MARINE PETROLEUM TRUST - Quarter Report: 2009 September (Form 10-Q)

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-08565

Marine Petroleum Trust

(Exact name of registrant as specified in its charter)

Texas		75-6008017
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
c/o The Corporate Trustee:
U.S. Trust, Bank of America Private Wealth Management
P. O. Box 830650, Dallas, Texas		75283-0650
(Address of principal executive offices)		(Zip Code)

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 þ No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

     Indicate number of units of beneficial interest outstanding as of the latest practicable date: As of November 5, 2009, Marine Petroleum Trust had 2,000,000 units of beneficial interest outstanding.

 

 

MARINE PETROLEUM TRUST

INDEX

		Page
		Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)			1
Consolidated Statements of Assets, Liabilities and Trust Corpus as of September 30, 2009 and June 30, 2009			1
Condensed Consolidated Statements of Distributable Income for the Three Months Ended September 30, 2009 and 2008			2
Consolidated Statements of Changes in Trust Corpus for the Three Months Ended September 30, 2009 and 2008			3
Notes to Condensed Consolidated Financial Statements			4
Item 2. Trustee’s Discussion and Analysis of Financial Condition and Results of Operations			6
Item 3. Quantitative and Qualitative Disclosures About Market Risk			10
Item 4T. Controls and Procedures			10
PART II. OTHER INFORMATION
Item 1A. Risk Factors			11
Item 6. Exhibits			11
EX-31.1
EX-32.1

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MARINE PETROLEUM TRUST AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS
As of September 30, 2009 and June 30, 2009

		September 30,				June 30,
		2009				2009
		(Unaudited)				(Audited)
ASSETS
Current assets:
Cash and cash equivalents		$	1,176,029			$	1,038,850
Federal income taxes refundable			14,425				14,425
Producing oil and gas properties			7				7
Total assets		$	1,190,461			$	1,053,282
LIABILITIES AND TRUST CORPUS
Current liabilities:
Federal income taxes payable		$	—			$	—
Total current liabilities		$	—			$	—
Trust corpus — authorized 2,000,000 units of beneficial interest, issued 2,000,000 units at nominal value		$	1,190,461			$	1,053,282
		$	1,190,461			$	1,053,282

See accompanying notes to condensed consolidated financial statements.

MARINE PETROLEUM TRUST AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF DISTRIBUTABLE INCOME
For the Three Months Ended September 30, 2009 and 2008
(Unaudited)

		Three Months Ended
		September 30,
		2009				2008
Income:
Oil and gas royalties		$	448,556			$	1,480,498
Oil and gas royalties from affiliate			248,858				284,937
Interest income			11				7,939
Total income		$	697,425			$	1,773,374
Expenses:
General and administrative		$	68,241			$	119,455
Distributable income before Federal income taxes			629,184				1,653,919
Federal income taxes of subsidiary			—				3,600
Distributable income		$	629,184			$	1,650,319
Distributable income per unit		$	0.31			$	0.83
Distributions per unit		$	0.25			$	0.77
Units outstanding			2,000,000				2,000,000

See accompanying notes to condensed consolidated financial statements.

MARINE PETROLEUM TRUST AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN TRUST CORPUS
For the Three Months Ended September 30, 2009 and 2008
(Unaudited)

		Three Months Ended
		September 30,
		2009				2008
Trust corpus, beginning of period		$	1,053,282			$	1,670,467
Distributable income			629,184				1,650,319
Distributions to unitholders			492,005				1,539,573
Trust corpus, end of period		$	1,190,461			$	1,781,213

See accompanying notes to condensed consolidated financial statements.

MARINE PETROLEUM TRUST AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2009
(Unaudited)

Note 1. Accounting Policies

     The financial statements include the financial statements of Marine Petroleum Trust (the “Trust”) and its wholly-owned subsidiary, Marine Petroleum Corporation (“MPC,” and collectively with the Trust, “Marine”). The financial statements are condensed and consolidated and should be read in conjunction with Marine’s Annual Report on Form 10-K for the fiscal year ended June 30, 2009. The financial statements included herein are unaudited, but in the opinion of the trustee of the Trust, they include all adjustments necessary for a fair presentation of the results of operations for the periods indicated. Operating results for the interim periods reported herein are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2010.

