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Item 1. Financial Statements

2022-02-14 compared with 2021-11-15 · 141 added, 111 removed, 218 unchanged (54% of the section changed)

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CONDENSED CONSOLIDATED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS

As of September 30, 2021 and June 30, 2021

September 30,

As of December 31, 2021 and June 30, 2021

Current assets:

Cash and cash equivalents

Federal income tax refundable

Producing oil and natural gas properties

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CONDENSED CONSOLIDATED STATEMENTS OF DISTRIBUTABLE INCOME

For the Three Months Ended September 30, 2021 and 2020

For the Three and Six Months Ended December 31, 2021 and 2020

Three Months Ended

September 30,

Six Months Ended

Oil and natural gas royalties

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN TRUST CORPUS

For the Three Months Ended September 30, 2021 and 2020

For the Six Months Ended December 31, 2021 and 2020

Six Months Ended

Trust corpus, beginning of period

Distributable income

Distributions to unitholders

Trust corpus, end of period

Distributions per unit

See accompanying notes to condensed consolidated financial statements.

MARINE PETROLEUM TRUST AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN TRUST CORPUS

For the Three Months Ended December 31, 2021 and 2020

Three Months Ended

September 30,

Trust corpus, beginning of period

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

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

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

The financial statements are condensed and consolidated and should be read in conjunction with Marines Annual Report

on Form 10-K for the fiscal year ended June 30, 2021.

The financial statements included herein are unaudited, but in the opinion of Simmons Bank (the Trustee), the Trustee of the Trust, they

include all adjustments necessary for a fair presentation of the results of operations for the periods presented.

Operating results for the interim periods reported herein are not necessarily indicative of the results that may be expected for the

fiscal year ending June 30, 2022.

December 31, 2021

Accounting Policies

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

owned subsidiary, Marine Petroleum Corporation (MPC, and collectively with the Trust, Marine).

The financial statements are condensed and consolidated and should be read in conjunction with Marines Annual Report on Form

10-K for the fiscal year ended June 30, 2021.

The financial statements included herein are unaudited, but in the opinion of Simmons Bank (the Trustee), the Trustee of the Trust, they include

all adjustments necessary for a fair presentation of the results of operations for the periods presented.

Operating results for the interim periods reported herein are not necessarily indicative of the results that may be expected for the fiscal

year ending June 30, 2022.

Basis of Accounting

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Total estimated reserve for future expenses deducted from

calculated distributable income for the three months ended September 30, 2021 was $55,000.

calculated distributable income for the three months ended December 31, 2021 was $50,000.

As stated under Note 1.

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Investment in Affiliate Tidelands Royalty Trust B

At September 30, 2021 and 2020, the Trust owned 32.6% of the outstanding units of beneficial interest in Tidelands.

At December 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

September 30,

Distributable (loss) before Federal income taxes

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The last distribution Marine received from Tidelands was in the fourth quarter of 2018.

The term of Tidelands expired earlier in

2021, and Tidelands is currently in the process of winding up.

Subsequent Events

On November 4, 2021, the Trustee announced that it has entered into an agreement with Argent Trust Company, a Tennessee chartered trust company

(Argent), pursuant to which the Trustee will be resigning as trustee of the Trust and will nominate Argent as successor trustee of the Trust.

The Trustees resignation as trustee, and Argents appointment as successor trustee,

are subject to certain conditions set forth in the agreement, including approval by the Unit holders of the Trust and of certain other trusts of which Simmons Bank acts as trustee (or a court) of (i) Argents appointment as successor trustee

and (ii) any amendments to the trust agreement of the Trust and the trust agreements and indentures of the other trusts necessary to permit Argent to serve as successor trustee.

The term of Tidelands expired in 2021.

Tidelands is currently in the process of winding up and has declared January 31, 2022 as the record date for the final distribution of $0.205883 per unit, which is expected to be paid on February 14, 2022.

