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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
<TABLE>
<S> <C> <C>
[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
</TABLE>
FOR THE TRANSITION PERIOD FROM TO .
COMMISSION FILE NUMBER 0-8565
MARINE PETROLEUM TRUST
(Exact name of registrant as specified in its charter)
<TABLE>
<C> <C>
TEXAS 75-6008017
(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 2,000,000
</TABLE>
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<PAGE> 2
PART I. FINANCIAL INFORMATION
MARINE PETROLEUM TRUST AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND JUNE 30, 1996
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
MARCH 31 JUNE 30,
1997 1996
---------- ----------
<S> <C> <C>
Current Assets:
Cash and cash equivalents................................. $2,255,294 $2,020,695
Oil and gas royalties receivable.......................... 383,381 587,925
Receivable from affiliate................................. 81,973 102,726
---------- ----------
Total current assets.............................. 2,720,648 2,711,346
---------- ----------
Investment in affiliate..................................... 259,917 266,482
Office equipment, at cost less accumulated depreciation..... 447 971
Producing oil and gas properties............................ 7 7
---------- ----------
$2,981,019 $2,978,806
========== ==========
LIABILITIES AND TRUST EQUITY
Current Liabilities:
Accounts payable.......................................... $ 895,724 $ 895,724
Employment tax payable.................................... 2,459
Income taxes payable...................................... 8,358 10,670
---------- ----------
Total current liabilities......................... 904,082 908,853
Trust Equity:
Corpus -- authorized 2,000,000 units of beneficial
interest, issued 2,000,000 units at nominal value...... 8 8
Undistributed income...................................... 2,076,929 2,069,945
---------- ----------
Total trust equity................................ 2,076,937 2,069,953
---------- ----------
$2,981,019 $2,978,806
========== ==========
</TABLE>
2
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MARINE PETROLEUM TRUST AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
-------------------- ------------------------
1997 1996 1997 1996
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Income:
Oil and gas royalties................. $882,772 $845,030 $2,829,543 $1,924,655
Equity in earnings of affiliate....... 82,690 93,537 233,386 277,774
Interest income of subsidiary......... 24,898 22,921 73,776 69,812
-------- -------- ---------- ----------
$990,360 $961,488 $3,136,705 $2,272,241
-------- -------- ---------- ----------
Expenses:
General and administrative............ 36,520 31,081 112,259 88,587
-------- -------- ---------- ----------
Income before Federal income taxes.... 953,840 930,407 3,024,446 2,183,654
Federal income taxes of subsidiary...... (200) 5,500 5,300 5,500
-------- -------- ---------- ----------
Net Income.................... $954,040 $924,907 $3,019,146 $2,178,154
======== ======== ========== ==========
Net income per unit..................... $0.48 $0.46 $1.51 $1.09
======== ======== ========== ==========
Distributions per unit.................. $0.52 $0.31 $1.51 $0.87
======== ======== ========== ==========
</TABLE>
3
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MARINE PETROLEUM TRUST AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 3,019,146 $ 2,178,154
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation........................................... 524 525
Change in assets and liabilities:
Decrease (increase) in royalties receivable.......... 204,544 (198,555)
Receivable from affiliate............................ 20,753 8,357
Employment tax payable................................. (2,459) (3,836)
Federal income tax payable............................. (2,312) 1,052
----------- -----------
Net cash provided by operating activities......... 3,240,196 1,985,697
----------- -----------
Cash flows provided by (used in) investing activities:
Decrease (increase) in undistributed earnings of
affiliate........................................... 6,565 (56,332)
Cash flows from financing activities -- distributions to
unitholders............................................... (3,012,162) (1,742,901)
----------- -----------
Net increase (decrease) in cash and cash
equivalents.................................... 234,599 186,464
----------- -----------
Cash and cash equivalents at beginning of period............ 2,020,695 1,661,312
----------- -----------
Cash and cash equivalents at end of period.................. $ 2,255,294 $ 1,847,776
=========== ===========
</TABLE>
4
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MARINE PETROLEUM TRUST AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
ACCOUNTING POLICIES
The financial statements include the financial statements of Marine
Petroleum Trust (the "Trust") and its wholly-owned subsidiary are condensed and
should be read in conjunction with the annual report for the fiscal year ended
June 30, 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 on March 31, 1997 includes $1,410,725 applicable to
the Trust and $666,204 applicable to Marine Petroleum 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
Marine Petroleum Corporation has provided an account payable of $895,724 to
cover possible refunds that may be required upon redetermination of gas prices
for royalty payments in prior periods.
5
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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 amounted to $.48 per unit in the current quarter ended March 31,
1997. In the comparable period of 1996 net income was $.46 per unit. Net income
increased during the current quarter primarily due to an increase in production
of gas, which offset lower gas prices.
Oil sales during the current quarter averaged approximately 134 barrels per
day as compared to approximately 217 barrels per day in the comparable period a
year ago, representing a 38% decrease. Management of the Trust does not have
adequate information to determine the reason for this decrease in oil production
from the level of production in the year-ago quarter. Management cannot,
therefore, predict whether oil production will increase from, stabilize at or
fall below current production levels.
Although general market prices for oil increased in the current quarter,
the Trust's income from oil reflects a lower oil price due to an adjustment made
in the current quarter to offset overpayments made to the Trust in the quarter
ended December 31, 1996. See "Results of Operations -- Three Months Ended March
31, 1997."
