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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
/X/QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
OR
/ /TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-8677
TIDELANDS ROYALTY TRUST "B"
(Exact name of registrant as specified in its charter)
TEXAS 75-6007863
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
NATIONSBANK OF TEXAS, N.A. 75283-0241
P.O. BOX 830241, DALLAS, TEXAS (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (800) 985-0794
None
(Former name, former address and former fiscal year
if changed since last report)
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate number of units of beneficial interest outstanding as of the last
practicable date.
Title of Each Class of Units Number of Units of Beneficial Interest
of Beneficial Interest March 31, 1996
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UNITS OF BENEFICIAL INTEREST 1,386,375
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PART I. FINANCIAL INFORMATION
TIDELANDS ROYALTY TRUST B AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
---------- ------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents........................................ $1,734,519 $1,706,767
Oil and gas royalties receivable................................. 221,793 198,395
Federal income taxes refundable.................................. 1,851 --
---------- ----------
Total current assets..................................... $1,958,163 $1,905,162
---------- ----------
Oil, gas and other mineral properties.............................. 2 2
---------- ----------
$1,958,165 $1,905,164
========== ==========
LIABILITIES AND TRUST EQUITY
Current Liabilities:
Accounts payable................................................. $ 983,400 $ 984,941
Income distributable to unitholders.............................. 230,074 231,749
Federal income taxes payable..................................... -- 374
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Total current liabilities................................ $1,213,474 $1,217,064
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Trust Equity:
Corpus -- authorized 1,386,525 units of beneficial interest,
issued 1,386,375 units at nominal value....................... $ 2 $ 2
Undistributed income............................................. 744,689 688,098
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744,691 688,100
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Total trust equity....................................... $1,958,165 $1,905,164
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</TABLE>
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TIDELANDS ROYALTY TRUST B AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
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1996 1995
-------- --------
<S> <C> <C>
Income:
Oil and gas royalties................................................ $292,949 $261,326
Interest and other................................................... 17,785 19,363
-------- --------
$310,734 $280,689
-------- --------
Expenses:
Production and other taxes........................................... 620 620
General and administrative........................................... 19,676 21,801
-------- --------
Total expenses............................................... 20,296 22,421
-------- --------
Income before Federal income taxes................................... 290,438 258,268
Federal income taxes of subsidiary................................... 3,775 4,000
-------- --------
Net income................................................... $286,663 $254,268
======== ========
Net income per unit.................................................... $ .21 $ .18
======== ========
Distributions per unit................................................. $ .17 $ .18
======== ========
</TABLE>
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TIDELANDS ROYALTY TRUST B AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income........................................................ $ 286,663 $ 254,268
Adjustments to reconcile net income to net cash provided by
operating activities:
Changes in assets and liabilities:
Accounts receivable.......................................... (23,398) (6,277)
Federal income taxes......................................... (1,851) --
Accounts payable............................................. (1,541) (1,592)
Federal taxes payable........................................ (374) (3,271)
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Net cash provided by operating activities................. 259,499 243,128
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Cash flows from financing activities -- distributions to
unitholders....................................................... (231,747) (234,990)
Net increase (decrease) in cash and cash equivalents.............. (27,752) 8,138
Cash and cash equivalents at beginning of period.................... 1,706,767 1,758,143
---------- ----------
Cash and cash equivalents at end of period.......................... $1,734,519 $1,766,281
========== ==========
</TABLE>
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TIDELANDS ROYALTY TRUST B AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
ACCOUNTING POLICIES
The financial statements include the financial statements of Tidelands
Royalty Trust B (the "Trust") and its wholly-owned subsidiary, are condensed,
and should be read in conjunction with the annual report for the fiscal year
ended December 31, 1995. The financial statements included herein are unaudited,
but in the opinion of management include all adjustments necessary for a fair
presentation of the results of operations for the periods indicated.
UNDISTRIBUTED INCOME
Undistributed income as of March 31, 1996 consisted of $323,960 applicable
to the Trust and $420,729 applicable to Tidelands Royalty B Corporation, the
Trust's wholly-owned subsidiary. Distributions to unitholders are dependent on
the volume and price of oil and gas sold by others and will fluctuate from
quarter to quarter.
ACCOUNTS PAYABLE
Accounts payable of $556,942 have been provided to cover refunds that may
be required upon redetermination of gas prices for royalty payments in prior
periods and $421,214 has been reserved for possible overpayments received on
production payments, which amounts have been substantially supplied by Tidelands
Royalty B Corporation.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION -- LIQUIDITY AND CAPITAL RESOURCES
The Trust is a "royalty trust" with overriding royalty interests in oil and
gas leases in the Gulf of Mexico. The Trust's indenture (and the charter and
by-laws of its subsidiary) expressly prohibit the operation of any kind of trade
or business. All royalties received by the Trust, less administrative expenses,
are distributed quarterly to unitholders. Since the Trust's sole purpose is to
collect and distribute cash collected from royalties, there are no requirements
for capital.