Note 2. Basis of Accounting

     The financial statements of Marine are prepared on the modified cash basis method and are not intended to present financial position and results of operations in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Under the modified cash basis method:

	•		Royalty income is recognized in the month when received by Marine.
	•		Marine’s expenses (which include accounting, legal, and other professional fees, trustees’ fees and out-of-pocket expenses) are recorded on an accrual basis. Reserves for liabilities that are contingent or uncertain in amount may also be established if considered necessary.
	•		Distributions to unitholders are recognized when declared by the trustee of the Trust.

     The financial statements of Marine differ from financial statements prepared in conformity with GAAP because of the following:

	•		Royalty income is recognized in the month received rather than in the month of production.
	•		Reserves may be established for contingencies that would not be recorded under GAAP.

     This comprehensive basis of accounting corresponds to the accounting principles permitted for royalty trusts by the U.S. Securities and Exchange Commission (the “SEC”), as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty Trusts.

Note 3. Distributable Income

     The Trust’s Indenture (the “Indenture”) provides that the 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 on the 28^th day of March, June, September and December of each year. If the 28^th day falls on a Saturday, Sunday or legal holiday, the distribution is payable on the immediately succeeding business day.

     As stated under “Accounting Policies” above, the financial statements in this Quarterly Report on Form 10-Q are the condensed and consolidated account balances of the Trust and MPC. However, distributable income is paid from the account balances of the Trust. Distributable income is comprised of (i) royalties from offshore Texas leases owned directly by the Trust, (ii) 98% of the royalties received from offshore Louisiana leases owned by MPC, which are retained by and delivered to the Trust on a quarterly basis, (iii) cash distributions from the Trust’s interest in Tidelands Royalty Trust “B” (“Tidelands”), a separate publicly traded royalty trust, (iv) dividends paid by MPC, less (v) administrative expenses incurred by the Trust. Distributions fluctuate from quarter to quarter primarily due to changes in oil and natural gas prices and production quantities.

Note 4. Subsequent Event

     Subsequent events have been evaluated through November 6, 2009, the issue date of the condensed consolidated financial statements of Marine for the quarter ended September 30, 2009.

Note 5. Investment in Affiliate — Tidelands Royalty Trust “B”

     At September 30, 2009 and 2008, the Trust owned 32.6% of the outstanding units of beneficial interest in Tidelands.

     The following summary financial statements have been derived from the unaudited consolidated financial statements of Tidelands:

TIDELANDS CONSOLIDATED STATEMENTS OF DISTRIBUTABLE INCOME

		Three Months Ended
		September 30,
		2009				2008
Income		$	793,305			$	1,390,370
Expenses			66,819				107,525
Distributable income before Federal income taxes			726,486				1,282,845
Federal income taxes of Tidelands’ subsidiary			3,800				13,100
Distributable income		$	722,686			$	1,269,745

     Tidelands is a reporting company under the Securities Exchange Act of 1934, as amended, and has filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2008. Consolidated statements of distributable income data concerning Tidelands has been presented through September 30, 2008, the latest period for which such information is publicly available in Tidelands’ Quarterly Report on Form 10-Q for the period ended September 30, 2009. Reference should be made to Tidelands’ public filings for current information concerning Tidelands and its financial position and results of operations.

Item 2. Trustee’s Discussion and Analysis of Financial Condition and Results of Operations

Organization

     The Trust is a royalty trust that was created in 1956 under the laws of the State of Texas. U.S. Trust, Bank of America Private Wealth Management serves as corporate trustee (the “Trustee”). The Indenture provides that the term of Trust will expire on June 1, 2021, unless extended by the vote of the holders of a majority of the outstanding units of beneficial interest. 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 Trust’s predecessors and Gulf Oil Corporation (“Gulf”). As a result of various transactions that have occurred since 1956, the Gulf interests now are held by Chevron Corporation (“Chevron”) and its assignees. The Trust holds title to interests in properties that are situated offshore of Texas.

     The Trust’s wholly-owned subsidiary, MPC, 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. MPC is prohibited from engaging in a trade or business and does only those things necessary for the administration and liquidation of its properties.

     Marine’s rights are generally referred to as overriding royalty interests in the oil and natural gas industry. An overriding royalty interest is created by an assignment by the owner of a working interest in an oil or gas lease. The royalty rights associated with an overriding royalty interest terminate when the underlying lease terminates. 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 and 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.

