What changed in this filing

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Item 1. Financial Statements

2021-05-17 compared with 2021-02-16 · 120 added, 113 removed, 236 unchanged (50% of the section changed)

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CONDENSED CONSOLIDATED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS

As of December 31, 2020 and June 30, 2020

As of March 31, 2021 and June 30, 2020

Current assets:

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CONDENSED CONSOLIDATED STATEMENTS OF DISTRIBUTABLE INCOME

For the Three and Six Months Ended December 31, 2020 and 2019

For the Three and Nine Months Ended March 31, 2021 and 2020

Three Months Ended

Six Months Ended

Nine Months Ended

Oil and natural gas royalties

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN TRUST CORPUS

For the Six Months Ended December 31, 2020 and 2019

Six Months Ended

For the Nine Months Ended March 31, 2021 and 2020

Nine Months Ended

Trust corpus, beginning of period

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN TRUST CORPUS

For the Three Months Ended December 31, 2020 and 2019

For the Three Months Ended March 31, 2021 and 2020

Three Months Ended

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

March 31, 2021

The financial statements herein include the financial statements of Marine Petroleum Trust (the Trust) and its

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Total estimated reserve for future expenses deducted from

calculated distributable income for the three months ended December 31, 2020 was $76,500.

calculated distributable income for the three months ended March 31, 2021 was $73,500.

As stated under Note 1.

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Investment in Affiliate Tidelands Royalty Trust B

At December 31, 2020 and 2019, the Trust owned 32.6% of the outstanding units of beneficial interest in Tidelands.

At March 31, 2021 and 2020, the Trust owned 32.6% of the outstanding units of beneficial interest in Tidelands.

The following summary financial statements have been derived from the unaudited condensed consolidated financial statements of Tidelands:

TIDELANDS CONDENSED CONSOLIDATED STATEMENTS OF DISTRIBUTABLE INCOME

Ended March 31,

Distributable (loss) before Federal income taxes

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The Trusts wholly owned subsidiary, Marine Petroleum Corporation (MPC, and collectively with the Trust, Marine),

holds title to interests in properties that are situated offshore of Louisiana because at the time the

Trust was created, trusts could not hold these interests under Louisiana law.

MPC is prohibited from engaging in a trade or business and only takes those actions that are necessary for the

administration and liquidation of its properties.

Marines rights are generally referred to as overriding royalty interests in the

oil and natural gas industry.

holds title to interests in properties that are situated offshore of Louisiana because at the time the Trust was created, trusts could not hold these interests under Louisiana law.

MPC is prohibited from engaging in a trade or business and only

takes those actions that are necessary for the administration and liquidation of its properties.

Marines rights are generally

referred to as overriding royalty interests in the oil and natural gas industry.

An overriding royalty interest is created by an assignment by the owner of a working interest in an oil or natural gas lease.

The royalty rights associated with an overriding royalty interest terminate when the

underlying lease terminates.

The royalty rights associated with an

overriding royalty interest terminate when the underlying lease terminates.

All production and marketing functions are conducted by the working interest owners of the leases.

Income from overriding royalties is paid to Marine either (i) on the basis of the selling price of oil, natural gas

and other minerals produced, saved or sold, or (ii) at the value at the wellhead as determined by industry standards, when the selling price does not reflect the value at the wellhead.

The Trustee assumes that some units of beneficial interest are held by middlemen, as such term is broadly defined in U.S.

Treasury Regulations

(and includes custodians, nominees, certain joint owners and brokers holding an interest for a customer in street name).

Therefore, the Trustee considers the Trust to be a widely held fixed investment trust (WHFIT) for U.S.

income tax purposes.

Income from overriding royalties is paid to Marine either (i) on the

basis of the selling price of oil, natural gas and other minerals produced, saved or sold, or (ii) at the value at the wellhead as determined by industry standards, when the selling price does not reflect the value at the wellhead.

The Trustee assumes that some units of beneficial interest are held by middlemen, as such

term is broadly defined in U.S.

Treasury Regulations (and includes custodians, nominees, certain joint owners and brokers holding an interest for a customer in street name).

Therefore, the Trustee considers the Trust to be a widely held fixed

investment trust (WHFIT) for U.S.

federal income tax purposes.

Accordingly, the Trust will provide tax information in accordance with applicable U.S.

Treasury Regulations governing the information reporting requirements of the Trust as a WHFIT.

