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Marine Petroleum (MARPS)
NASDAQ:MARPS
Risk Overview Q2, 2024
Risk Distribution
48% Finance & Corporate
29% Production
10% Legal & Regulatory
10% Macro & Political
5% Tech & Innovation
0% Ability to Sell
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.
Risk Change Over Time
S&P500 Average
Sector Average
Risks removed
Risks added
Risks changed
Marine Petroleum Risk Factors
New Risk (0)
Risk Changed (0)
Risk Removed (0)
No changes from previous report
The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
Risk Highlights Q2, 2024
Main Risk Category
Finance & Corporate
With 10 Risks
Finance & Corporate
With 10 Risks
Number of Disclosed Risks
21
No changes from last report
S&P 500 Average: 31
21
No changes from last report
S&P 500 Average: 31
Recent Changes
0Risks added
0Risks removed
1Risks changed
Since Jun 2024
0Risks added
0Risks removed
1Risks changed
Since Jun 2024
Number of Risk Changed
1
-1
From last reportS&P 500 Average: 3
1
-1
From last reportS&P 500 Average: 3
See the risk highlights of Marine Petroleum in the last period.
Risk Word Cloud
The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.
Risk Factors Full Breakdown - Total Risks 21
Finance & Corporate
Total Risks: 10/21 (48%)Above Sector Average
Share Price & Shareholder Rights7 | 33.3%
Share Price & Shareholder Rights - Risk 1
The limited liability of the unitholders is uncertain.Share Price & Shareholder Rights - Risk 2
Unitholders have limited voting rights.Voting rights as a unitholder are more limited than those of stockholders of most public corporations. For example, there is no requirement for annual meetings of unitholders or for an annual or other periodic re-election of the Trustee. Unlike corporations, which are generally governed by boards of directors that are elected by their equity holders, the Trust is administered by a corporate trustee in accordance with the Indenture and other organizational documents. The Trustee has extremely limited discretion in its administration of the Trust.
Share Price & Shareholder Rights - Risk 3
Important reserve and other information with respect to the particular leases subject to Marine's royalty interest is unreasonably difficult to obtain.The leasehold working interests that are subject to the rights held by Marine are owned, in most cases, in whole or in part by Arena, or other oil and natural gas exploration and production companies. Certain information with respect to the particular leases subject to Marine's interests, including, but not limited to, (i) reserves, (ii) the availability of oil and natural gas, (iii) the average production cost (lifting cost) per unit, (iv) undeveloped acreage and (v) net wells and net acres, lies solely within the knowledge of these working interest owners. Marine does not have access to engineering data regarding these leaseholds and believes that such information would have been compiled principally by or for the working interest owners of these leaseholds and such information is unreasonably difficult for Marine to obtain.
Share Price & Shareholder Rights - Risk 4
Marine's royalty interest can be sold and the Trust can be terminated.The Trust may be terminated and the Trustee may sell Marine's royalty interests if holders of 80% or more of the units of beneficial interest of the Trust approve the sale and vote to terminate the Trust. Following any such termination and liquidation, the net proceeds of any sale would be distributed to the unitholders and the unitholders would receive no further distributions from the Trust. Any such sale may not be on terms acceptable or favorable to all unitholders.
Share Price & Shareholder Rights - Risk 5
Our units have been thinly traded and an active trading market for our units may not develop.The trading volume of our units has historically been low. As a result, sales of small amounts of the units in the public market could cause the price of the units to fluctuate greatly, including in a materially adverse manner. In addition, a more active trading market for our units may not develop, or if it does develop, may not continue, and a unitholder may find it difficult to dispose of, or to obtain accurate quotations as to the market value of, our units.
Share Price & Shareholder Rights - Risk 6
The market price for the units may not reflect the value of the royalty interests held by Marine.The public trading price for the units tends to be tied to the recent and expected levels of cash distributions on the units. The amounts available for distribution by Marine vary in response to numerous factors outside of Marine's control, including prevailing prices for oil and natural gas produced from properties on the leases. The market price of the units is not necessarily indicative of the value that Marine would realize if it sold its interest in the properties on the leases to a third-party buyer and distributed the net proceeds to its unitholders. In addition, the market price of the units is not necessarily reflective of the fact that Marine's assets are depleting assets, and a portion of each cash distribution paid on the units should be considered by investors as a return of capital, with the remainder being considered as a return on investment. There is no guarantee that distributions made to a unitholder over the life of these depleting assets will equal or exceed the purchase price paid by the unitholder for the unit.
In addition, the public stock markets have traditionally experienced price and trading volume volatility. This volatility has had a significant effect on the market prices of securities issued by many companies for reasons that may or may not be related to operating performance. If the public stock markets continue to experience price and trading volume volatility in the future, the market price of the units could be adversely affected.