     The Trustee assumes that some units of beneficial interest are held by middlemen, as such term is broadly defined in U.S. Treasury Regulations (and includes custodians, nominees, certain joint owners, and brokers holding an interest for a customer in street name). Therefore, the Trustee considers the Trust to be a widely held fixed investment trust (“WHFIT”) for U.S. Federal income tax purposes. Accordingly, the Trust will provide tax information in accordance with applicable U.S. Treasury Regulations governing the information reporting requirements of the Trust as a WHFIT. The representative of the Trust that will provide the required information is U.S. Trust, Bank of America Private Wealth Management and the contact information for the representative is as follows:

U.S. Trust, Bank of America Private Wealth Management
P.O. Box 830650
Dallas, Texas 75283-0650
Telephone number: (800) 985-0794

Each unitholder should consult his or her own tax advisor for compliance matters.

Liquidity and Capital Resources

     Due to the limited purpose of the Trust as stated in the Trust’s Indenture, there is no requirement for capital. The Trust’s only obligation is to distribute to unitholders the distributable income actually collected. As an administrator of oil and natural gas royalty properties, the Trust collects royalties monthly, pays administration expenses and disburses all net royalties collected to its unitholders each quarter.

     The Trust’s Indenture (and MPC’s charter and by-laws) expressly prohibits the operation of any kind of trade or business. The Trust’s oil and natural gas properties are depleting assets and are not being replaced due to the prohibition against these investments. These restrictions, along with other factors, allow the Trust to be treated as a grantor trust. As a grantor trust, all income and deductions for state and U.S Federal tax purposes generally flow through to each individual unitholder. In May 2006, the State of Texas passed legislation to implement a new franchise or “margin” tax. The Trust does not believe that it is subject to the franchise tax because at least 90% of

its income is from passive sources. Please see Marine’s Annual Report on Form 10-K for the fiscal year ended June 30, 2009 for further information. MPC is a taxable entity and pays state and U.S. Federal taxes on its income. However, MPC’s income specifically excludes 98% of oil and natural gas royalties collected by MPC, which are retained by and delivered to the Trust in respect of the Trust’s net profits interest.

The Leases

     Marine relies on public records for information regarding drilling operations. The public records available up to the date of this report indicate that there were three new well completions made during the three months ended September 30, 2009 on leases in which Marine has an interest. Public records also indicate that there were three wells in the process of being drilled and no permits for wells to be drilled in the future.

     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 58 leases covering 209,376 gross acres located in the Gulf of Mexico. Marine’s overriding royalty interest applies only to existing leases and does not apply to any new leases that Chevron may acquire. The Trust also owns a 32.6% interest in Tidelands. Tidelands has an overriding royalty interest in five leases covering 22,948 gross acres located in the Gulf of Mexico. As a result of this ownership, the Trust receives periodic distributions from Tidelands.

Critical Accounting Policies and Estimates

     In accordance with SEC Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty Trusts, Marine uses the modified cash basis method of accounting. Under this accounting method, royalty income is recorded when received, and distributions to unitholders are recorded when declared by the Trustee of the Trust. Expenses of Marine (which include accounting, legal, and other professional fees, trustees’ fees and out-of-pocket expenses) are recorded on an accrual basis. Marine also reports distributable income instead of net income under the modified cash basis method of accounting. Cash reserves are permitted to be established by the Trustee for certain contingencies that would not be recorded under GAAP.

     Marine did not have any changes in critical accounting policies or in significant accounting estimates during the three months ended September 30, 2009. Please see Marine’s Annual Report on Form 10-K for the fiscal year ended June 30, 2009 for a detailed discussion of critical accounting policies.

General

     During the three months ended September 30, 2009, Marine realized 66.4% of its royalty income from the sale of oil and 33.6% from the sale of natural gas, excluding its interest in Tidelands. Royalty income consists of oil and natural gas royalties received from producers.

     Marine’s royalty income is derived from the oil and natural gas production activities of unrelated parties. Marine’s royalty income fluctuates from period to period based upon factors beyond Marine’s control, including, without limitation, the number of productive wells drilled and maintained on leases subject to Marine’s interest, the level of production over time from such wells and the prices at which the oil and natural gas from such wells are sold.

     Important aspects of Marine’s operations are conducted by third parties. Marine’s royalty income is dependent on the operations of the working interest owners of the leases on which Marine has an overriding royalty interest. The oil and natural gas companies that lease tracts subject to Marine’s interests are responsible for the production and sale of oil and natural gas and the calculation of royalty payments to Marine. The only obligation of the working interest owners to Marine is to make monthly overriding royalty payments of Marine’s interest in the oil and natural gas sold. Marine’s distributions are processed and paid by American Stock Transfer & Trust Company, LLC as the agent for Marine.