GENERAL
Net income for the three months ended March 31, 1996 amounted to $.21 per
unit, an increase of $.03 over the $.18 realized in the comparable period a year
ago. Cash distributions to unitholders amounts to $.17 per unit in the current
period, down $.01 from the $.18 per unit distributed in the comparable period a
year ago.
The Trust realizes most of its income from the sale of natural gas, which
sales accounted for approximately 91% of income in the current quarter as
compared to approximately 95% in the comparable period last year. During the
past year the owners of the lease on West Cameron Block 230 determined that it
was no longer feasible to operate the wells and released the lease back to the
Minerals Management Service. The loss of the revenue from these wells was offset
by an increase in production from a well on High Island Block 128 following
recompletion in another producing zone by the operator in 1995.
Revenue from the sale of oil was responsible for approximately 9% of the
Trust's income in the current quarter, up from approximately 5% in the
comparable quarter last year. The Trust's share of oil produced from Sabine Pass
Block 13 amounted to 1,644 barrels in the current quarter, up from 206 barrels
produced in the comparable quarter last year.
On April 24, 1996 the Federal government opened sealed bids for leases on
open blocks in the Central Gulf of Mexico. The Trust has received a list of the
bidders and an analysis shows that neither Chevron Corporation nor Elf
Acquitane, Inc bid on any block that is located in the area that is subject to
the Trust's interests. Blocks covering approximately 137,000 acres in the area
that is subject to the Trust's interests were offered and high bids were made by
the other bidders on blocks covering approximately 67,000 acres in such area.
This effectively removes those blocks from possible leasing by Chevron or Elf
Acquitane for the next five years. The Trust has no knowledge of the intent of
Chevron or Elf Acquitane as to future interest in acquiring leases in the
Royalty Area.
No drilling operations were reported during the current three-month period
and no new drilling locations were announced.
The Trust's revenues are derived from the oil and gas production activities
of unrelated parties. The Trust's revenues and distributions fluctuate from
period to period based upon factors beyond The Trust's control, including
without limitation the number of leases bid on and obtained by parties subject
to the contract between the Trust's predecessors and Gulf Oil Corporation dated
April 30, 1951 (The "1951
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Contract"), the number of productive wells drilled and maintained on leases
subject to the Trust's interest, the level of production over time from such
wells and the prices at which the oil and gas from such wells is sold. The Trust
believes that it will continue to have revenues sufficient to permit
distributions to be made to unitholders for the foreseeable future, although no
assurance can be made regarding the amounts thereof. The foregoing sentence is a
forward-looking statement. Factors that might cause actual results to differ
from expected results include reductions in prices or demand for oil and gas,
which might then lead to decreased production; reductions in production due to
depletion of existing wells or disruptions in service, including as the result
of storm damage, blowouts or other production accidents, and geological changes
such as cratering of productive formations; expiration or release of leases
subject to the Trust's interests; and the discontinuation by parties subject to
the 1951 Contract of their efforts to obtain leases in the area that is subject
to the Trust's interests.
RESULTS OF OPERATIONS -- THREE MONTHS ENDED MARCH 31, 1996
Income from oil and gas royalties increased approximately 12% in the
current quarter as compared to the comparable quarter last year. Higher natural
gas prices and increased oil production accounted for this increase. The average
price for natural gas increased approximately 36% to $2.15 from $1.58 realized
last year.
The average price for oil decreased approximately 5% to $13.20 from $13.90
realized last year. Royalties from the sale of oil increased due to an
approximately 122% increase in the volume of oil produced and sold.
The quantities of oil and gas sold and the average prices for oil and gas
for the three months ended March 31, 1996, and those recorded for the comparable
1995 quarter, are presented in the following table:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
OIL
Barrels sold................................................... 2,085 939
Average Price.................................................. $13.20 $13.90
NATURAL GAS
mcf sold....................................................... 123,237 156,822
Average price.................................................. $2.15 $1.58
</TABLE>
PART II. OTHER INFORMATION
There were no events reportable under Part II of the Quarterly Report on
Form 10-Q.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
<TABLE>
<S> <C>
TIDELANDS ROYALTY TRUST "B"
NationsBank of Texas, N.A., Trustee
May 14, 1996
By: /s/ PATRICIA COX
Patricia Cox
Vice President
May 14, 1996 /s/ R. RAY BELL
R. Ray Bell
Principal Accounting Officer
</TABLE>
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EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
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27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,734,519
<SECURITIES> 0
<RECEIVABLES> 221,793
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,958,163
<PP&E> 2
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,958,165
<CURRENT-LIABILITIES> 1,213,474
<BONDS> 0
<COMMON> 2
0
0
<OTHER-SE> 744,689
<TOTAL-LIABILITY-AND-EQUITY> 1,958,165
<SALES> 292,949
<TOTAL-REVENUES> 310,734
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 20,296
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 290,438
<INCOME-TAX> 3,775
<INCOME-CONTINUING> 286,663
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 286,663
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
