Overview of Marine Petroleum Trust’s Financial Performance

Financial Highlights

• Distributable income increased to $233,552 for the three months ended September 30, 2024, up from $228,057 in the same period in 2023.
• Distributions per unit decreased to $0.09 per unit for the three months ended September 30, 2024, down from $0.12 per unit in the same period in 2023.
• Oil production decreased to 3,265 barrels (bbls) in Q3 2024 from 3,964 bbls in Q3 2023.
• Natural gas volumes sold increased to 5,095 thousand cubic feet (mcf) in Q3 2024 from 3,148 mcf in Q3 2023.
• Natural gas liquids sold increased to 8,437 mcf in Q3 2024 from 5,512 mcf in Q3 2023.

Revenue and Profit Trends

The Trust’s royalty income is heavily influenced by commodity prices and production volumes. Key trends include:

• Oil royalty income decreased to $264,786 in Q3 2024 from $286,168 in Q3 2023, due to lower oil production despite higher prices.
• Natural gas royalty income (net of expenses) increased to $15,362 in Q3 2024 from $3,964 in Q3 2023, due to higher production and prices.
• Natural gas liquids royalty income (net of expenses) increased to $6,350 in Q3 2024 from $1,375 in Q3 2023, due to higher production and prices.

Overall, the Trust’s total royalty income decreased slightly to $286,498 in Q3 2024 from $291,021 in Q3 2023, as the increases in natural gas and natural gas liquids were not enough to offset the decline in oil royalties.

Strengths and Weaknesses

Strengths:

• The Trust has a diversified portfolio of oil and gas royalty interests, providing exposure to multiple commodities.
• Royalty income is generated with minimal operating expenses, allowing for efficient distribution of cash flows to unitholders.
• The Trust’s modified cash basis accounting provides transparency and simplicity.

Weaknesses:

• The Trust’s royalty interests are depleting assets, and no new leases are being added to replace them.
• Royalty income is entirely dependent on third-party production and pricing, which can be volatile and unpredictable.
• The Trust has limited ability to influence or control the operations of the working interest owners.

Outlook

The outlook for the Trust depends heavily on future commodity prices and production levels. While the recent increases in natural gas and natural gas liquids prices and volumes are encouraging, the overall trend of declining oil production remains a concern.

Without the ability to acquire new leases, the Trust’s royalty base will continue to deplete over time. This could put pressure on distributable income and distributions to unitholders in the future.

The Trust’s management will need to closely monitor market conditions and work with the working interest owners to optimize production from the existing leases. Prudent cost management and cash flow preservation will also be critical to maintaining distributions to unitholders.