Trustees Discussion and Analysis of Financial Condition and Results of Operations

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Simmons Bank and Southwest Bank, the former corporate Trustee of the Trust.

The Trusts Indenture (the Indenture) provides that the term of the Trust will expire on June 1, 2041, unless extended by the vote of the holders of a

majority of the outstanding units of beneficial interest.

The Trust is not permitted to engage in any business activity because it was

organized for the sole purpose of providing an efficient, orderly and practical means for the administration and liquidation of rights to payments from certain oil and natural gas leases in the Gulf of Mexico, pursuant to license agreements and

amendments between the Trusts predecessors and Gulf Oil Corporation (Gulf).

As a result of various transactions that have occurred since 1956, these interests now are held by Chevron Corporation (Chevron) and its

assignees, including Arena Energy, LP (collectively with Chevron and its assignees, the Interest Owners).

On November 4, 2021, Simmons Bank, announced that it had entered into an agreement with Argent Trust Company, a Tennessee chartered trust company (Argent),

pursuant to which the Trustee will be resigning as trustee of the Trust and will nominate Argent as successor trustee of the Trust.

The Trustees resignation as trustee, and Argents appointment as successor trustee, are subject to certain

conditions set forth in the agreement, including approval by the unitholders of the Trust and of certain other trusts of which Simmons Bank acts as trustee (or a court) of (i) Argents appointment as successor trustee and (ii) any

amendments to the Trusts Indenture (the Indenture) and the trust agreements and indentures of the other trusts necessary to permit Argent to serve as successor trustee.

The Indenture provides that the term of the Trust will expire

on June 1, 2041, unless extended by the vote of the holders of a majority of the outstanding units of beneficial interest.

The Trust is not permitted to engage in any business activity because it was organized for

the sole purpose of providing an efficient, orderly and practical means for the administration and liquidation of rights to payments from certain oil and natural gas leases in the Gulf of Mexico, pursuant to license agreements and amendments between

the Trusts predecessors and Gulf Oil Corporation (Gulf).

As a result of various transactions that have occurred since 1956, these interests now are held by Chevron Corporation (Chevron) and its assignees, including

Arena Energy, LP (collectively with Chevron and its assignees, the Interest Owners).

The Trust holds title to interests in properties that are situated offshore of Texas.

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.

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.

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 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.

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.

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.

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Commodity Prices

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.

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 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

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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 September 30, 2021 on leases in which Marine has an interest.

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

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

As of February 1, 2022, 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.

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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.

The Trust also owns a 32.6% interest in Tidelands.

As a result of this ownership, the Trust has the

right to receive periodic distributions from Tidelands to the extent Tidelands makes distributions to its unitholders.

The four leases covering an aggregate of 17,188 gross acres in which Tidelands owned interests are no longer producing and are not

expected to produce in the future.

Therefore, such acreage is not included in Marines acreage in this report.

The term of Tidelands expired earlier in 2021, and Tidelands is currently in the process of winding up.

Accordingly, we do not expect

to receive any income from distributions from Tidelands in future quarters from the leases.

Marines overriding royalty interest applies only to

existing leases and does not apply to any new leases that the Interest Owners may acquire.

The Trust also owns a 32.6% interest in Tidelands Royalty Trust B (Tidelands).

As a result of this ownership, the Trust has the right to receive periodic distributions from Tidelands to the extent Tidelands makes distributions to its unitholders.

The term of Tidelands expired in 2021.

Tidelands is currently in the process of

winding up and has declared January 31, 2022 as the record date for the final distribution of $0.205883 per unit, which is expected to be paid on February 14, 2022.

Accordingly, after the distribution is received, we do not expect any

other income from Tidelands.

Critical Accounting Policies and Estimates

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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 months ended September 30, 2021.

see Marines Annual Report on Form 10-K for the fiscal year ended June 30, 2021 for a detailed discussion of its critical accounting policies.

