OF CAWLEY, GILLESPIE & ASSOCIATES INC.

                                                                      EXHIBIT 23

                                  [LETTERHEAD]

                                 March  20, 2002

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, 2001 and in
the Permian Basin Royalty Trust Annual Report for the year ending December 31,
2001, based on reserve reports dated March 20, 2002 prepared by Cawley,
Gillespie & Associates, Inc.


Submitted,


                                         /s/ CAWLEY, GILLESPIE & ASSOCIATES
                                      ------------------------------------------
                                         CAWLEY, GILLESPIE & ASSOCIATES, INC.


</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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