Marine Petroleum Trust(MARPS) - 2021 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Presents Marine Petroleum Trust's unaudited condensed consolidated financial statements for periods ended December 31, 2020 Condensed Consolidated Statements of Assets, Liabilities and Trust Corpus Total assets decreased to $871,152 by December 31, 2020, primarily due to reduced cash and cash equivalents Assets, Liabilities, and Trust Corpus (As of Dec 31, 2020 vs. June 30, 2020) | Account | December 31, 2020 (Unaudited) | June 30, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $868,345 | $933,745 | | Total assets | $871,152 | $936,552 | | Liabilities and Trust Corpus | | | | Total current liabilities | $0 | $0 | | Trust corpus | $871,152 | $936,552 | Condensed Consolidated Statements of Distributable Income Distributable income significantly decreased for periods ended December 31, 2020, due to lower oil and natural gas royalties Distributable Income Comparison (Three and Six Months Ended Dec 31) | Metric | Q4 2020 | Q4 2019 | 6 Months 2020 | 6 Months 2019 | | :--- | :--- | :--- | :--- | :--- | | Oil and natural gas royalties | $101,545 | $141,361 | $155,185 | $339,609 | | Total income | $101,545 | $145,648 | $155,287 | $349,340 | | General and administrative expenses | $96,583 | $37,196 | $117,298 | $105,349 | | Distributable income | $4,962 | $108,452 | $37,989 | $243,991 | | Distributable income per unit | $0.00 | $0.05 | $0.02 | $0.12 | Condensed Consolidated Statements of Changes in Trust Corpus Trust Corpus decreased as distributions exceeded distributable income, resulting in lower distributions per unit Changes in Trust Corpus (Six Months Ended Dec 31) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Trust corpus, beginning of period | $936,552 | $969,426 | | Distributable income | $37,989 | $243,991 | | Distributions to unitholders | ($103,389) | ($268,519) | | Trust corpus, end of period | $871,152 | $944,898 | | Distributions per unit | $0.05 | $0.13 | Changes in Trust Corpus (Three Months Ended Dec 31) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Trust corpus, beginning of period | $880,546 | $933,964 | | Distributable income | $4,962 | $108,452 | | Distributions to unitholders | ($14,356) | ($97,518) | | Trust corpus, end of period | $871,152 | $944,898 | | Distributions per unit | $0.01 | $0.05 | Notes to Condensed Consolidated Financial Statements Financial statements are modified cash basis, not GAAP; Trust holds interest in Tidelands Royalty Trust 'B' - The financial statements are prepared on a modified cash basis, which differs from GAAP. Key differences include recognizing royalty income when received (not produced) and expenses when paid (not incurred)[27][30] - The Trust owns 32.6% of Tidelands Royalty Trust 'B'. Tidelands reported a distributable loss of $4,774 for the three months and $9,842 for the six months ended December 31, 2020, and has suspended its SEC reporting obligations[31] Trustee's Discussion and Analysis of Financial Condition and Results of Operations Trustee discusses significant declines in royalty and distributable income due to lower commodity prices and natural gas production Overview and Business Structure Marine Petroleum Trust is a royalty trust for oil and gas lease payments, income sensitive to commodity price fluctuations - The Trust was created solely to administer and liquidate payment rights from certain oil and natural gas leases in the Gulf of Mexico and cannot engage in any other business activity[33] - The Trust's income is heavily influenced by commodity prices, which are subject to wide fluctuation based on supply, demand, political conditions, and other factors beyond the Trustee's control[38][40] Liquidity, Capital Resources, and Leases Trust has no capital requirements, distributes net royalties quarterly, holds 0.75% overriding royalty interest in Gulf of Mexico leases - The Trust has no capital requirements and is prohibited from operating