     The volume of oil and natural gas produced and its selling price are primary factors in the calculation of overriding royalty payments. Production is affected by the declining capability of the producing wells, the number of new wells drilled and the number of existing wells re-worked and placed back in production. Production from

existing wells is anticipated to decrease in the future due to normal well depletion. Marine has no input with the operators regarding future drilling or re-working operations which could impact the oil and natural gas production on the leases on which Marine has an overriding royalty interest.

Hurricanes Gustav and Ike

     In September 2008, Hurricanes Gustav and Ike hit the Gulf Coast, which generally caused (i) a disruption of oil and natural gas production, (ii) damage to offshore production platforms and (iii) damage to onshore oil and natural gas pipeline facilities.

     Because Marine is not the operator of the leases on which it has an overriding royalty interest, Marine has received limited information regarding the effects of the hurricanes on production. However, based on the limited information that Marine has received from operators and from data from the Minerals Management Service records and publications, Marine believes that all significant leases in which Marine has an interest that experienced a disruption in production were back on production by the third quarter of 2009. Production volumes may be slow to reach and may not reach the volumes realized before damage was caused by the hurricanes. The Minerals Management Service is a division of the U.S. government.

     In general, Marine receives royalties two months after oil production and three months after natural gas production. The distribution to be paid in December 2009 will generally be based on production in July, August, September and October of 2009. At this time, Marine is unable to predict the extent to which this distribution will be affected by the damage caused by the hurricanes.

     To Marine’s knowledge, there were no platforms destroyed on the leases on which Tidelands has an overriding royalty interest, and Marine has been advised that the wells on these leases were generally only shut-in for a short period of time. The revenue received from Marine’s equity interest in Tidelands accounted for approximately 50% of the distribution per unit paid in September 2009.

Summary of Operating Results

     Distributable income per unit for the three months ended September 30, 2009 decreased 62.7% to $0.31 as compared to $0.83 for the comparable period in 2008. Distributions to unitholders amounted to $0.25 per unit for the three months ended September 30, 2009, a decrease of $0.52 per unit from the distributions for the comparable period in 2008. During the three months ended September 30, 2009, the difference between distributable income per unit and distributions per unit resulted from timing differences between the closing of the financial statements and the determination date of the distribution amount to unitholders.

     For the three months ended September 30, 2009, oil production decreased 1,977 barrels and natural gas production decreased 5,004 thousand cubic feet (mcf) from the levels realized in the comparable period in 2008. For the three months ended September 30, 2009, the average price realized for a barrel of oil decreased $75.04 from the price realized in the comparable period in 2008 and the average price realized for an mcf of natural gas decreased $9.01 from the price realized in the comparable period in 2008.

     The following table presents the net production quantities of oil and natural gas and distributable income and distributions per unit for the last five quarters.

		Net Production
		Quantities (1)
						Natural				Distributable				Distribution
Quarter Ended		Oil (bbls)				Gas (mcf)				Income Per Unit				Per Unit
September 30, 2008			6,972				41,078			$	0.83			$	0.77
December 31, 2008			3,573				28,385			$	0.49			$	0.89
March 31, 2009			2,130				28,473			$	0.30			$	0.30
June 30, 2009			4,210				16,794			$	0.29			$	0.26
September 30, 2009			4,995				36,074			$	0.31			$	0.25

Results of Operations—Three Months Ended September 30, 2009 and 2008

     Distributable income decreased 61.9% to $629,184 for the three months ended September 30, 2009 from $1,650,319 realized for the comparable three months in 2008. Marine believes that the primary reason royalties were down for the three months ended September 30, 2009 was the 55.7% decrease in the price of oil and the 68.4% decrease in the price of natural gas. In addition, for the three months ended September 30, 2009, oil production decreased 28.4% and natural gas production decreased 12.2%.

     Excluding the Trust’s interest in Tidelands, oil and gas production (barrels of oil equivalent) in the three months ended September 30, 2009 decreased 19.8% from the volumes realized in the quarter ended September 30, 2008, with a 28.4% decrease in the production of oil and a 12.2% decrease in the production of natural gas.

     Income from oil royalties, excluding the Trust’s interest in Tidelands, for the three months ended September 30, 2009 decreased 68.3% to $297,967 from $939,032 realized for the comparable three months in 2008. There was a 28.4% decrease in production and a 55.7% decrease in the price realized.

     Income from natural gas royalties, excluding the Trust’s interest in Tidelands, for the three months ended September 30, 2009 decreased 72.2% to $150,589 from $541,466 for the comparable three months in 2008. There was a 12.2% decrease in production and a 68.4% decrease in the price realized.

     Income from the Trust’s interest in Tidelands decreased approximately 12.7% for the three months ended September 30, 2009 as compared to the comparable three months of 2008.

     The following table presents the quantities of oil and natural gas sold and the average price realized from current operations for the three months ended September 30, 2009, and those realized in the comparable three months in 2008, excluding the Trust’s interest in Tidelands.

		Three Months Ended September 30,
		2009				2008
		(Unaudited)				(Unaudited)				% Change
Oil
Barrels sold			4,995				6,972				(28.4	)%
Average price		$	59.65			$	134.69				(55.7	)%
Natural gas
Mcf sold			36,074				41,078				(12.2	)%
Average price		$	4.17			$	13.18				(68.4	)%

     General and administrative expenses decreased 42.9% to $68,241 in the three months ended September 30, 2009 from $119,455 in the prior year period, primarily due to decreased professional fees and expenses.

Forward-Looking Statements

     The statements discussed in this Quarterly Report on Form 10-Q regarding Marine’s future financial performance and results, and other statements that are not historical facts, are forward-looking statements as defined in Section 27A of the Securities Act of 1933. This report uses the words “may,” “expect,” “anticipate,” “estimate,” “believe,” “continue,” “intend,” “plan,” “budget,” or other similar words to identify forward-looking statements. You should read statements that contain these words carefully because they discuss future expectations, contain projections of Marine’s financial condition, and/or state other “forward-looking” information. Actual results may differ from expected results because of: reductions in price or demand for oil and natural gas, which might then lead to decreased production; reductions in production due to the depletion of existing wells or disruptions in service, which may be caused by storm damage to production facilities, blowouts or other production accidents, or geological changes such as cratering of productive formations; and the expiration or release of leases subject to Marine’s interests. Additional risks are set forth in Marine’s Annual Report on Form 10-K for the year ended June

30, 2009. Events may occur in the future that Marine is unable to accurately predict or over which it has no control. If one or more of these uncertainties materialize, or if underlying assumptions prove incorrect, actual outcomes may vary materially from those forward-looking statements included in this Quarterly Report on Form 10-Q.

Website

     Marine has an Internet website and has made available its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to such reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, at www.marps-marinepetroleumtrust.com. Each of these reports will be posted on this website as soon as reasonably practicable after such report is electronically filed with or furnished to the SEC.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     Marine did not experience any significant changes in market risk during the period covered by this Quarterly Report on Form 10-Q. Marine’s market risk is described in more detail in “Item 7A: Quantitative and Qualitative Disclosures About Market Risk” in its Annual Report on Form 10-K for the fiscal year ended June 30, 2009.

Item 4T. Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

     U.S. Trust, Bank of America Private Wealth Management, as Trustee of the Trust, is responsible for establishing and maintaining Marine’s disclosure controls and procedures. These controls and procedures are designed to ensure that material information relating to Marine is communicated to the Trustee. As of the end of the period covered by this Quarterly Report on Form 10-Q, the Trustee carried out an evaluation of the effectiveness of the design and operation of Marine’s disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Trustee concluded that Marine’s disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q.

Changes in Internal Control Over Financial Reporting

     There has not been any change in Marine’s internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, Marine’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1A. Risk Factors

     As of the date of this filing, there have been no material changes from the risk factors previously disclosed in the “Risk Factors” in Marine’s Annual Report filed on Form 10-K for the fiscal year ended June 30, 2009 except as follows:

Cash held by the Trustee is not insured by the Federal Deposit Insurance Corporation.

     Currently, cash held by Marine reserved for the payment of accrued liabilities and estimated future expenses and distributions to unitholders is typically held in cash deposits, U.S. Treasury and agency bonds and money market accounts. Marine places such reserve cash with financial institutions that Marine considers credit worthy and limits the amount of credit exposure from any one financial institution. However, none of these accounts are insured by the Federal Deposit Insurance Corporation. In the event that any such financial institution becomes insolvent, Marine may be unable to recover any or all such cash from the insolvent financial institution. Any loss of such cash may have a material adverse effect on Marine’s cash balances and any distributions to unitholders.

Item 6. Exhibits

     The following exhibits are included herein:

	31.1		Certification of the Corporate Trustee pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1		Certification of the Corporate Trustee pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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.