The Trustee will provide the required

information and the contact information for the Trustee is below:

Treasury Regulations governing the information reporting requirements of the Trust as a

The Trustee will provide the required information and the contact information for the Trustee is below:

2911 Turtle Creek Blvd., Suite 850

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Each unitholder should consult its own tax advisor for compliance with U.S.

federal income tax laws and

federal income tax laws and regulations.

Commodity Prices

Trusts income and monthly distributions are heavily influenced by commodity prices.

Commodity prices may fluctuate widely in response to (i) relatively minor changes in the supply of and demand for oil and natural gas, (ii) market

uncertainty and (iii) a variety of additional factors that are beyond the Trustees control.

The Trusts income

and monthly distributions are heavily influenced by commodity prices.

Commodity prices may fluctuate widely in response to (i) relatively minor changes in the supply of and demand for oil and natural gas, (ii) market uncertainty and

(iii) a variety of additional factors that are beyond the Trustees control.

Factors that may impact future commodity prices, including the price of oil and natural gas, include but are not limited to:

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As stated in the Indenture, there is no requirement for capital due to the limited purpose of the Trust.

The Trusts only obligation is to

distribute the distributable income that is actually collected to unitholders.

As an administrator of oil and natural gas royalty interests, the Trust collects royalties monthly, pays administrative expenses and disburses all net royalties that are

collected to its unitholders each quarter, subject to the availability of distributable income on the distribution date after the payment of expenses.

The Indenture (and MPCs charter and by-laws) expressly prohibits the operation of any kind of

trade or business.

The Trusts only

obligation is to distribute the distributable income that is actually collected to unitholders.

As an administrator of oil and natural gas royalty interests, the Trust collects royalties monthly, pays administrative expenses and disburses all net

royalties that are collected to its unitholders each quarter, subject to the availability of distributable income on the distribution date after the payment of expenses.

The Indenture (and MPCs charter and by-laws)

expressly prohibits the operation of any kind of trade or business.

The Trusts oil and natural gas properties are depleting assets that are not being replaced due to the prohibition against investments.

These restrictions, along with other factors, allow the Trust to be treated as a grantor

These restrictions, along with other

factors, allow the Trust to be treated as a grantor trust.

As a grantor trust, all income and deductions for state and U.S.

federal income tax purposes generally flow through to each individual unitholder.

The State of Texas imposes a franchise tax, but the Trust does not believe that it is subject

to the franchise tax because at least 90% of its income is from passive sources.

Please see Marines Annual Report on Form 10-K for the fiscal year ended June 30, 2020 for further information.

a taxable entity that pays state and U.S.

The State of Texas imposes a franchise tax,

but the Trust does not believe that it is subject to the franchise tax because at least 90% of its income is from passive sources.

Please see Marines Annual Report on Form 10-K for the fiscal year ended

June 30, 2020 for further information.

MPC is a taxable entity that pays state and U.S.

federal income taxes and state franchise taxes.

However, MPCs income specifically excludes 98% of the oil and natural gas royalties collected by MPC, which are retained by and delivered to the Trust

because of the Trusts net profits interest.

However, MPCs income specifically excludes 98% of the oil and natural gas royalties collected by MPC,

which are retained by and delivered to the Trust because of the Trusts net profits interest.

Marine relies on public records for information regarding drilling and workover operations.

The public records available up to the date of this

report indicate that there were no new well completions made during the three months ended December 31, 2020 on leases in which Marine has an interest.

As of February 1, 2021, public records also indicated that there were no wells in the

process of being drilled or recompleted on other leases in which Marine has an interest.

Marine holds an overriding royalty interest that

is equal to three-fourths of one percent of the working interest and is calculated on the value at the well of any oil, natural gas or other minerals produced and sold from 55 leases covering 199,868 gross acres located in the Gulf of Mexico.

report indicate that there were no new well completions made during the three months ended March 31, 2021 on leases in which Marine has an interest.

As of May 1, 2021, public records also indicated that there were no wells in the process

of being drilled or recompleted on other leases in which Marine has an interest.

Marine holds an overriding royalty interest that is

equal to three-fourths of one percent of the working interest and is calculated on the value at the well of any oil, natural gas or other minerals produced and sold from 55 leases covering 199,868 gross acres located in the Gulf of Mexico.

Marines overriding royalty interest applies only to existing leases and does not apply to any new leases that the Interest Owners may acquire.

