PART I
Organization. Marine Petroleum Trust (the Trust) is a royalty trust that was created in 1956 under the laws of the State of
Texas. Effective February 20, 2018, Simmons Bank (Simmons) became corporate trustee of the Trust as a result of a merger between Simmons and Southwest Bank, the former corporate trustee of the Trust. On November 4, 2021,
Simmons announced that it had entered into an agreement with Argent Trust Company, a Tennessee chartered trust company (the Trustee), pursuant to which Simmons would resign as trustee of the Trust and nominate Argent Trust Company as
successor trustee of the Trust. The change in trustee from Simmons to Argent Trust Company was effective on December 30, 2022.
The
Trust is not permitted to engage in any business activity because it was organized for the sole purpose of providing an efficient, orderly and practical means for the administration and liquidation of rights to payments from certain oil and natural
gas leases in the Gulf of Mexico, pursuant to license agreements and amendments between the Trusts predecessors and Gulf Oil Corporation (Gulf). As a result of various transactions that have occurred since 1956, these interests
were largely held by Chevron Corporation (Chevron) and are now predominately held by its assignees, including Arena Energy, LP (Arena, and collectively with Chevron and its assignees, the Interest Owners). The
Trust holds title to interests in properties that are situated offshore of Texas.
The Indenture provides that the corporate trustee is to
distribute all cash in the Trust, less an amount reserved for the payment of accrued liabilities and estimated future expenses, to unitholders of record on the last business day of February, May, August and November. Payments are to be made on the
28th day of September, December, March and June of each fiscal year. If the 28th falls on a Saturday, Sunday or legal holiday, the distribution
is payable on the next succeeding business day.
The Indenture prohibits the operation of any kind of trade or business by the Trust and
also provides that the term of the Trust will expire on June 1, 2041, unless extended by the vote of the holders of a majority of the outstanding units of beneficial interest.
Effective October 19, 2017, Simmons First National Corporation (SFNC) completed its acquisition of First Texas BHC, Inc., the
parent company of Southwest Bank. SFNC is the parent of Simmons. SFNC merged Southwest Bank, the former corporate trustee of the Trust, with Simmons effective February 20, 2018. Effective December 30, 2022, Argent Trust Company succeeded
Simmons as the corporate trustee of the Trust following Simmons resignation as trustee. The defined term Trustee as used herein shall refer to Simmons for periods on and after February 20, 2018 through December 29, 2022, and to
Argent Trust Company for periods on and after December 30, 2022.
The Trusts wholly owned subsidiary, Marine Petroleum
Corporation (MPC, and collectively with the Trust, Marine), holds title to interests in properties that are situated offshore of Louisiana, because at the time the Trust was created, trusts could not hold these interests
under Louisiana law. Ninety-eight percent of all oil, natural gas, and other mineral royalties collected by MPC, less the receiving and collection costs, are retained by and delivered to the Trust. MPC retains the remaining two percent of the
overriding royalties along with other items of income and expense until the board of directors declares a dividend out of the corpus. MPC, like the Trust, is prohibited from engaging in a trade or business and only takes those actions that are
necessary for the administration and liquidation of its properties. Marines only industry segment or purpose is the administration and collection of royalties.
Royalties. Marines rights are generally referred to as overriding royalty interests in the oil and natural gas industry, and are
sometimes referred to as overriding royalty interests in this Annual Report on Form 10-K. An overriding royalty interest is created by an assignment by the owner of a working interest in an oil or natural gas
lease. All production and marketing functions are conducted by the working interest owners of the leases. Income from overriding royalties is paid to Marine either (i) on the basis of the selling price of oil, natural gas and other minerals
produced, saved or sold, or (ii) at the value at the wellhead as determined by industry standards, when the selling price does not reflect the value at the wellhead.
Marine holds an overriding royalty interest equal to three-fourths of 1% of the value at the well of any oil, natural gas, or other minerals
produced and sold from the leases described in the Properties section below. Marines overriding royalty interest applies only to existing leases and does not apply to new leases that the Interest Owners may acquire.
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