Marine Petroleum Trust(MARPS) - 2023 Q4 - Annual Report

Revenue Sources - For the fiscal year ended June 30, 2023, approximately 95% of Marine's royalty revenues were attributable to oil sales, while 5% were from natural gas sales[23]. - Marine's royalty income is derived from contracts based on oil and natural gas sales from leases in the Gulf of Mexico, with no direct ownership of physical properties[62]. - Marine's revenue from oil royalties for fiscal 2023 was $1,523,466, an increase of approximately 21% from $1,259,133 in fiscal 2022, driven by higher oil prices and production[97]. - Revenue from natural gas royalties decreased to $86,416 in fiscal 2023 from $89,121 in fiscal 2022, despite an increase in average price per mcf to $6.80 from $5.86[98]. - Revenue from natural gas royalties increased to $89,121 in fiscal 2022, up from $23,905 in fiscal 2021, representing a growth of approximately 272%[103]. Production and Sales - For the fiscal year ended June 30, 2023, Marine reported net quantities sold of 16,817 barrels of oil and 12,712 thousand cubic feet of natural gas, compared to 16,096 barrels and 15,221 thousand cubic feet in 2022[66]. - The average sales price for oil in 2023 was $90.59 per barrel, an increase from $78.23 in 2022, while the average sales price for natural gas was $6.80 per thousand cubic feet, up from $5.86 in 2022[66]. - Marine's oil sales for the twelve months ended June 30, 2023, totaled 16,817 barrels, an increase from 16,096 barrels in 2022, representing a growth of 4.46%[180]. - Natural gas sales for Marine in the twelve months ended June 30, 2023, were 12,712 mcf, a decrease from 15,221 mcf in 2022, reflecting a decline of 16.54%[180]. Financial Performance - Total income for the fiscal year ended June 30, 2023 was $1,648,943, up from $1,441,940 in 2022, reflecting an increase of about 14.4%[148]. - Distributable income for the fiscal year 2023 was $1,375,417, compared to $1,204,193 in 2022, marking a rise of approximately 14.2%[148]. - Distributable income per unit increased from $0.60 in 2022 to $0.69 in 2023, an increase of 15%[148]. - Total distributions to unitholders rose to $1,551,337 in 2023 from $952,080 in 2022, indicating a significant increase of about 63%[151]. - The June 2023 distribution was $0.11 per unit, down from $0.16 in March 2023, but is expected to increase to $0.12 in September 2023[89]. Assets and Liabilities - Total assets increased from $978,183 in June 30, 2022 to $1,154,143 in June 30, 2023, representing a growth of approximately 18%[146]. - Cash and cash equivalents increased from $978,176 in June 30, 2022 to $1,154,136 in June 30, 2023, a growth of approximately 18%[166]. - The Trust's corpus at the end of the year was $978,183, down from $1,154,143 at the beginning of the year, reflecting a decrease of about 15%[151]. Operational Risks - Marine's royalty revenues are highly dependent on oil and natural gas prices, which are subject to significant volatility due to various uncontrollable factors[30]. - 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[63]. - Marine is exposed to risks related to cybersecurity disruptions, which could adversely affect its operations and distributions to unitholders[51]. Trust Structure and Governance - The Trust is prohibited from engaging in any business activities and is set to expire on June 1, 2041, unless extended by unitholders[16]. - The Trust may be terminated and Marine's royalty interests sold if 80% or more of the unitholders approve, which could result in no further distributions to unitholders[49]. - The Trust is authorized to issue 2,000,000 units of beneficial interest, with 195 unitholders as of September 1, 2023, and distributions are made quarterly[76]. - The Trust has no long-term contractual obligations other than the obligation to distribute income to unitholders[108]. - The Trust does not maintain any off-balance sheet arrangements[108]. 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[57]. - Audit fees for the fiscal year ended June 30, 2023, were $57,680, an increase from $50,630 in fiscal 2022[132]. - The Trust has no critical audit matters reported for the current period[143]. - As of June 30, 2023, the Trustee concluded that Marine's disclosure controls and procedures were effective[118]. Market and Trading - The trading volume of Marine's units has historically been low, which could lead to significant price fluctuations with small sales[45]. - The market price of Marine's units may not reflect the actual value of the royalty interests held, as it is influenced by external factors such as oil and natural gas prices[43]. - Two working interest owners accounted for 100% of the royalty payments to Marine for the fiscal year ended June 30, 2023, indicating a high concentration of revenue sources[48].