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Item 9A. Controls and Procedures

2021-09-24 compared with 2020-09-28 · 70 added, 67 removed, 276 unchanged (33% of the section changed)

40 unchanged sentences

Simmons Bank, Trustee

Southwest Bank, Trustee

Under the Indenture, the Trustee is entitled to reasonable and customary fees and compensation for its

Simmons Bank has served as Trustee since February 20, 2018, the effective date of its merger with

Southwest Bank.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED UNITHOLDER MATTERS

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Amount and Nature of

Beneficial Ownership

Percent of Class

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Financial Statements and Supplementary Data above.

Indenture, as amended on December 8, 2000, of Marine Petroleum Trust, filed as Exhibit 4.1 to the Annual Report on Form 10-K of Marine for the fiscal year ended June 30, 2001 (File No.

000-08565), and incorporated by reference herein .

Description of Securities, filed as Exhibit 4.2 to the Annual Report on Form 10-K of Marine for the fiscal

year ended June 30, 2019 (File No.

000-08565), and incorporated by reference herein .

Subsidiaries of Marine, filed as Exhibit 21.1 to the Annual Report on Form 10-K of Marine for the fiscal

year ended June 30, 2002 (File No.

Indenture, as amended on

November 16, 2020, of Marine Petroleum Trust, filed as Exhibit 4.1 to the Quarterly Report on Form 10-Q of Marine for the quarter ended September 30, 2020 (File

000-08565), and incorporated by reference herein.

Certification of the Corporate Trustee pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 .

Certification of the Corporate Trustee pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 .

Description of Securities.

Subsidiaries of Marine,

filed as Exhibit 21.1 to the Annual Report on Form 10-K of Marine for the fiscal year ended June 30, 2002 (File No.

000-08565), and incorporated by reference

Certification of the Corporate Trustee pursuant to Section

302 of the Sarbanes-Oxley Act of 2002.

Certification of the Corporate Trustee pursuant to Section

906 of the Sarbanes-Oxley Act of 2002.

Filed herewith.

Financial Statement Schedules All required schedules are included in the financial statements included in this Annual Report on Form 10-K.

(c) Financial Statement Schedules All required schedules are included in the financial statements included in this Annual Report on Form

FORM 10-K SUMMARY

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audited the accompanying consolidated statements of assets, liabilities, and trust corpus of Marine Petroleum Trust and Subsidiary (the Trust) as of June 30, 2021 and 2020, and the related consolidated statements of distributable income and

changes in trust corpus for each of the three years in the period ended June 30, 2020, and the related notes (collectively referred to as the consolidated financial statements).

changes in trust corpus for each of the two years in the period ended June 30, 2021, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present

fairly, in all material respects, the assets, liabilities, and trust corpus of the Trust as of June 30, 2020 and 2019, and the distributable income and changes in trust corpus for each of the three years in the period ended June 30, 2020,

in conformity with the modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America.

fairly, in all material respects, the assets, liabilities, and trust corpus of the Trust as of June 30, 2021 and 2020, and the distributable income and changes in trust corpus for each of the two years in the period ended June 30, 2021, in

conformity with the modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America.

As described in Note 2 to the consolidated financial statements, these consolidated financial statements were prepared on a modified cash basis of accounting,

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We believe that our audits provide a reasonable basis for our opinion.

Emphasis of Matter

As discussed in Note 1 to the

consolidated financial statements, the Trust Indenture is set to expire June 1, 2021.

Critical Audit Matters

Critical audit matters are

matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the Trustee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial

statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ WEAVER AND TIDWELL, L.L.P

We have served as the Trusts auditor since 2011.

We have served as the

Trusts auditor since 2011.

Dallas, Texas

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Summary of Significant Accounting Policies

Petroleum Trust (the Trust) was established on June 1, 1956 with the transfer of property to the Trust consisting of certain contract rights, units of beneficial interest and common stock in exchange for units of beneficial interest

in the Trust.

The contract rights entitled the Trust to receive an overriding royalty interest in oil, natural gas and other mineral leasehold interests acquired by Gulf Oil Corporation, now Chevron U.S.A., Inc.

(Chevron), a subsidiary

of Chevron Corporation, in certain areas of the Gulf of Mexico acquired prior to January 1, 1980.

