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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
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 JUNE 30, 1997
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)
<TABLE>
<S> <C>
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)
</TABLE>
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.
<TABLE>
<CAPTION>
Title of Each Class of Units Number of Units of Beneficial Interest
of Beneficial Interest June 30, 1997
---------------------------- --------------------------------------
<C> <C>
UNITS OF BENEFICIAL INTEREST 1,386,375
</TABLE>
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PART I. FINANCIAL INFORMATION
TIDELANDS ROYALTY TRUST B AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
---------- ------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents................................. $1,716,781 $1,763,020
Oil and gas royalties receivable.......................... 282,748 175,012
Federal income taxes refundable........................... 3,978 7,226
---------- ----------
Total current assets.............................. $2,003,507 $1,945,258
---------- ----------
Oil, gas and other mineral properties....................... 2 2
---------- ----------
$2,003,509 $1,945,260
========== ==========
LIABILITIES AND TRUST EQUITY
Current Liabilities:
Accounts payable.......................................... $ 982,333 $ 983,433
Income distributable to unitholders....................... 184,816 226,916
---------- ----------
Total current liabilities......................... $1,167,149 $1,210,349
---------- ----------
Trust Equity:
Corpus -- authorized 1,386,525 units of beneficial
interest, issued 1,386,375 units at nominal value...... $ 2 $ 2
Undistributed income...................................... 836,358 734,909
---------- ----------
836,360 734,911
---------- ----------
Total trust equity................................ $2,003,509 $1,945,260
========== ==========
</TABLE>
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TIDELANDS ROYALTY TRUST B AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
-------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Income:
Oil and gas royalties......................... $291,695 $345,358 $524,008 $638,307
Interest and other............................ 19,794 17,694 38,255 35,479
-------- -------- -------- --------
$311,489 $363,052 $562,263 $673,786
-------- -------- -------- --------
Expenses:
Production and other taxes.................... 0 620 620
General and administrative.................... 18,176 30,397 37,469 50,073
-------- -------- -------- --------
Total expenses........................ 18,176 30,397 38,089 50,693
-------- -------- -------- --------
Income before Federal income taxes............ 293,313 332,655 524,174 623,093
Federal income taxes of subsidiary............ 3,900 4,825 7,600 8,600
-------- -------- -------- --------
Net income............................ $289,413 $327,830 $516,574 $614,493
======== ======== ======== ========
Net income per unit............................. $ 0.21 $ 0.24 $ 0.37 $ 0.44
Distributions per unit.......................... $ 0.13 $ 0.21 $ 0.30 $ 0.38
</TABLE>
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TIDELANDS ROYALTY TRUST B AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 516,574 $ 614,493
Adjustments to reconcile net income to net cash provided
by operating activities:
Changes in assets and liabilities:
Accounts receivable.................................. (107,736) (32,742)
Federal income taxes................................. 3,248 (6,850)
Accounts payable..................................... (1,100) (214)
---------- ----------
Net cash provided by operating activities......... 410,986 574,687
---------- ----------
Cash flows from financing activities -- distributions to
unitholders............................................... (457,225) (461,818)
Net increase (decrease) in cash and cash equivalents...... (46,239) 112,869
Cash and cash equivalents at beginning of period............ 1,763,020 1,706,767
---------- ----------
Cash and cash equivalents at end of period.................. $1,716,781 $1,819,636
========== ==========
</TABLE>
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TIDELANDS ROYALTY TRUST B AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(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, 1996. 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 June 30, 1997 consisted of $325,198 applicable
to the Trust and $511,160 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.
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 six months ended June 30, 1997 amounted to $.21 per
unit, a decrease of $.03 over the $.24 realized in the comparable period a year
ago. Cash distributions to unitholders amounted to $.13 per unit in the current
period, a decrease of $.08 from the $.21 per unit distributed in the comparable
period a year ago.
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The Trust realizes most of its income from the sale of natural gas, which
sales accounted for approximately 86% of income in the current six month period
as compared to approximately 90% in the comparable period last year. Revenue
from the sale of oil was responsible for approximately 14% of the Trust's income
in the current six month period, up from approximately 10% in the comparable
period last year. The change in the ratio of income from the sale of natural gas
to income from the sale of oil resulted primarily from lower natural gas
production in the current six month period.