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Cash reserves are permitted to be established by the Trustee for certain contingencies that would not be recorded under generally accepted accounting principles in the United States.

Marine did not have any changes in its critical accounting policies or estimates during the three and six months ended December 31, 2020.

Marine did not have any changes in its critical accounting policies or estimates during the three and nine months ended March 31, 2021.

Please see Marines Annual Report on Form 10-K for the fiscal year ended June 30, 2020 for a detailed discussion of its critical accounting policies.

New Accounting Pronouncements

Since the Trust financial statements are prepared on a modified-cash basis, most accounting pronouncements are not applicable to the Trust.

new accounting pronouncements have been adopted or issued that would have a significant impact on Marines financial statements.

Trust financial statements are prepared on a modified-cash basis, most accounting pronouncements are not applicable to the Trust.

No new accounting pronouncements have been adopted or issued that would have a significant impact on Marines

financial statements.

Marines royalty income is derived from the oil and natural gas production activities of third parties.

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time from such wells and the prices at which the oil and natural gas from such wells are sold.

Important aspects of Marines

operations are conducted by third parties.

Marines royalty income is dependent on the operations of the working interest owners of the leases on which Marine has an overriding royalty interest.

The oil and natural gas companies that lease

tracts subject to Marines interests are responsible for the production and sale of oil and natural gas and the calculation of royalty payments to Marine.

The only obligation of the working interest owners to Marine is to make monthly

overriding royalty payments that reflect Marines interest in the oil and natural gas sold.

Important aspects of Marines operations are conducted by third parties.

royalty income is dependent on the operations of the working interest owners of the leases on which Marine has an overriding royalty interest.

The oil and natural gas companies that lease tracts subject to Marines interests are responsible for

the production and sale of oil and natural gas and the calculation of royalty payments to Marine.

The only obligation of the working interest owners to Marine is to make monthly overriding royalty payments that reflect Marines interest in the

oil and natural gas sold.

Marines distributions are processed and paid by its transfer agent, American Stock Transfer & Trust Company, LLC.

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Summary of Operating Results

six months ended December 31, 2020, the Trust realized approximately 95% of its royalty income from the sale of oil and approximately 5% of its royalty income from the sale of natural gas.

During the six months ended December 31, 2019, the

nine months ended March 31, 2021, the Trust realized approximately 95% of its royalty income from the sale of oil and approximately 5% of its royalty income from the sale of natural gas.

During the nine months ended March 31, 2020, the

Trust realized approximately 87% of its royalty income from the sale of oil and approximately 13% of its royalty income from the sale of natural gas.

Royalty income includes royalties from oil and natural gas received from producers.

Distributable income per unit for the six months ended December 31, 2020 was $0.02 as compared to $0.12 for the comparable period in

Distributions per unit amounted to $0.05 per unit for the six months ended December 31, 2020, a decrease from distributions of $0.13 per unit for the comparable period in 2019.

During the six months ended December 31, 2020, the

difference between distributable income per unit and distributions per unit resulted from timing differences between the closing of the financial statements and the determination date of the distribution amount to unitholders.

For the six months ended December 31, 2020, oil production decreased to 4,659 barrels (bbls) from 4,823 bbls and natural gas production

Distributable income per unit for the nine months ended March 31, 2021 was $0.02 as compared to $0.20 for the comparable period in 2020.

Distributions per unit amounted to $0.07 per unit for the nine months ended March 31, 2021, a decrease from distributions of $0.20 per unit for the comparable period in 2020.

During the nine months ended March 31, 2021, the difference

between distributable income per unit and distributions per unit resulted from timing differences between the closing of the financial statements and the determination date of the distribution amount to unitholders.

For the nine months ended March 31, 2021, oil production decreased to 6,624 barrels (bbls) from 8,161 bbls and natural gas production

decreased to 5,546 thousand cubic feet (mcf) from 28,110 mcf as compared to the comparable period in 2020.

For the six months ended December 31, 2020, the average price realized for oil decreased to $31.70 per bbl as compared to the price

of $60.57 realized for the comparable period in 2019 and the average price realized for natural gas (net of expenses) decreased to $1.82 per mcf as compared to the average price of $2.54 realized for the comparable period in 2019.

For the nine months ended March 31, 2021, the average price realized for oil decreased to $34.14 per bbl as compared to the price of

$59.31 realized for the comparable period in 2020 and the average price realized for natural gas (net of expenses) decreased to $2.08 per mcf as compared to the average price of $2.52 realized for the comparable period in 2020.