a trade or business. Its purpose is to collect and distribute net royalties to unitholders quarterly[41][42] - Marine holds a 0.75% overriding royalty interest in 55 leases in the Gulf of Mexico. Public records indicate no new well completions during the three months ended December 31, 2020[43][44] Summary of Operating Results Operating results for six months ended December 31, 2020, show significant declines in distributable income and distributions per unit Production and Price Comparison (Six Months Ended Dec 31) | Metric | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Oil Production (bbls) | 4,659 | 4,823 | -3.4% | | Natural Gas Production (mcf) | 4,118 | 18,691 | -78.0% | | Average Oil Price ($/bbl) | $31.70 | $60.57 | -47.7% | | Average Natural Gas Price ($/mcf) | $1.82 | $2.54 | -28.3% | Quarterly Production and Distribution Data | Quarter Ended | Oil (bbls) | Gas (mcf) | Distributable Income Per Unit | Distributions Per Unit | | :--- | :--- | :--- | :--- | :--- | | Sep 30, 2019 | 2,700 | 10,542 | $0.07 | $0.09 | | Dec 31, 2019 | 2,123 | 8,150 | $0.05 | $0.05 | | Mar 31, 2020 | 3,339 | 9,418 | $0.08 | $0.07 | | Jun 30, 2020 | 4,466 | 5,529 | $0.09 | $0.10 | | Sep 30, 2020 | 2,148 | 2,154 | $0.02 | $0.04 | | Dec 31, 2020 | 2,512 | 1,965 | $0.00 | $0.01 | Results of Operations - Three Months Ended Dec 31, 2020 vs 2019 Q4 2020 royalty income decreased due to lower oil prices and natural gas production, despite increased oil production volume Q4 Production and Price Comparison (2020 vs. 2019) | Metric | Q4 2020 | Q4 2019 | | :--- | :--- | :--- | | Oil | | | | Bbls sold | 2,512 | 2,123 | | Average price | $38.98 | $57.32 | | Natural Gas | | | | Mcf sold | 1,965 | 8,150 | | Average price, net of expenses | $1.85 | $2.41 | - General and administrative expenses increased to $96,583 from $37,196 year-over-year, mainly due to the timing of expenses related to the annual financial statements[63] Results of Operations - Six Months Ended Dec 31, 2020 vs 2019 Six-month royalty income significantly declined due to substantial drops in oil prices and natural gas production volumes Six-Month Production and Price Comparison (2020 vs. 2019) | Metric | 6 Months 2020 | 6 Months 2019 | | :--- | :--- | :--- | | Oil | | | | Bbls sold | 4,659 | 4,823 | | Average price | $31.70 | $60.57 | | Natural Gas | | | | Mcf sold | 4,118 | 18,691 | | Average price, net of expenses | $1.82 | $2.54 | - Distributable income for the six-month period decreased to $37,989 from $243,991 in the comparable 2019 period[65] Quantitative and Qualitative Disclosures About Market Risk No material changes to market risk disclosures since the Annual Report on Form 10-K for the fiscal year ended June 30, 2020 - There has been no material change from the market risk information provided in the Annual Report on Form 10-K for the fiscal year ended June 30, 2020[74] Controls and Procedures Trustee concluded disclosure controls and procedures effective as of December 31, 2020, with no material internal control changes - Based on an evaluation as of December 31, 2020, the Trustee concluded that Marine's disclosure controls and procedures were effective[76] - There were no changes in internal control over financial reporting during the quarter ended December 31, 2020, that materially affected or are likely to materially affect such controls[77] PART II. OTHER INFORMATION Risk Factors No material changes to risk factors since the Annual Report on Form 10-K for the fiscal year ended June 30, 2020 - As of the filing date, there have been no material changes from the risk factors disclosed in the Annual Report on Form 10-K for the fiscal year ended June 30, 2020[79] Exhibits Lists Form 10-Q exhibits, including Corporate Trustee certifications under Sarbanes-Oxley Act Sections 302 and 906 - The report includes certifications from the Corporate Trustee as required by Sections 302 (Exhibit 31.1) and 906 (Exhibit 32.1) of the Sarbanes-Oxley Act of 2002[80]