Natural gas production has declined in two fields in which the Trust has an
interest. During the quarter ended June 30, 1996, the High Island Block 128
Field produced natural gas to the Trust's interest at a rate of approximately
450 mcf per day. During the quarter ended June 30, 1997, production to the
Trust's interest on the High Island Block 128 Field had declined to
approximately 150 mcf per day. During the quarter ended June 30, 1996, the West
Cameron Block 165 Field produced natural gas to the Trust's interest at a rate
of approximately 700 mcf per day. During the quarter ended June 30, 1997,
production to the Trust's interest on the West Cameron Block 165 Field had
declined to approximately 300 mcf per day.
Burlington Resources has completed three natural gas wells on Galveston
Block 303, which is subject to the Trust's interest. One of these new wells
produced 69,212 mcf of natural gas to the Trust's interest during the current
quarter, representing approximately 65% of the natural gas production
attributable to the Trust during such quarter. The Trust has not been advised on
the productivity or timing of the other two wells.
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 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 JUNE 30, 1996
Income from oil and gas royalties decreased approximately 16% in the
current quarter as compared to the comparable quarter last year. Lower natural
gas prices and decreased gas production primarily accounted for this decrease.
The average price for natural gas decreased approximately 13% to $2.30 from the
$2.64 realized last year. The average price for oil decreased approximately 14%
to $13.95 from the $16.16 realized last year.
Production of natural gas during the current quarter declined on the High
Island Block 128 Field and the West Cameron Block 165 Field. See -- General.
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The quantities of oil and gas sold and the average prices for oil and gas
for the three months ended June 30, 1997, and those recorded for the comparable
1996 period, are presented in the following table:
<TABLE>
<CAPTION>
1997 1996
------- --------
<S> <C> <C>
OIL
Barrels sold.............................................. 3,287 2,216
Average Price............................................. $13.95 $16.16
NATURAL GAS
mcf sold.................................................. 106,286 117,286
Average price............................................. $2.30 $2.64
</TABLE>
RESULTS OF OPERATIONS -- SIX MONTHS ENDED JUNE 30, 1997
Income from oil and gas royalties decreased approximately 18% in the
current six month period as compared to the comparable six month period last
year. Lower gas production accounted for most of the decrease. The average price
for natural gas increased approximately 3% to $2.45 from the $2.39 realized last
year. The average price for oil increased approximately 1% to $14.92 from the
$14.72 realized last year. Royalties from the sale of oil increased due to an
approximately 13% 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 six months ended June 30, 1997, and those recorded for the comparable
1996 period, are presented in the following table:
<TABLE>
<CAPTION>
1997 1996
------- --------
<S> <C> <C>
OIL
Barrels sold.............................................. 4,863 4,301
Average Price............................................. $14.92 $14.72
NATURAL GAS
mcf sold.................................................. 184,554 240,523
Average price............................................. $2.45 $2.39
</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.
TIDELANDS ROYALTY TRUST "B"
NationsBank of Texas, N.A., Trustee
August 11, 1996 By: /s/ PATRICIA COX
-----------------------------------
Patricia Cox
Vice President
August 11, 1996 /s/ R. RAY BELL
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R. Ray Bell
Principal Accounting Officer
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TIDELANDS ROYALTY TRUST "B"
C/O NATIONSBANK OF TEXAS, N.A.
P.O. BOX 830241
DALLAS, TEXAS 75283-0241
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- ------------------ ----------------------------------------------------------
<C> <S>
27 -- Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,716,781
<SECURITIES> 0
<RECEIVABLES> 282,748
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,003,507
<PP&E> 2
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,003,509
<CURRENT-LIABILITIES> 1,167,149
<BONDS> 0
<COMMON> 2
0
0
<OTHER-SE> 836,358
<TOTAL-LIABILITY-AND-EQUITY> 2,003,509
<SALES> 524,008
<TOTAL-REVENUES> 562,263
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 38,089
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 524,174
<INCOME-TAX> 7,600
<INCOME-CONTINUING> 516,574
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 516,574
<EPS-PRIMARY> 0.37
<EPS-DILUTED> 0.37
</TABLE>