The following table presents the net production quantities of oil and natural gas and distributable income and distributions per unit for the

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Distributions

September 30, 2019

December 31, 2019

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December 31, 2020

March 31, 2021

Excludes the Trusts interest in Tidelands.

Results of OperationsThree Months Ended December 31, 2020 Compared to the Three Months Ended December 31, 2019

Income from oil and natural gas royalties, decreased to $101,545 during the three months ended December 31, 2020 from $141,361 realized

for the comparable period in 2019.

Royalties decreased for the three months ended December 31, 2020 as compared to the comparable period in 2019 primarily due to a decrease in production of gas, and also by a sharp decrease in pricing of oil

Distributable income decreased to $4,962 for the three months ended December 31, 2020 from $108,452 realized for the

comparable period in 2019.

Income from oil royalties, for the three months ended December 31, 2020 decreased to $97,903 from

Results of OperationsThree Months Ended March 31, 2021 Compared to the Three Months Ended

March 31, 2020

Income from oil and natural gas royalties, decreased to $82,501 during the three months ended March 31, 2021

from $214,980 realized for the comparable period in 2020.

Royalties decreased for the three months ended March 31, 2021 as compared to the comparable period in 2020 primarily due to a decrease in production of oil and gas, and also by a sharp

decrease in pricing of oil.

Distributable income decreased to $11,241 for the three months ended March 31, 2021 from $150,841

realized for the comparable period in 2020.

The volume of oil sold in the three months ended December 31, 2020 increased to 2,512 bbls from 2,123 bbls realized for the comparable period in 2019, and the average price realized for oil

decreased to $38.98 per bbl for the three months ended December 31, 2020 from $57.32 per bbl realized for the comparable period in 2019.

Income from natural gas royalties (net of expenses), for the three months ended December 31, 2020 decreased to $3,642 from $19,675 for

the comparable period in 2019.

The volume of natural gas sold in the three months ended December 31, 2020 decreased to 1,965 mcf from 8,150 mcf realized for the comparable period in 2019, and the average price realized for natural gas (net of

expenses) decreased to $1.85 per mcf for the three months ended December 31, 2020 from $2.41 per mcf realized for the comparable period in 2019.

We did not receive any income from distributions from Tidelands for the three months ended December 31, 2020 and 2019.

Income from oil royalties, for the three months ended March 31, 2021 decreased to

$78,468 from $191,960 realized for the comparable period in 2020.

The volume of oil sold in the three months ended March 31, 2021 decreased to 1,965 bbls from 3,339 bbls realized for the comparable period in 2020, and the average price realized

for oil decreased to $39.94 per bbl for the three months ended March 31, 2021 from $57.50 per bbl realized for the comparable period in 2020.

Income from natural gas royalties (net of expenses), for the three months ended March 31, 2021 decreased to $4,033 from $23,020 for the

comparable period in 2020.

The volume of natural gas sold in the three months ended March 31, 2021 decreased to 1,428 mcf from 9,419 mcf realized for the comparable period in 2020, and the average price realized for natural gas (net of

expenses) increased to $2.82 per mcf for the three months ended March 31, 2021 from $2.44 per mcf realized for the comparable period in 2020.

We did not receive any income from distributions from Tidelands for the three months ended March 31, 2021 and 2020.

We understand that

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The following table presents the quantities of oil and natural gas sold and the average price realized for the three months ended

December 31, 2020, and those realized for the comparable period in 2019.

Three Months Ended December 31,

March 31, 2021, and those realized for the comparable period in 2020.

Three Months Ended March 31,

Average price

Average price, net of expenses

General and administrative expenses increased to $96,583 for the three months ended

December 31, 2020 from $37,196 for the comparable period of 2019, primarily due to the timing of expenses related to the closing of the annual financial statements which expenses were incurred in the quarter ended December 31, 2020

compared to the quarter ended September 30, 2019 for the previous year.

Results of OperationsSix Months Ended December 31, 2020

Compared to the Six Months Ended December 31, 2019

Income from oil and natural gas royalties, excluding the Trusts interest

in Tidelands, decreased to $155,185 during the six months ended December 31, 2020 from $339,609 realized for the comparable period in 2019.

Royalties decreased for the six months ended December 31, 2020 primarily due to a decrease in the

price and production of oil as well as a decrease in natural gas production.

