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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, 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 March 31, 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
MARCH 31, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
---------- ------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents................................. $1,825,172 $1,763,020
Oil and gas royalties receivable.......................... 118,255 175,012
Federal income taxes receivable........................... 3,526 7,226
---------- ----------
Total current assets.............................. $1,946,953 $1,945,258
---------- ----------
Oil, gas and other mineral properties....................... 2 2
---------- ----------
$1,946,955 $1,945,260
========== ==========
LIABILITIES AND TRUST EQUITY
Current Liabilities:
Accounts payable.......................................... $ 984,881 $ 983,433
Income distributable to unitholders....................... 230,314 226,916
---------- ----------
Total current liabilities......................... $1,215,195 $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...................................... 731,758 734,909
---------- ----------
731,760 734,911
---------- ----------
Total trust equity................................ $1,946,955 $1,945,260
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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, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
--------------------
1997 1996
-------- --------
<S> <C> <C>
Income:
Oil and gas royalties..................................... $232,313 $292,949
Interest and other........................................ 18,461 17,785
-------- --------
$250,774 310,734
-------- --------
Expenses:
Production and other taxes................................ 620 620
General and administrative................................ 19,293 19,676
-------- --------
Total expenses.................................... 19,913 20,296
-------- --------
Income before Federal income taxes........................ 230,861 290,438
Federal income taxes of subsidiary........................ 3,700 3,775
-------- --------
Net income........................................ $227,161 $286,663
======== ========
Net income per unit......................................... $ 0.16 $ 0.21
======== ========
Distributions per unit...................................... $ 0.17 $ 0.17
======== ========
</TABLE>
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TIDELANDS ROYALTY TRUST B AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 227,161 $ 286,663
Adjustments to reconcile net income to net cash provided
by operating activities:
Changes in assets and liabilities:
Accounts receivable.................................. 56,757 (23,398)
Federal income taxes................................. 3,700 (2,225)
Accounts payable..................................... 1,448 (1,541)
---------- ----------
Net cash provided by operating activities......... 289,066 259,499
---------- ----------
Cash flows from financing activities -- distributions to
unitholders............................................... (226,914) (231,747)
Net increase (decrease) in cash and cash equivalents...... 62,152 27,752
Cash and cash equivalents at beginning of period............ 1,763,020 1,706,767
---------- ----------
Cash and cash equivalents at end of period.................. $1,825,172 $1,734,519
========== ==========
</TABLE>
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TIDELANDS ROYALTY TRUST B AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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 March 31, 1997 consisted of $237,514 applicable
to the Trust and $494,244 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 amounted to $.16 per unit in the current quarter ended March 31,
1997, which is approximately the income level experienced for the past three
quarters. Net income for the quarter ended March 31, 1996 was $.21 per unit.
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Prices received for oil and gas were significantly higher in the current
quarter as compared to those of a year ago but were not high enough to offset
the decline in the volumes of oil and gas sold.
Approximately 88% of the Trust's income in the current quarter resulted
from the sale of natural gas. This percentage decreased slightly from 90% a year
ago. Approximately 12% of the Trust's income in the current quarter resulted
from the sale of oil. This percentage increased slightly from 10% a year ago.
The Trust's results for the current quarter reflect a $3.73 per barrel increase
in the price of oil and a $.50 per mcf increase in the price of gas.
Burlington Resources has drilled two successful gas wells on Galveston
Block 303 and has started a third well. Tidelands holds a 4.17% overriding
royalty interest in the block. These new wells are not expected to affect
Tidelands' distributions before the second half of the year.
The United States, through its Minerals Management Service, conducted a
lease sale in the Central Gulf of Mexico Area on March 5, 1997. The unleased
portion of the Trust's "Contract Area" covers approximately 71,200 acres that
were available for lease at the sale. Neither Chevron nor Elf bid on any of the
tracts in the Trust's "Contract Area," but nine of such tracts covering 24,850
acres were bid on by other bidders. Leases granted to such other bidders are not
subject to the Trust's interests.
The Trust's revenues are derived from the oil and gas production 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 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 to production facilities, 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 contract dated April 30, 1951 between
the Trust's predecessors and Gulf Oil Corporation 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, 1997
Income from oil and gas royalties decreased approximately 21% in the
current quarter from that realized in the comparable quarter in 1996. Higher oil
and gas prices did not offset the decline in production and sale of both oil and
gas.
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The quantities of oil and gas sold and the average prices for oil and gas
for the three month periods ended March 31, 1997 and 1996 are presented in the
following table:
<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
OIL
Barrels sold.............................................. 1,576 2,085
Average price............................................. $16.93 $13.20
NATURAL GAS
Mcf sold.................................................. 77,609 123,237
Average price............................................. $2.65 $2.15
</TABLE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The Trust filed a Current Report on Form 8-K dated February 24, 1997, to
report that the Trust's units of beneficial interest would cease to be traded on
the Nasdaq Small Cap Market on February 27, 1997 and that thereafter trading in
such units would occur through the Over the Counter Bulletin Board.
There were no other 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 12, 1997 By: /s/ PATRICIA COX
-------------------------------------------------
Patricia Cox
Vice President
May 12, 1997 /s/ R. RAY BELL
-----------------------------------------------------
R. Ray Bell
Principal Accounting Officer
</TABLE>
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,825,172
<SECURITIES> 0
<RECEIVABLES> 118,255
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,946,953
<PP&E> 2
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,946,955
<CURRENT-LIABILITIES> 1,215,195
<BONDS> 0
<COMMON> 2
0
0
<OTHER-SE> 731,758
<TOTAL-LIABILITY-AND-EQUITY> 1,946,955
<SALES> 232,313
<TOTAL-REVENUES> 250,774
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 19,913
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 230,861
<INCOME-TAX> 3,700
<INCOME-CONTINUING> 227,161
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 227,161
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