The Trust must distribute to its

unitholders all cash accumulated each quarter, less an amount reserved for accrued liabilities and estimated future expenses.

Marine Petroleum Trust (the Trust) was established on June 1, 1956 with the transfer of property to the Trust consisting of

certain contract rights, units of beneficial interest and common stock in exchange for units of beneficial interest in the Trust.

The contract rights entitled the Trust to receive an overriding royalty interest in oil, natural gas and other mineral

leasehold interests acquired by Gulf Oil Corporation, now Chevron U.S.A., Inc.

(Chevron), a subsidiary of Chevron Corporation, in certain areas of the Gulf of Mexico prior to January 1, 1980.

The Trust must distribute to its unitholders all cash accumulated each quarter, less an amount reserved for accrued liabilities and estimated

future expenses.

The Trust and its subsidiary cannot engage in a trade or business.

Funds held by Marine Petroleum Corporation, a wholly

owned subsidiary of the Trust, (MPC, and collectively with the Trust, Marine) pending distribution to the Trust are invested in U.S.

Funds held by Marine Petroleum Corporation, a wholly owned subsidiary of the Trust, (MPC, and collectively with the Trust, Marine) pending

distribution to the Trust are invested in U.S.

Treasury and agency bonds.

The unitholders assigned their contract rights offshore of Louisiana to MPC reserving a 98% net profits interest to themselves.

profits interest contract was transferred to the Trust along with the other properties.

The unitholders assigned their contract rights offshore of

Louisiana to MPC reserving a 98% net profits interest to themselves.

The net profits interest contract was transferred to the Trust along with the other properties.

The Trust is authorized to pay expenses of MPC should it be necessary.

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However, the unitholders owning eighty percent (80%) or more of the outstanding units may terminate the Trust on any date.

Following the filing of this Annual Report with the SEC, the unitholders will be asked to approve an amendment to the Indenture to extend the

life of the Trust beyond the current expiration date of June 1, 2021.

(b) Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the Trust and its wholly owned subsidiary, MPC.

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transactions have been eliminated upon consolidation.

Producing Oil and Gas Properties

At the time the Trust was established, no determinable market value was available for the assets transferred to the Trust;

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Federal income tax.

Tax positions taken by the Trust related to the Trusts pass-through status and federal

state tax positions have been reviewed, and the Trustee is of the opinion that material positions taken would more likely than not be sustained upon an examination.

In accordance with the Trusts basis of accounting discussed in Note 2, the

Trust would only recognize the impact of tax positions that were not upheld at the time of payment.

As of June 30, 2020, the Trusts tax years 2016 through 2019 remain subject to examination.

MPC recognizes interest and penalties related to unrecognized tax benefits in income tax expense.

(e) Credit Risk Concentration and Cash Equivalents

positions taken by the Trust related to the Trusts pass-through status and federal state tax positions have been reviewed, and the Trustee is of the opinion that material positions taken would more likely than not be sustained upon an

In accordance with the Trusts basis of accounting discussed in Note 2, the Trust would only recognize the impact of tax positions that were not upheld at the time of payment.

As of June 30, 2021, the Trusts tax years

2017 through 2020 remain subject to examination.

MPC recognizes interest and penalties related to unrecognized tax benefits in income tax

Credit Risk Concentration and Cash Equivalents

Financial instruments which potentially subject Marine to concentrations of credit risk are primarily investments in cash equivalents, U.S.

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Treasury and agency bonds and money market accounts.

(f) Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with the modified cash basis method of accounting requires the Trustee to make various

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Actual results may differ from such estimates.

(g) Distributable Income per Unit and Distributions

Distributable Income per Unit and Distributions

Distributable income per unit is determined by dividing distributable income by the number of units of beneficial interest outstanding during

Distributions to unitholders are calculated and paid out net of reserve for future expenses, which are estimated by the Trustee on a quarterly basis.

(h) Significant Royalty Sources

Significant Royalty Sources

Percent of royalty revenue received by Marine from producers is summarized as follows:

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Distributions to unitholders are recognized when declared by the Trustee of the Trust.

The financial statements of Marine differ from financial statements prepared in conformity

with GAAP because of the following:

The financial statements of Marine differ from financial statements prepared in conformity with GAAP because

of the following:

Royalty income is recognized in the month received rather than in the month of production.

