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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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<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 SEPTEMBER 30, 2000
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>
<S> <C>
TEXAS 75-6008017
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
BANK OF AMERICA, 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
latest practicable date.
<TABLE>
<CAPTION>
Title of Each Class of Units Number of Units of Beneficial Interest
of Beneficial Interest September 30, 2000
---------------------------- --------------------------------------
<S> <C>
UNITS OF BENEFICIAL INTEREST 2,000,000
</TABLE>
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MARINE PETROLEUM TRUST
INDEX
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<CAPTION>
PAGE
NUMBER
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED).................... 2
Condensed Consolidated Balance Sheets September 30, 2000 and
June 30, 2000............................................. 2
Condensed Consolidated Statements of Income and
Undistributed Income for the Three Months Ended September
30, 2000 and 1999......................................... 3
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended September 30, 2000 and 1999............ 4
Notes to Condensed Consolidated Financial Statements........ 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................. 6
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION................................... 8
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................... 8
Signatures.................................................. 9
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MARINE PETROLEUM TRUST AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2000 AND JUNE 30, 2000
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30 JUNE 30
2000 2000
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<S> <C> <C>
Current Assets:
Cash and cash equivalents................................. $1,918,682 $1,681,598
Oil and gas royalties receivable.......................... 763,756 486,708
Receivable from affiliate................................. 161,648 95,002
---------- ----------
Total current assets.............................. 2,844,086 2,263,308
---------- ----------
Investment in affiliate..................................... 356,139 306,401
Office equipment, net....................................... 555 555
Producing oil and gas properties............................ 7 7
---------- ----------
$3,200,787 $2,570,271
========== ==========
LIABILITIES AND TRUST EQUITY
Current Liabilities:
Accounts payable.......................................... $ 88 $ 88
Income taxes payable...................................... 12,957 10,182
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Total current liabilities......................... 13,045 10,270
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Trust Equity:
Corpus -- authorized 2,000,000 units of beneficial
interest, issued 2,000,000 units at nominal value...... 8 8
Undistributed income...................................... 3,187,734 2,559,993
---------- ----------
Total trust equity................................ 3,187,742 2,560,001
---------- ----------
$3,200,787 $2,570,271
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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MARINE PETROLEUM TRUST AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND UNDISTRIBUTED INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
-----------------------
2000 1999
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<S> <C> <C>
Income:
Oil and gas royalties..................................... $1,694,404 $1,004,437
Equity in earnings of affiliate........................... 201,434 86,481
Interest income........................................... 27,001 22,318
---------- ----------
1,922,839 1,113,236
Expenses:
General and administrative................................ 44,140 33,834
---------- ----------
Income before Federal income taxes........................ 1,878,699 1,079,402
Federal income taxes of subsidiary.......................... 5,400 2,140
---------- ----------
Net income........................................ 1,873,299 1,077,262
Undistributed income at beginning of period................. 2,559,993 2,116,678
---------- ----------
4,433,292 3,193,940
Distributions to unitholders................................ 1,245,558 872,514
---------- ----------
Undistributed income at end of period....................... $3,187,734 $2,321,426
========== ==========
Net income per unit......................................... $ .94 $ .54
========== ==========
Distributions per unit...................................... $ .62 $ .44
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
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MARINE PETROLEUM TRUST AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
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<CAPTION>
2000 1999
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Cash flows from operating activities:
Net income................................................ $ 1,873,299 $1,077,262
Adjustments to reconcile net income to net cash provided
by operating activities:
Equity in undistributed earnings of affiliate.......... (49,738) 23,434
Change in assets and liabilities:
Oil and gas royalties receivable..................... (277,048) (119,222)
Receivables from affiliate........................... (66,646) (38,472)
Accounts payable..................................... -- (121,327)
Income taxes payable................................. 2,775 540
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Net cash provided by operating activities......... 1,482,642 822,215
Cash flows from financing activities -- distributions to
unitholders............................................... (1,245,558) (872,514)
----------- ----------
Net increase (decrease) in cash and cash
equivalents..................................... 237,084 (50,299)
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Cash and cash equivalents at beginning of period............ 1,681,598 1,659,864
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Cash and cash equivalents at end of period.................. $ 1,918,682 $1,609,565
=========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
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MARINE PETROLEUM TRUST AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
ACCOUNTING POLICIES
The financial statements include the financial statements of Marine
Petroleum Trust (the "Trust") and its wholly-owned subsidiary, Marine Petroleum
Corporation, are condensed, and should be read in conjunction with the Trust's
annual report on Form 10-K for the fiscal year ended June 30, 2000. 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. Operating results for the three
months ended September 30, 2000 are not necessarily indicative of the results
that may be expected for the year ending June 30, 2001.
UNDISTRIBUTED INCOME
Undistributed income on September 30, 2000 includes $2,308,223 applicable
to the Trust and $879,511 applicable to Marine Petroleum Corporation.
Distributions to unitholders are dependent on the volume and price of oil and
gas sold by others and will fluctuate from quarter to quarter.
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ITEM 2. 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
Increased oil and gas prices plus an increase in oil production resulted in
a 74% increase in net income for the current quarter as compared to the
comparable quarter a year ago.
Distributions to unitholders amounted to $.62 per unit this quarter, an
increase of 41% over the distribution for the comparable quarter a year ago.
The Trust must rely on public records for information regarding drilling
operations. The public records indicate that an estimated 16 drilling and
workover operations have been conducted during the quarter ended September 30,
2000 on leases in which the Trust has an interest. These records indicate that
over 87% of the operations resulted in new oil and gas production.
The following table presents the net production quantities of oil and gas,
excluding the Trust's equity interest in Tidelands, and net income and
distributions per unit for the last five quarters.
<TABLE>
<CAPTION>
PRODUCTION
---------------------- NET CASH
QUARTER OIL(BBLS) GAS(MCF) INCOME DISTRIBUTION
------- ---------- --------- ------ ------------
<S> <C> <C> <C> <C>
September 30, 1999...................................... 23,388 213,537 .54 .44
December 31, 1999....................................... 24,244 180,380 .55 .51
March 31, 2000.......................................... 29,549 283,065 .77 .55
June 30, 2000........................................... 15,656 130,855 .51 .65
September 30, 2000...................................... 26,466 211,835 .94 .62
</TABLE>
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 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
6
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April 30, 1951 between the predecessors of Tidelands Royalty Trust "B"
("Tidelands") and Gulf Oil Corporation of their efforts to obtain leases in the
area that is subject to Tidelands' interests.
Important aspects of the Trust's operations are conducted by third parties.
These include the production and sale of oil and gas and the calculation of
royalty payments to the Trust, which are conducted by oil and gas companies that
lease tracts subject to Marine's interests. Similarly, the Trust's distributions
are processed and paid by The Bank of New York as the agent for the trustee of
the Trust.
RESULTS OF OPERATIONS -- THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
Net income for the quarter ended September 30, 2000 amounted to $1,873,299
which was approximately 74% more than the $1,077,262 (including the $124,000
release of the accounts payable reserve) realized in the comparable period of
1999.
Revenue from oil royalties, excluding the Trust's equity interest in
Tidelands and the reduction of the amounts reserved for royalty over-payments,
increased 85% to approximately $778,000 in the current quarter from
approximately $420,000 realized in the comparable period a year ago. As shown in
the table below, the increase in oil royalties over the comparable period a year
ago was due to both increased sales quantities and higher prices.
Revenue from gas royalties, excluding the Trust's equity interest in
Tidelands and the reduction of the amounts reserved for royalty over-payments,
increased 99% to approximately $917,000 in the current quarter from
approximately $461,000 in the comparable period a year ago. As shown in the
table below, there was an increase in gas production and an increase in the
current quarter prices.
Income from the Trust's equity in Tidelands increased approximately 133% in
the current period over the comparable period last year due to an increase in
Tidelands' revenue from oil and natural gas.
The quantities of oil and gas sold and the average prices realized from
current operations for the three months ended September 30, 2000, and those
realized in the comparable 1999 quarter, excluding the Trust's equity interest
in Tidelands and the reduction of the amounts reserved for royalty
over-payments, are presented in the following table:
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<CAPTION>
2000 1999(1)
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<S> <C> <C>
OIL
Barrels sold.............................................. 26,466 22,477
Average price............................................. $ 29.39 $ 18.69
GAS
Mcf sold.................................................. 211,835 196,802
Average price............................................. $ 4.33 $ 2.34
</TABLE>
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(1) Prior year numbers have been revised to conform to the current year's
presentation.
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PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On November 7, 2000, the Trust commenced a solicitation of all unitholders
of record at the close of business on October 24, 2000, requesting the consent
of the holders of a majority of outstanding units to the extension of the
expiration date of the Trust from June 1, 2001 to June 1, 2021. The consent
solicitation expires at 5:00 p.m., New York time on December 8, 2000. If holders
of a majority of the outstanding units do not consent to the extension of the
Trust and no other action is taken by the unitholders, then the Trust will
terminate on June 1, 2001 and the Trust would cease to be listed on the Nasdaq
Small Cap Market.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
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<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
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<C> <S>
27 -- Financial Data Schedule
</TABLE>
(b) Current Reports on Form 8-K:
None
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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
Bank of America, N.A., Trustee
November 13, 2000 By: /s/ CINDY STOVER MILLER
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Cindy Stover Miller
Vice President
November 13, 2000 /s/ R. RAY BELL
------------------------------------
Principal Accounting Officer
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INDEX TO EXHIBITS
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<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
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<C> <S>
27 -- Financial Data Schedule
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