<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
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 DECEMBER 31, 1999
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)
---------------------
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 December 31, 1999
---------------------------- --------------------------------------
<S> <C>
UNITS OF BENEFICIAL INTEREST 2,000,000
</TABLE>
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- --------------------------------------------------------------------------------
<PAGE> 2
MARINE PETROLEUM TRUST
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED).................... 2
Condensed Consolidated Balance Sheets December 31, 1999 and
June 30, 1999............................................. 2
Condensed Consolidated Statements of Income and
Undistributed Income for the Three Months and Six Months
Ended December 31, 1999 and 1998.......................... 3
Condensed Consolidated Statements of Cash Flows for the Six
Months Ended December 31, 1999 and 1998................... 4
Notes to Condensed Consolidated Financial Statements........ 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................. 6
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK............................................... 8
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................... 9
Signatures.................................................. 10
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MARINE PETROLEUM TRUST AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND JUNE 30, 1999
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30
1999 1999
----------- ----------
<S> <C> <C>
Current Assets:
Cash and cash equivalents................................. $1,609,836 $1,659,864
Oil and gas royalties receivable.......................... 437,398 307,657
Receivable from affiliate................................. 87,729 80,939
---------- ----------
Total current assets.............................. 2,134,963 2,048,460
---------- ----------
Investment in affiliate..................................... 305,253 322,070
Office equipment, net....................................... 555 555
Producing oil and gas properties............................ 7 7
---------- ----------
$2,440,778 $2,371,092
========== ==========
LIABILITIES AND TRUST EQUITY
Current Liabilities:
Accounts payable.......................................... $ 47,583 $ 244,250
Income taxes payable...................................... 9,096 10,156
---------- ----------
Total current liabilities......................... 56,679 254,406
---------- ----------
Trust Equity:
Corpus -- authorized 2,000,000 units of beneficial
interest, issued 2,000,000 units at nominal value...... 8 8
Undistributed income...................................... 2,384,091 2,116,678
---------- ----------
Total trust equity................................ 2,384,099 2,116,686
---------- ----------
$2,440,778 $2,371,092
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE> 4
MARINE PETROLEUM TRUST AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND UNDISTRIBUTED INCOME
FOR THE THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
----------------------- -----------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Income:
Oil and gas royalties......................... $1,044,398 $ 843,063 $2,048,835 $1,512,297
Equity in earnings of affiliate............... 84,756 101,465 171,237 149,907
Interest income............................... 23,001 24,978 45,319 51,464
---------- ---------- ---------- ----------
1,152,155 969,506 2,265,391 1,713,668
Expenses -- General and administrative.......... 55,942 43,584 89,776 101,966
---------- ---------- ---------- ----------
Income before Federal income taxes.... 1,096,213 925,922 2,175,615 1,611,702
Federal income taxes of subsidiary.............. -- 1,100 2,140 1,100
---------- ---------- ---------- ----------
Net income............................ 1,096,213 924,822 2,173,475 1,610,602
Undistributed income at beginning of period..... 2,321,426 1,843,701 2,116,678 1,809,260
---------- ---------- ---------- ----------
3,417,639 2,768,523 4,290,153 3,419,862
Distributions to unitholders.................... 1,033,548 811,803 1,906,062 1,463,142
---------- ---------- ---------- ----------
Undistributed income at end of period........... $2,384,091 $1,956,720 $2,384,091 $1,956,720
========== ========== ========== ==========
Net income per unit............................. $ 0.55 $ 0.46 $ 1.09 $ 0.81
========== ========== ========== ==========
Distributions per unit.......................... $ 0.51 $ 0.41 $ 0.95 $ 0.73
========== ========== ========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 5
MARINE PETROLEUM TRUST AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 2,173,475 $ 1,610,602
Adjustments to reconcile net income to net cash provided
by operating activities:
Equity in undistributed earnings of affiliate.......... 16,817 15,282
Change in assets and liabilities:
Oil and gas royalties receivable..................... (129,741) 29,949
Receivable from affiliate............................ (6,790) 73,830
Accounts payable..................................... (196,667) (371,832)
Income taxes payable................................. (1,060) (3,300)
----------- -----------
Net cash provided by operating activities......... 1,856,034 1,354,531
----------- -----------
Cash flows from financing activities -- distributions to
unitholders............................................... (1,906,062) (1,463,142)
----------- -----------
Net decrease in cash and cash equivalents......... (50,028) (108,611)
----------- -----------
Cash and cash equivalents at beginning of period............ 1,659,864 1,922,336
----------- -----------
Cash and cash equivalents at end of period.................. $ 1,609,836 $ 1,813,725
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 6
MARINE PETROLEUM TRUST AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(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, 1999. 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
and six months ended December 31, 1999 are not necessarily indicative of the
results that may be expected for the year ending June 30, 2000.
UNDISTRIBUTED INCOME
Undistributed income on December 31, 1999 includes $1,564,478 applicable to
the Trust and $819,613 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.
ACCOUNTS PAYABLE
Marine Petroleum Corporation has provided an account payable of $47,000 at
December 31, 1999 to cover possible refunds that may be required upon
redetermination of gas prices for royalty payments in prior periods. During the
quarter ended December 31, 1999, Marine Petroleum Corporation determined that
$73,250 of the previously established account payable was no longer required.