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

Please see Marines Annual Report on Form 10-K for the fiscal year ended June 30, 2021 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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Summary of Operating Results

three months ended September 30, 2021, the Trust realized approximately 91% of its royalty income from the sale of oil and approximately 9% of its royalty income from the sale of natural gas.

During the three months ended September 30,

2020, the Trust realized approximately 93% of its royalty income from the sale of oil and approximately 7% of its royalty income from the sale of natural gas.

six months ended December 31, 2021, the Trust realized approximately 93% of its royalty income from the sale of oil and approximately 7% of its royalty income from the sale of natural gas.

During the 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.

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

Distributable income per unit for the three months ended September 30, 2021 was $0.10 as compared to $0.02 for the comparable period in

Distributions per unit amounted to $0.06 per unit for the three months ended September 30, 2021, an increase from distributions of $0.04 per unit for the comparable period in 2020.

During the three months ended September 30, 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 three months ended September 30, 2021, oil production increased to 3,241 barrels (bbls) from 2,148 bbls and natural gas

production increased to 3,808 thousand cubic feet (mcf) due to prior period adjustments from 2,154 mcf as compared to the comparable period in 2020.

For the three months ended September 30, 2021, the average price realized for oil increased to

$64.40 per bbl as compared to the price of $23.19 realized for the comparable period in 2020 and the average price realized for natural gas (net of expenses) increased to $5.39 per mcf as compared to the average price of $1.78 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 last six quarters.

Distributable income per unit for the six months ended December 31, 2021 was $0.19 as

compared to $0.02 for the comparable period in 2020.

Distributions per unit amounted to $0.17 per unit for the six months ended December 31, 2021, an increase from distributions of $0.05 per unit for the comparable period in 2020.

six months ended December 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 six months ended December 31, 2021, oil production increased to 6,917 barrels (bbls) from 4,659 bbls

and natural gas production increased to 6,775 thousand cubic feet (mcf) from 4,118 mcf as compared to the comparable period in 2020.

For the six months ended December 31, 2021, the average price realized for oil increased to $66.06 per bbl

as compared to the price of $31.70 realized for the comparable period in 2020 and the average price realized for natural gas (net of expenses) increased to $5.46 per mcf as compared to the average price of $1.82 realized for the comparable period in

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

unit for the last six quarters.

Net Production

Quantities (1)

Quarter Ended

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Distributions

June 30, 2020

September 30, 2020

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September 30, 2021

Excludes the Trusts interest in Tidelands.

Results of OperationsThree Months Ended September 30, 2021 Compared to the Three Months Ended September 30, 2020

Income from oil and natural gas royalties, increased to $229,240 during the three months ended September 30, 2021 from $53,639 realized

for the comparable period in 2020.

Royalties increased for the three months ended September 30, 2021 as compared to the comparable period in 2020 primarily due to an increase in production of oil and gas, and also by a sharp increase in pricing

of oil and gas.

Distributable income increased to $203,212 for the three months ended September 30, 2021 from $33,027 realized for

the comparable period in 2020.

Income from oil royalties, for the three months ended September 30, 2021 increased to $208,729 from

December 31, 2021

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

Income from oil and natural gas royalties, increased to $264,692 during the three months ended December 31, 2021 from

$101,545 realized for the comparable period in 2020.

The volume of oil sold in the three months ended September 30, 2021 increased to 3,241 bbls from 2,148 bbls realized for the comparable period in 2020, and the average price realized for oil

increased to $64.40 per bbl for the three months ended September 30, 2021 from $23.19 per bbl realized for the comparable period in 2020.

Income from natural gas royalties (net of expenses), for the three months ended September 30, 2021 increased to $20,511 from $3,844 for

Royalties increased for the three months ended December 31, 2021 as compared to the comparable period in 2020 primarily due to an increase in production of oil and gas, and also by a sharp

increase in pricing of oil and gas.

Distributable income increased to $181,444 for the three months ended December 31, 2021 from

$4,962 realized for the comparable period in 2020.

Income from oil royalties, for the three months ended December 31, 2021 increased

to $248,187 from $97,903 realized for the comparable period in 2020.

The volume of oil sold in the three months ended December 31, 2021 increased to 3,676 bbls from 2,512 bbls realized for the comparable period in 2020, and the average price

realized for oil increased to $67.52 per bbl for the three months ended December 31, 2021 from $38.98 per bbl realized for the comparable period in 2020.

Income from natural gas royalties (net of expenses), for the three months ended December 31, 2021 increased to $16,505 from $3,642 for

the comparable period in 2020.

The volume of natural gas sold in the three months ended September 30, 2021 increased to 3,808 mcf due to prior period adjustments from 2,154 mcf realized for the comparable period in 2020, and the average price

realized for natural gas (net of expenses) increased to $5.39 per mcf for the three months ended September 30, 2021 from $1.78 per mcf realized for the comparable period in 2020.

We did not receive any income from distributions from Tidelands for the three months ended September 30, 2021 and 2020.

Tidelands expired earlier in 2021, and Tidelands is currently in the process of winding up.

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

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

the three months ended September 30, 2021, and those realized for the comparable period in 2020.

Three Months Ended September 30,

The volume of natural gas sold in the three months ended

December 31, 2021 increased to 2,967 mcf from 1,965 mcf realized for the comparable period in 2020, and the average price realized for natural gas (net of expenses) increased to $5.56 per

mcf for the three months ended December 31, 2021 from $1.85 per mcf realized for the comparable period in 2020.

We did not receive

any income from distributions from Tidelands for the three months ended December 31, 2021 and 2020.

The following table presents the

quantities of oil and natural gas sold and the average price realized for the three months ended December 31, 2021, and those realized for the comparable period in 2020.

Three Months Ended

Average price

Average price, net of expenses

General and administrative expenses increased to $26,083 for the three months ended September 30, 2021

from $20,714 for the comparable period of 2020, primarily due to timing of payment of expenses.

General and administrative expenses decreased to $83,263 for the three months ended December 31, 2021

from $96,583 for the comparable period of 2020, primarily due to lower professional and printing costs.

Results of OperationsSix Months Ended

December 31, 2021 Compared to the Six Months Ended December 31, 2020

Income from oil and natural gas royalties, excluding

the Trusts interest in Tidelands, increased to $493,932 during the six months ended December 31, 2021 from $155,185 realized for the comparable period in 2020.

Royalties increased for the six months ended December 31, 2021 primarily

due to an increase in the price and production of oil as well as an increase in the price and production of natural gas.

Distributable

income increased to $384,656 for the six months ended December 31, 2021 from $37,989 realized for the comparable period in 2020.

Income from oil royalties for the six months ended December 31, 2021 increased to $456,916 from $147,699 realized for the comparable

period in 2020.

The volume of oil sold in the six months ended December 31, 2021 increased to 6,917 bbls from 4,659 bbls realized for the comparable period in 2020, and the average price realized for oil increased to $66.06 per bbl for the six

months ended December 31, 2021 from $31.70 per bbl realized for the comparable period in 2020.

Income from natural gas royalties

(net of expenses) for the six months ended December 31, 2021 increased to $37,016 from $7,487 for the comparable period in 2020.

The volume of natural gas sold in the six months ended December 31, 2021 increased to 6,775 mcf from 4,118 mcf

realized for the comparable period in 2020, and the average price realized for natural gas (net of expenses) increased to $5.46 per mcf for the six months ended December 31, 2021 from $1.82 per mcf realized for the comparable period in 2020.

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

The following table presents the quantities of oil and natural gas sold and the average

price realized for the six months ended December 31, 2021, and those realized for the comparable period in 2020, excluding the Trusts interest in Tidelands.

Six Months Ended

Average price

Average price, net of expenses

General and administrative expenses decreased to $109,346 for the six months ended December 31, 2021 from

$117,298 for the comparable period of 2020, primarily due to lower professional and printing costs.

Forward-Looking Statements

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

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

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, 2021.

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