Overview of Marine Petroleum Trust’s Financial Performance

Marine Petroleum Trust is a royalty trust that was created in 1956 to administer oil and natural gas royalty interests in the Gulf of Mexico. The trust’s financial statements are prepared using the modified cash basis method of accounting, which differs from generally accepted accounting principles (GAAP) in several key ways:

• Royalty income is recognized when received rather than when produced
• Expenses are recorded when paid rather than when incurred
• No allowance for depletion is included since the trust’s assets were assigned nominal values when it was established

Revenue and Profit Trends

• For the nine months ended March 31, 2025, the trust’s royalty income increased to $778,554 from $774,721 in the prior year period. This was primarily due to higher prices and volumes for natural gas and natural gas liquids.
• Distributable income, which is the cash available for distribution to unitholders, increased to $557,108 for the nine months ended March 31, 2025, up from $542,819 in the prior year period.
• Oil production declined slightly to 9,718 barrels in the nine-month period, while natural gas volumes increased to 14,677 thousand cubic feet and natural gas liquids volumes rose to 26,686 thousand cubic feet.
• The average price realized for oil decreased to $75.67 per barrel, but natural gas prices (net of expenses) increased to $2.10 per thousand cubic feet and natural gas liquids prices (net of expenses) rose to $0.46 per thousand cubic feet.

Strengths and Weaknesses

Strengths:

• Stable royalty income stream from established oil and gas properties
• No requirement for capital expenditures or operational activities
• Tax-efficient structure as a grantor trust

Weaknesses:

• Declining production from mature, depleting oil and gas properties
• Exposure to volatile commodity prices that impact royalty income
• Limited ability to acquire new properties or diversify assets due to trust structure

Outlook

The trust’s future performance will largely depend on commodity price fluctuations and the production levels of the underlying oil and gas properties. While the trust has no control over these factors, the current high energy price environment is supportive of royalty income in the near-term. However, the long-term decline in production from the maturing properties remains a concern. The trust is nearing the end of its planned lifespan, with the indenture set to expire in 2041 unless extended by unitholders. Overall, the trust provides a relatively passive investment vehicle for accessing Gulf of Mexico oil and gas royalties, but faces inherent challenges due to its limited purpose and depleting asset base.