Since June 30, 1996, the end of the Trust's last fiscal year, operators
have drilled 19 development wells, of which 16 were successful. Three wells were
either dry or abandoned due to drilling problems. Two wells currently are in the
drilling stage and there are 2 permits for wells to be drilled in the future.
When drilling is completed, operators in the Gulf of Mexico generally do not
identify the well as an oil or gas well but instead report only that operations
have been suspended. Management of the Trust believes that most of the 16
successful wells mentioned above will be gas wells.
The Trust's income from its equity in Tidelands Royalty Trust B (Tidelands)
declined in the quarter ended March 31, 1997. Tidelands' revenue is primarily
from gas sales, which fell during the periods reported.
Burlington Resources 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 and the Trust holds a 32.6% equity interest in Tidelands.
These new wells are not expected to affect the Trust's distributions before the
second half of the calendar year.
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
Tideland's predecessors and Gulf Oil Corporation of their efforts to obtain
leases in the area that is subject to Tidelands' interests.
6
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RESULTS OF OPERATIONS -- THREE MONTHS ENDED MARCH 31, 1997
Net income for the quarter ended March 31, 1997 amounted to $954,040, which
was approximately 3% more than the $924,907 realized in the comparable period of
1996.
Chevron overpaid the royalty due for oil sales in the quarter ended
December 31, 1996 and deducted a like amount from oil royalties paid in the
current quarter. Oil and gas prices in the tables included in the Trust's
quarterly and annual reports are calculated by dividing the actual revenue by
the corresponding volumes for the period. Without giving effect to the deduction
taken by Chevron in the current quarter, the average price received for oil in
the current quarter would have been $21.69 per barrel, which would have been an
increase of 27% over the price received in the comparable quarter in 1996. The
volume of oil sold decreased approximately 38% over the comparable period last
year. See "General."
Natural gas volumes sold increased approximately 41% in the current period
from the comparable period last year. Natural gas volumes amounted to 301,518
mcf this period and were 213,718 mcf for the comparable period last year. The
average price decreased $.21 to $2.64 per mcf from $2.85 a year ago.
The Trust's income from its equity interest in Tidelands decreased
approximately 12% in the current period over the comparable period last year.
See "General."
The quantities of oil and gas sold and the average prices (based on actual
receipts) for oil and gas (including the equity in Tidelands) for the three
month periods ended March 31, 1997 and 1996 are presented in the following
table:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
OIL
Barrels sold.............................................. 12,046 19,509
Average price............................................. $13.61(1) $17.03
NATURAL GAS
Mcf sold.................................................. 301,518 213,718
Average price............................................. $2.64 $2.85
</TABLE>
- ---------------
(1) The average price per barrel of oil for the current quarter reported in this
table reflects a reduction in revenue actually received in the current
quarter, which reduction was made to offset overpayments to the Trust during
the quarter ended December 31, 1996. If such offset had not occurred, then
the price reported in this table for the current quarter would have been
$21.69 per barrel.
RESULTS OF OPERATIONS -- NINE MONTHS ENDED MARCH 31, 1997
Net income for the nine months ended March 31, 1997 amounted to $3,019,146
which was approximately 39% more than the $2,178,154 realized in the comparable
period of 1996.
The volume of oil sold in the current nine-month period increased
approximately 1% over the comparable period in 1996, and there was an
approximately 32% increase in the average price received. The volume of natural
gas sold in the current period increased approximately 18% over the comparable
period in 1996 and the average price received for natural gas increased to $2.45
per mcf from the $2.04 received during the 1996 period.
Income from the equity interest in Tidelands decreased approximately 16% in
the current nine months as compared to the comparable period in 1996. Income
from this source in the nine months ended March 31, 1996 amounted to $277,774,
but decreased to $233,386 in the current nine months. See "General."
7
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The quantities of oil and gas sold and the average prices for oil and gas
(including the equity in Tidelands) for the nine month periods ended March 31,
1997 and 1996 are presented in the following table:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
OIL
Barrels sold.............................................. 54,732 54,244
Average price............................................. $21.84 $16.51
NATURAL GAS
Mcf sold.................................................. 758,543 640,878
Average price............................................. $2.45 $2.04
</TABLE>
PART II. OTHER INFORMATION
There were no events reportable under Part II of the Quarterly Report on
Form 10-Q.
8
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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.
MARINE PETROLEUM TRUST
NationsBank of Texas, N.A., Trustee
May 12, 1997 By: /s/ PAT COX
----------------------------------
Pat Cox, Vice President
May 12, 1997 /s/ R. RAY BELL
------------------------------------
R. Ray Bell, Principal Accounting
Officer
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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> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 2,255,294
<SECURITIES> 0
<RECEIVABLES> 383,381
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,720,648
<PP&E> 7
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,981,019
<CURRENT-LIABILITIES> 904,082
<BONDS> 0
<COMMON> 8
0
0
<OTHER-SE> 2,076,929
<TOTAL-LIABILITY-AND-EQUITY> 2,981,019
<SALES> 2,829,543
<TOTAL-REVENUES> 3,136,705
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 112,259
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,024,446
<INCOME-TAX> 5,300
<INCOME-CONTINUING> 3,019,146
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,019,146
<EPS-PRIMARY> 1.51
<EPS-DILUTED> 1.51
</TABLE>