Distributable income decreased to $37,989 for the six months

ended December 31, 2020 from $243,991 realized for the comparable period in 2019.

Income from oil royalties for the six months ended

December 31, 2020 decreased to $147,699 from $292,101 realized for the comparable period in 2019.

The volume of oil sold in the six months ended December 31, 2020 decreased to 4,659 bbls from 4,823 bbls realized for the comparable period

in 2019, and the average price realized for oil decreased to $31.70 per bbl for the six months ended December 31, 2020 from $60.57 per bbl realized for the comparable period in 2019.

Income from natural gas royalties (net of expenses) for the six months ended December 31, 2020 decreased to $7,487 from $47,508 for the

General and administrative expenses increased to $71,343 for the three months ended March 31, 2021 from

$67,265 for the comparable period of 2020, primarily due to timing of payment of expenses.

Results of OperationsNine Months Ended March 31,

2021 Compared to the Nine Months Ended March 31, 2020

Income from oil and natural gas royalties decreased to $237,686 during the

nine months ended March 31, 2021 from $554,588 realized for the comparable period in 2020.

Royalties decreased for the nine months ended March 31, 2021 primarily due to a decrease in the price and production of oil and natural gas, as compared

to the comparable period in 2020.

Distributable income decreased to $49,229 for the nine months ended March 31, 2021 from $394,832

realized for the comparable period in 2020.

Income from oil royalties for the nine months ended March 31, 2021 decreased to

$226,167 from $484,061 realized for the comparable period in 2020.

The volume of oil sold in the nine months ended March 31, 2021 decreased to 6,624 bbls from 8,161 bbls realized for the comparable period in 2020, and the average price realized

for oil decreased to $34.14 per bbl for the nine months ended March 31, 2021 from $59.31 per bbl realized for the comparable period in 2020.

Income from natural gas royalties (net of expenses) for the nine months ended March 31, 2021 decreased to $11,519 from $70,527 for the

comparable period in 2020.

The volume of natural gas sold in the six months ended December 31, 2020 decreased to 4,118 mcf from 18,691 mcf realized for the comparable period in 2019, and the average price realized for natural gas (net of

expenses) decreased to $1.82 per mcf for the six months ended December 31, 2020 from $2.54 per mcf realized for the comparable period in 2019.

We did not receive any income from distributions from Tidelands for the six months ended December 31, 2020 and 2019.

The volume of natural gas sold in the nine months ended March 31, 2021 decreased to 5,546 mcf from 28,110 mcf realized for the comparable period in 2020, and the average price realized for natural gas (net of

expenses) decreased to $2.08 per mcf for the nine months ended March 31, 2021 from $2.52 per mcf realized for the comparable period in 2020.

We did not receive any income from distributions from Tidelands for the nine months ended March 31, 2021 and 2020.

We understand that

Tidelands does not currently have sufficient production in economic quantities to generate any revenue to be distributed to its unit holders.

Tidelands does not currently have sufficient production in economic quantities to generate any revenue to be distributed to its unitholders.

Accordingly, we do not expect to receive any income from distributions from Tidelands in future quarters.

The following table presents the quantities of oil and natural gas sold and the average price realized for the six months ended

December 31, 2020, and those realized for the comparable period in 2019, excluding the Trusts interest in Tidelands.

Six Months Ended December 31,

The following table presents the quantities of oil and natural gas sold and the average price realized for the nine months ended

March 31, 2021, and those realized for the comparable period in 2020.

Nine Months Ended

Average price

Average price, net of expenses

General and administrative expenses increased to $117,298 for the six months ended December 31, 2020 from

$105,349 for the comparable period of 2019, primarily due to increased printing fees and professional expenses as well as an increase in trustee expenses due to the timing of monthly payments.

General and administrative expenses increased to $188,641 for the nine months ended March 31, 2021 from

$172,614 for the comparable period of 2020, primarily due to increased printing fees and professional expenses.

Forward-Looking Statements

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reasonably practicable after such report is electronically filed with, or furnished, to the SEC.

Quantitative and Qualitative Disclosures About Market Risk

There has been no material change from the information provided in

Marines Annual Report on Form 10-K, Item 7A:

and Qualitative Disclosures About Market Risk

There has been no material change from the information provided in Marines

Annual Report on Form 10-K, Item 7A:

Quantitative and Qualitative Disclosures About Market Risk, for the fiscal year ended June 30, 2020.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements