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Item 1. Financial Statements

2023-02-14 compared with 2022-11-14 · 127 added, 101 removed, 230 unchanged (50% of the section changed)

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CONDENSED CONSOLIDATED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS

As of September 30, 2022 and June 30, 2022

September 30,

As of December 31, 2022 and June 30, 2022

Current assets:

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CONDENSED CONSOLIDATED STATEMENTS OF DISTRIBUTABLE INCOME

For the Three Months Ended September 30, 2022 and 2021

For the Three and Six Months Ended December 31, 2022 and 2021

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, 2022 and 2021

For the Six Months Ended December 31, 2022 and 2021

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, 2022 and 2021

Three Months Ended

September 30,

Trust corpus, beginning of period

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

December 31, 2022

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

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on Form 10-K for the fiscal year ended June 30, 2022.

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, 2023.

The financial statements included herein are unaudited, but in the opinion of Argent Trust Company (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, 2023.

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, 2022 was $522,369.

calculated distributable income for the three months ended December 31, 2022 was $109,759.

As stated under Note 1.

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Distributable income is comprised of (i) royalties from offshore Texas leases owned directly by the Trust, (ii) 98% of the royalties received from offshore Louisiana leases owned by MPC, which are retained by

and delivered to the Trust on a quarterly basis, (iii) cash distributions from the Trusts interest in Tidelands Royalty Trust B (Tidelands), a separate royalty trust, until Tidelands was wrapped up, (iv) dividends

paid by MPC, less (v) administrative expenses incurred by the Trust.

and delivered to the Trust on a quarterly basis, (iii) cash distributions from the Trusts interest in Tidelands Royalty Trust B (Tidelands), a separate royalty trust, until Tidelands was wrapped up

(iv) dividends paid by MPC, less (v) administrative expenses incurred by the Trust.

Distributions fluctuate from quarter to quarter primarily due to changes in oil and natural gas prices and production quantities and expenses incurred.

Investment in Affiliate Tidelands Royalty Trust B

At September 30, 2021, the Trust owned 32.6% of the outstanding units of beneficial interest in Tidelands, which entity was wound up prior

At December 31, 2021, the Trust owned 32.6% of the outstanding units of beneficial interest in Tidelands, which entity was wound up prior

to June 30, 2022.

Due to Tidelands being wound up prior to June 30, 2022, there was no market underlying the 452,366 units owned by the Trust at the time Tidelands was wound up.

However, expenses and fees to be reimbursed to the Trustee do exist as

a payable of $154,196 as of September 30, 2022.

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 September 30, 2022

Three Months Ended

September 30, 2021

A reserve of $154,196 has been established for future

reporting and compliance issues that may arise in years to come and will be used for such transactions.

The following summary financial

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

TIDELANDS CONDENSED

CONSOLIDATED STATEMENTS OF DISTRIBUTABLE INCOME

Distributable (loss) before Federal income taxes

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Marine Petroleum Trust (the Trust) is a royalty trust that was created in 1956 under the laws of the State of Texas.

February 20, 2018, Simmons Bank became corporate trustee of the Trust (the Trustee) as a result of a merger between Simmons Bank and Southwest Bank, the former corporate trustee of the Trust.

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 nominate Argent as successor trustee of

On March 21, 2022, the unitholders of the Trust, by way of written consent, voted (i) to approve the appointment of Argent as successor trustee to serve as trustee of the Trust once the resignation of the Trustee takes effect

February 20, 2018, Simmons Bank became corporate trustee of the Trust (Simmons) as a result of a merger between Simmons Bank and Southwest Bank, the former corporate trustee of the Trust.

On November 4, 2021, Simmons announced

that it had entered into an agreement with Argent Trust Company, a Tennessee chartered trust company (the Trustee), pursuant to which Simmons would resign as trustee of the Trust and nominate Argent Trust Company as successor trustee of

On March 21, 2022, the unitholders of the Trust, by way of written consent, voted (i) to approve the appointment of the Trustee as successor trustee to serve as trustee of the Trust once the resignation of Simmons took effect

and (ii) to not approve an amendment to the Indenture to permit a national bank or trust company having its principal office in the United States and having an unimpaired capital and surplus of at least $3,000,000.00 to serve as trustee of the

On September 23, 2022, upon request of the Trustee, the District Court of Dallas County, Texas, 298th Judicial District

approved an order modifying Article VI, Section 8 of the Indenture to substitute United States for State of Texas so that it permits a successor trustee of the Trust to be a national bank, state bank or trust company

having its principal office in the United States and having unimpaired capital and surplus of not less than Three Million Dollars ($3,000,000).

The full text of the Indenture, as modified by the courts order is set forth in Exhibit 4.1 and

incorporated by reference herein.

The change in Trustee is expected to be effective December 30, 2022.

The Trusts 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 were largely held

by Chevron Corporation (Chevron) and are now predominately held by 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.

On September 23, 2022, upon request of Simmons, the District Court of Dallas County,

Texas, 298th Judicial District approved an order modifying Article VI, Section 8 of the Indenture to substitute United States for State of Texas so that it permits a successor trustee of the Trust to be a national bank,

state bank or trust company having its principal office in the United States and having unimpaired capital and surplus of not less than Three Million Dollars ($3,000,000).

The full text of the Indenture, as modified by the courts order is set

forth in Exhibit 4.1 and incorporated by reference herein.

The change in trustee was effective on December 30, 2022.

Trusts 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 were largely held by Chevron Corporation (Chevron) and are now predominantly held by 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 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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information and the contact information for the Trustee is below:

Argent Trust Company

2911 Turtle Creek Blvd., Suite 850

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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.

Factors that may impact future commodity

prices, including the price of oil and natural gas, include but are not limited to:

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:

political conditions in major oil producing regions, especially in the Middle East, Russia and Ukraine;

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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, 2022 on leases in which Marine has an interest.

As of November 1, 2022, 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, 2022 on leases in which Marine has an interest.

As of February 1, 2023, 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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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, 2022.

see Marines Annual Report on Form 10-K for the fiscal year ended June 30, 2022 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, 2022.

Please see Marines Annual Report on Form 10-K for the fiscal year ended June 30, 2022 for a detailed discussion of its critical accounting policies.

New Accounting Pronouncements

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Summary of Operating Results

three months ended September 30, 2022, the Trust realized approximately 94% of its royalty income from the sale of oil and approximately 6% of its royalty income from the sale of natural gas.

During the 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.

six months ended December 31, 2022, the Trust realized approximately 94% of its royalty income from the sale of oil and approximately 6% of its royalty income from the sale of natural gas.

During the 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.

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

Distributable income per unit for the three months ended September 30, 2022 was $0.26 as compared to $0.10 for the comparable period in

Distributions per unit amounted to $0.26 per unit for the three months ended September 30, 2022, an increase from distributions of $0.06 per unit for the comparable period in 2021.

During the three months ended September 30, 2022,

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, 2022, oil production increased to 5,187

barrels (bbls) from 3,241 bbls and natural gas production increased to 4,417 thousand cubic feet (mcf) from 3,808 mcf as compared to the comparable period in 2021.

For the three months ended September 30, 2022, the average price realized

for oil increased to $107.70 per bbl as compared to the price of $64.40 realized for the comparable period in 2021 and the average price realized for natural gas (net of expenses) increased to $8.39 per mcf as compared to the average price of $5.39

realized for the comparable period in 2021.

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, 2022 was $0.45 as compared to $0.19 for the comparable period in

Distributions per unit amounted to $0.51 per unit for the six months ended December 31, 2022, an increase from distributions of $0.17 per unit for the comparable period in 2021.

During the six months ended December 31, 2022, 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, 2022, oil production increased to 9,499 barrels

(bbls) from 6,917 bbls and natural gas production increased to 7,738 thousand cubic feet (mcf) from 6,775 mcf as compared to the comparable period in 2021.

For the six months ended December 31, 2022, the average price realized for oil

increased to $100.65 per bbl as compared to the price of $66.06 realized for the comparable period in 2021 and the average price realized for natural gas (net of expenses) increased to $8.40 per mcf as compared to the average price of $5.46 realized

for the comparable period in 2021.

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

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Distributions

June 30, 2021

September 30, 2021

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September 30, 2022

December 31, 2022

(1) Excludes the Trusts interest in Tidelands prior to its being wound up.

Results of OperationsThree Months Ended September 30, 2022 Compared to the Three Months Ended September 30, 2021

Income from oil and natural gas royalties, increased to $595,719 during the three months ended September 30, 2022 from $229,240 realized

Results of OperationsThree Months Ended December 31, 2022 Compared to the Three Months Ended December 31, 2021

Income from oil and natural gas royalties, increased to $425,321 during the three months ended December 31, 2022 from $264,692 realized

for the comparable period in 2021.

Royalties increased for the three months ended September 30, 2022 as compared to the comparable period in 2021 primarily due to an increase in production of oil and gas, and also by a sharp increase in pricing

Royalties increased for the three months ended December 31, 2022 as compared to the comparable period in 2021 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 $522,369 for the three months ended September 30, 2022 from $203,213 realized for

Distributable income increased to $378,969 for the three months ended December 31, 2022 from $181,444 realized for

the comparable period in 2021.

Income from oil royalties, for the three months ended September 30, 2022 increased to $558,640 from

Income from oil royalties, for the three months ended December 31, 2022 increased to $397,391 from

$248,187 realized for the comparable period in 2021.

The volume of oil sold in the three months ended September 30, 2022 increased to 5,187 bbls from 3,241 bbls realized for the comparable period in 2021, and the average price realized for oil

increased to $107.70 per bbl for the three months ended September 30, 2022 from $64.40 per bbl realized for the comparable period in 2021.

Income from natural gas royalties (net of expenses), for the three months ended September 30, 2022 increased to $37,079 from $20,511 for

The volume of oil sold in the three months ended December 31, 2022 increased to 4,311 bbls from 3,676 bbls realized for the comparable period in 2021, and the average price realized for oil

increased to $92.18 per bbl for the three months ended December 31, 2022 from $67.52 per bbl realized for the comparable period in 2021.

Income from natural gas royalties (net of expenses), for the three months ended December 31, 2022 increased to $27,931 from $16,505 for

the comparable period in 2021.

The volume of natural gas sold in the three months ended September 30, 2022 increased to 4,417 mcf from 3,808 mcf realized for the comparable period in 2021, and the average price realized for natural gas (net of

expenses) increased to $8.39 per mcf for the three months ended September 30, 2022 from $5.39 per mcf realized for the comparable period in 2021.

The volume of natural gas sold in the three months ended December 31, 2022 increased to 3,321 mcf from 2,967 mcf realized for the comparable period in 2021, and the average price realized for natural gas (net of

expenses) increased to $8.41 per mcf for the three months ended December 31, 2022 from $5.56 per mcf realized for the comparable period in 2021.

Prior to June 30, 2022, Tidelands was wound up and allowed to terminate.

As a result, Tidelands

will no longer make distributions.

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

the three months ended September 30, 2022, and those realized for the comparable period in 2021.

Three Months Ended September 30,

Tidelands will no longer make distributions.

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

price realized for the three months ended December 31, 2022, and those realized for the comparable period in 2021.

Three Months Ended December 31,

Average price

Average price, net of expenses

General and administrative expenses increased to $78,081 for the three months ended September 30, 2022

from $26,083 for the comparable period of 2021, primarily due to an increase in professional fees incurred due to the upcoming change in Trustee and timing of payment of professional expenses.

General and administrative expenses decreased to $56,160 for the three months ended December 31, 2022

from $83,263 for the comparable period of 2021, primarily due to the timing of payment of professional fees.

Results of OperationsSix Months

Ended December 31, 2022 Compared to the Six Months Ended December 31, 2021

Income from oil and natural gas royalties

increased to $1,021,040 during the six months ended December 31, 2022 from $493,932 realized for the comparable period in 2021.

Royalties increased for the six months ended December 31, 2021 primarily due to an increase in the price and

production of oil and natural gas.

Distributable income increased to $901,338 for the six months ended December 31, 2022 from

$384,656 realized for the comparable period in 2021.

Income from oil royalties for the six months ended December 31, 2022 increased

to $956,030 from $456,916 realized for the comparable period in 2021.

The volume of oil sold in the six months ended December 31, 2022 increased to 9,499 bbls from 6,917 bbls realized for the comparable period in 2021, and the average price

realized for oil increased to $100.65 per bbl for the six months ended December 31, 2022 from $66.06 per bbl realized for the comparable period in 2021.

Income from natural gas royalties (net of expenses) for the six months ended December 31, 2022 increased to $65,010 from $37,016 for the

comparable period in 2021.

The volume of natural gas sold in the six months ended December 31, 2022 increased to 7,738 mcf from 6,775 mcf realized for the comparable period in 2021, and the average price realized for natural gas (net of

expenses) increased to $8.40 per mcf for the six months ended December 31, 2022 from $5.46 per mcf realized for the comparable period in 2021.

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

December 31, 2022, and those realized for the comparable period in 2021.

Six Months Ended December 31,

Average price

Average price, net of expenses

General and administrative expenses increased to $134,241 for the six months ended

December 31, 2022 from $109,346 for the comparable period of 2021, primarily due to an increase in professional fees incurred due to the change in Trustee and timing of payment of professional expenses.

Forward-Looking Statements

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other changes in domestic and international energy markets;

the resignation of the Trustee;

and the expiration, termination or release of leases subject to Marines

Additional risks are set forth in Marines Annual Report on Form 10-K for the fiscal year ended June 30, 2022.

Events may occur in the future that Marine is unable to accurately predict or

over which it has no control.

If one or more of these uncertainties materialize, or if underlying assumptions prove incorrect, actual outcomes may vary materially from those forward-looking statements included in this Quarterly Report on Form 10-Q.

and the expiration, termination or release of leases subject to Marines interests.

Additional risks are set

forth in Marines Annual Report on Form 10-K for the fiscal year ended June 30, 2022.

Events may occur in the future that Marine is unable to accurately predict or over which it has no control.

one or more of these uncertainties materialize, or if underlying assumptions prove incorrect, actual outcomes may vary materially from those forward-looking statements included in this Quarterly Report on Form

Except as required by applicable securities laws, Marine does not undertake any obligation to update or revise any forward-looking statements.

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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