Accordingly accounts payable was reduced and oil and gas royalties was increased
by $73,250.
5
<PAGE> 7
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 20% increase in net income for the current quarter as compared to the
comparable quarter a year ago.
Distributions to unitholders amounted to $.51 per unit this quarter, an
increase of 24% over the distribution for the comparable quarter a year ago.
The owners of the leases continue to drill new wells and work over old
wells. During the six months ended December 31, 1999, 24 operations were
conducted resulting in 8 new oil and 16 new gas wells capable of producing.
During the same period there were 6 operations that were unsuccessful.
The following table presents the net production quantities of oil and gas
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>
December 31, 1998....................................... 16,382 346,495 $.46 $.41
March 31, 1999.......................................... 17,496 279,145 .37 .31
June 30, 1999........................................... 15,017 147,655 .36 .35
September 30, 1999...................................... 23,388 213,537 .54 .44
December 31, 1999....................................... 24,244 180,380 .55 .51
</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 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.
6
<PAGE> 8
Important aspects of the Trust's operations are conducted by third parties.
As of the date of this report, the Trust has not experienced any significant
disruptions to financial or operating activities as a result of the Year 2000
issues. There were no internal system disruptions and the Trust is not aware of
any failures affecting third parties that conduct the Trust's operations. The
Trust will continue to monitor the situation for any internal or third party
disruptions, but expects none at this time. Costs incurred by the Trust related
to Year 2000 issues were not material.
RESULTS OF OPERATIONS -- THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
Net income for the quarter ended December 31, 1999 amounted to $1,096,213
(including the $73,250 release of the accounts payable reserve) which was
approximately 19% more than the $924,822 (including the $74,000 release of the
accounts payable reserve) realized in the comparable period of 1998.
Revenue from oil royalties, including the Trust's share of Tidelands'
royalties, increased 180% to $568,053 in the current quarter from $202,606
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, including the Trust's share of Tidelands'
royalties, decreased 24% to $562,968 in the current quarter from $744,171 in the
comparable period a year ago. The gas revenue figures include the additional
revenue from the reduction of the accounts payable reserve as discussed above.
As shown in the table below, gas production decreased over the comparable period
a year ago, while there was an increase in natural gas prices.
Income from the Trust's equity in Tidelands decreased approximately 16% in
the current period over the comparable period last year due to a decrease in
Tidelands' revenue from natural gas.
The quantities of oil and gas sold and the average prices realized from
current operations for the three months ended December 31, 1999, and those
realized in the comparable 1998 quarter, are presented in the following table:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
OIL
Barrels sold.............................................. 24,244 16,382
Average price............................................. $ 23.43 $ 12.37
GAS
Mcf sold.................................................. 180,380 346,495
Average price............................................. $ 3.12 $ 2.15
</TABLE>
7
<PAGE> 9
RESULTS OF OPERATIONS -- SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
Net income for the six months ended December 31, 1999 amounted to
$2,173,475 (including the $197,250 release of the accounts payable reserve)
which was approximately 35% more than the $1,610,602 (including the $204,000
release of the accounts payable reserve) realized in the comparable period of
1998.
Revenue from oil royalties, including the Trust's share of Tidelands'
royalties, increased 163% to $1,004,247 in the current six months from $381,807
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, including the Trust's share of Tidelands'
royalties, decreased 6% to $1,219,983 in the current six months from $1,296,606
in the comparable period a year ago. The gas revenue figures include the
additional revenue from the reduction of the accounts payable reserve as
discussed above. As shown in the table below, gas production decreased over the
comparable period a year ago, while there was an increase in natural gas prices.
Income from the Trust's equity in Tidelands increased approximately 14% in
the current period over the comparable period last year due to an increase in
Tidelands' revenue from oil.
The quantities of oil and gas sold and the average prices realized from
current operations for the six months ended December 31, 1999, and those
realized in the comparable 1998 period, are presented in the following table:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
OIL
Barrels sold.............................................. 47,631 29,226
Average price............................................. $ 21.08 $ 13.06
GAS
Mcf sold.................................................. 393,917 570,415
Average price............................................. $ 3.10 $ 2.27
</TABLE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
8
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
27.1 -- Financial Data Schedule
</TABLE>
(b) Current Reports on Form 8-K:
None
9
<PAGE> 11
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
February 10, 2000 By: /s/ CINDY STOVER MILLER
----------------------------------
Cindy Stover Miller
Vice President
February 10, 2000 /s/ R. RAY BELL
------------------------------------
Principal Accounting Officer
10
<PAGE> 12
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
27.1 -- Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,609,836
<SECURITIES> 0
<RECEIVABLES> 437,398
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,134,963
<PP&E> 562
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,440,778
<CURRENT-LIABILITIES> 56,679
<BONDS> 0
0
0
<COMMON> 8
<OTHER-SE> 2,384,091
<TOTAL-LIABILITY-AND-EQUITY> 2,440,778
<SALES> 2,048,835
<TOTAL-REVENUES> 2,265,391
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 89,776
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,175,615
<INCOME-TAX> 2,140
<INCOME-CONTINUING> 2,173,475
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,173,475
<EPS-BASIC> 1.09
<EPS-DILUTED> 1.09
</TABLE>
