Marine Petroleum Trust(MARPS) - 2022 Q4 - Annual Report

Revenue Sources - For the fiscal year ended June 30, 2022, approximately 93% of Marine's royalty revenues were attributable to the sale of oil, while 7% were from natural gas sales[22]. - Marine holds an overriding royalty interest equal to 0.75% of the value at the well of any oil, natural gas, or other minerals produced and sold from existing leases[19]. - Marine's overriding royalty interests do not apply to new leases that the Interest Owners may acquire, limiting future revenue opportunities[35]. - Two working interest owners accounted for 100% of the royalty payments to Marine for the fiscal year ended June 30, 2022, indicating a high concentration of revenue sources[51]. - Revenue from oil royalties in fiscal 2022 was $1,259,133, a 249% increase from $362,751 in fiscal 2021, driven by higher production and prices[98]. - Natural gas royalties in fiscal 2022 amounted to $89,121, up from $23,905 in fiscal 2021, with an average price of $5.86 per mcf compared to $2.80 per mcf in fiscal 2021[99]. - Marine's total income from oil and natural gas royalties in fiscal 2022 was $1,348,254, compared to $386,656 in fiscal 2021[96]. Financial Performance - Marine's distributable income for fiscal 2022 was $1,204,193, or $0.60 per unit, a significant increase from $161,580, or $0.08 per unit, in fiscal 2021[92]. - Total income for the fiscal year ended June 30, 2022, was $1,441,940, a significant increase of 272% compared to $386,817 in the previous year[148]. - Distributable income before federal income taxes rose to $1,204,193 in 2022, compared to $161,580 in 2021, marking an increase of approximately 645%[148]. - Distributable income per unit increased to $0.60 in 2022 from $0.08 in 2021, reflecting a growth of 650%[148]. - Distributions to unitholders totaled $952,080 in 2022, compared to $196,102 in 2021, reflecting an increase of approximately 385%[150]. Operational Aspects - The Trust's distributions are highly dependent on oil and natural gas prices, with any sustained decline potentially affecting cash distributions to unitholders[30]. - Marine's royalty interests are depleting assets, and no funds are reinvested, leading to potential faster depletion than expected[27]. - The Trust is prohibited from engaging in any business activities and can only receive payments from existing leases[12]. - The Trust's operations are entirely dependent on third parties for production and sale of oil and natural gas[25]. - Marine does not have access to engineering data regarding reserves, making it difficult to estimate proved oil and natural gas reserves attributable to its interests[65]. - No wells were drilled or re-drilled on tracts in which Marine has an interest as of June 30, 2022, indicating no new production activities[72]. Market and Regulatory Environment - The volatility of oil and gas prices reduces the predictability of future cash distributions to unitholders[34]. - Marine's operations are subject to extensive governmental regulations, which could significantly impact its royalty interests[42]. - The Trust anticipates qualifying as a passive entity for the Texas franchise tax, which would exempt it from the tax, as it primarily generates royalty income from oil and gas sales[185]. - The no tax due threshold for the Texas franchise tax is set at $1,230,000 for reports due on or after January 1, 2022, and before January 1, 2024[187]. Asset and Equity Information - Total assets increased to $1,154,143 in June 30, 2022, from $902,030 in June 30, 2021, representing a growth of approximately 28%[145]. - The Trust's corpus at the end of the fiscal year was $1,154,143, compared to $902,030 at the beginning of the year, showing an increase of approximately 28%[150]. - Marine's units have historically been thinly traded, leading to potential volatility in market prices with small sales[49]. - The market price of Marine's units may not reflect the value of the royalty interests due to external factors affecting cash distributions[46]. - The Trust does not maintain any equity compensation plans and has not repurchased any units during the fourth quarter of fiscal 2022[128]. Audit and Compliance - Marine's financial statements are prepared on a modified cash basis, differing from generally accepted accounting principles (GAAP), which may affect the comparability of financial information[59]. - Audit fees for the fiscal year ended June 30, 2022, were $50,630, compared to $50,000 in 2021[131]. - The Trustee evaluated the effectiveness of disclosure controls and procedures, concluding they were effective as of June 30, 2022[118].