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expects to receive in exchange for those goods or services and revenue streams related solely to oil and gas royalties.

The Trust adopted the disclosure standards of this update, as required, beginning with the first quarter of fiscal year 2019.

adoption of this standard has not had a significant impact on its financial statements due to the modified cash basis of reporting used by the Trust.

The Trust has adopted the disclosure standards of this update, as required, beginning with the first quarter of fiscal year 2019.

The adoption of this standard has not had a significant impact on its financial statements due to the modified cash basis of reporting used by the Trust.

Investment in Affiliate Tidelands Royalty Trust B

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automatically and immediately suspended.

The term of Tidelands expired earlier in 2021, and Tidelands is currently in the process of dissolving the

Summary of Quarterly Financial Data (Unaudited)

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Supplemental Information Relating to Oil and Gas Reserves (Unaudited)

Oil and natural gas reserve information relating to Marines and Tidelands royalty interests is not presented because such

information is not available to Marine or Tidelands.

Oil and natural gas reserve information relating to Marines royalty interests is not presented because such information is not available

to Marine or Tidelands.

Marines share of oil and natural gas sold for its royalty interests and Marines equity in oil and natural gas sold for Tidelands royalty interests were as follows:

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Treasury Regulation section 301.7701-4(b);

least 90% of the trusts income for the taxable year must be derived from passive sources (e.g., royalties, bonuses, delay rental income from mineral properties, dividends, interest, and gains from the sale of securities);

and (c) no more

than 10% of the trusts income for the taxable year can be derived from an active trade or business (e.g., rent and certain income received by a non-operator under a joint operating agreement pursuant to

which the operator is the member of an affiliated group that includes such non-operator).

An entity will determine on an annual basis whether it meets the requirements to be treated as a passive

entity for the Texas franchise tax.

The Trustee believes that all or substantially all of the income of the Trust currently is passive, as it consists of royalty income from the sale of oil and natural gas, dividends and interest income.

the Trust anticipates that it will be a passive entity in the tax year ending in 2020.

Subject to any change in the sources of income derived by the Trust or any change in the Indenture, the Trust expects that it will continue to qualify as a

passive entity that is not subject to the Texas franchise tax.

If the Trust is exempt from the Texas franchise tax as a passive entity,

each unitholder that is subject to the Texas franchise tax as a taxable entity under the Texas Tax Code should generally include its share of the Trusts revenue in its franchise tax computation.

The Texas franchise tax does not apply to

natural persons.

more than 10% of the trusts income for the taxable year can be derived from an active trade or business (e.g., rent and certain income received by a non-operator under a joint operating agreement

pursuant to which the operator is the member of an affiliated group that includes such non-operator).

An entity will determine on an annual basis whether it meets the requirements to be treated as a

passive entity for the Texas franchise tax.

The Trustee believes that all or substantially all of the income of the Trust currently is passive, as it consists of royalty income from the sale of oil and natural gas, dividends and interest

Thus, the Trust anticipates that it will be a passive entity in the tax year ending in 2021.

Subject to any change in the sources of income derived by the Trust or any change in the Indenture, the Trust expects that it will continue to

qualify as a passive entity that is not subject to the Texas franchise tax.

If the Trust is exempt from the Texas franchise tax as a

passive entity, each unitholder that is subject to the Texas franchise tax as a taxable entity under the Texas Tax Code should generally include its share of the Trusts revenue in its franchise tax computation.

The Texas franchise tax does not

apply to natural persons.

In the event the Trust does not qualify as a passive entity, it would not be required to pay any tax and is not

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MARINE PETROLEUM TRUST

Simmons Bank, in its capacity as trustee of Marine Petroleum Trust and not in its individual capacity or otherwise

Simmons Bank, in its capacity as trustee of Marine

Petroleum Trust and not in its individual capacity or

September 24, 2021

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following persons on behalf of the registrant and in the capacities and on the dates indicated.

Simmons Bank, in its capacity as trustee of Marine Petroleum Trust and not in its individual capacity or otherwise

Simmons Bank, in its capacity as trustee of Marine

Petroleum Trust and not in its individual capacity or

September 24, 2021

2 unchanged sentences

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-K

Item 9A. Controls and Procedures