Share Price & Shareholder Rights - Risk 7
The Trustee, Marine and the Trust's unitholders do not control the operation or development of the properties in the leases and have little influence over their operation or development.The Trustee, Marine and the Trust's unitholders have little, if any, influence or control over the operation or future development of the underlying properties of the leases. The properties underlying the leases are owned by independent working interest owners. The working interest owners manage the underlying properties and handle the receipt and payment of funds relating to the leases and payments to Marine for its royalty interests. The current working interest owners are under no obligation to continue operating the properties. The failure of a working interest owner to conduct its operations, discharge its obligations, cooperate with regulatory agencies or comply with laws, rules and regulations in a proper manner could have an adverse effect on net proceeds payable to Marine. The Trustee, Marine and the Trust's unitholders do not have the right to replace a working interest owner.
Accounting & Financial Operations1 | 4.8%
Accounting & Financial Operations - Risk 1
Financial information of Marine is not prepared in accordance with generally accepted accounting principles in the United States.Debt & Financing2 | 9.5%
Debt & Financing - Risk 1
Failure to collect royalty payments from working interest owners could adversely affect Marine's distributions to its unitholders.Debt & Financing - Risk 2
Royalty interests are depleting assets and may deplete faster than expected or in their entirety.The net proceeds payable to Marine are derived from the sale of depleting assets. Accordingly, the portion of the distributions to unitholders that are attributable to depletion may be considered a return of capital as opposed to a return on investment. Distributions that are considered a return of capital will ultimately diminish the depletion tax benefits available to unitholders, which could reduce the market value of the units over time.
The reduction in proved reserve quantities is a common measure of depletion. Future maintenance and development projects on the leases will likely affect the quantity of proved reserves. The timing and size of these projects will depend on the market prices of oil and natural gas. If operators of the leases do not implement additional maintenance and development projects, the future rate of production decline of proved reserves may be higher than the rate currently experienced by Marine. Eventually, the properties in the leases will stop producing in commercial quantities, and Marine will cease to be entitled to receive any distributions of net proceeds therefrom.
Production
Total Risks: 6/21 (29%)Above Sector Average
Costs6 | 28.6%
Costs - Risk 1
Cash held by the Trustee is not insured by the Federal Deposit Insurance Corporation.Costs - Risk 2
Operating risks for the working interest owners' interests on the leases can adversely affect distributions.The occurrence of drilling, production or transportation accidents and other natural disasters on the properties underlying the leases can reduce distributions. These occurrences include blowouts, cratering, explosions, environmental and hurricane damage that may result in personal injuries, property damage, damage to productive formations or equipment and environmental damages. Any of these occurrences could have a material adverse effect on the amount of our distributions or the market value of the units.
Costs - Risk 3
Marine is unable to acquire royalty interests in any more leases.Marine's overriding royalty interests apply only to existing leases and do not apply to new leases that the Interest Owners may acquire. Therefore, the Interest Owners are no longer obligated to assign any interest to Marine out of any lease that they acquire. In addition, Marine is not permitted to carry on any business, including making investments in additional oil and natural gas interests. Marine will continue to be entitled to receive payments on its existing leases, so long as the leases are active properties. Once the leases terminate or expire, any overriding royalties payable to Marine will terminate and Marine will not be able to acquire any additional or replacement royalty interests.
Costs - Risk 4
Current and future oil and natural gas prices fluctuate due to a number of uncontrollable factors. Any depression in oil and natural gas prices would result in lower royalty payments to Marine and lower cash distributions to its unitholders.Marine's quarterly distributions are highly dependent upon the prices realized from the sale of oil and natural gas. Any sustained decline in Marine's distributable income would cause a decrease in the value of cash distributions to its unitholders and could result in Marine being unable to make a cash distribution to its unitholders in one or more quarters, as well as result in a decrease of the market price of the units.
Historically, oil and natural gas prices have been volatile and are likely to continue to be volatile in the future due to factors beyond Marine's control. These factors include, but are not limited to:
- political conditions worldwide, and in particular, political disruptions, terrorist activities, wars or other armed conflicts in oil producing regions, including the war in Ukraine, and the Israel-Hamas war;- worldwide economic conditions;- tariffs;- weather conditions;- technological innovation affecting extraction expenses;- the supply and price of domestic and foreign oil and natural gas;- the level of consumer demand;- the price and availability of alternative fuels;- the proximity to, and capacity of, transportation facilities; and - the effect of worldwide energy conservation measures.
Moreover, government regulations, such as the regulation of natural gas transportation and price controls, can affect oil and natural gas prices in the long term.
Lower prices may reduce the amount of oil and natural gas that is economical to produce and reduce distributable income available to Marine. As a result, a substantial decline in the production or price of oil and natural gas could result in Marine being unable to make distributions to unitholders in future quarters. The volatility of oil and gas prices reduces the predictability of future cash distributions to unitholders. Substantially all of the oil and natural gas produced from the leases are being sold under short-term or multi-month contracts at market clearing prices or on the spot market.
Costs - Risk 5
The owner of any properties in the leases may abandon any property, terminating the related royalty interest Marine may hold.The current working interest owners or any transferee may abandon any well or property that is subject to Marine's royalty interest if it believes that the well or property can no longer produce in commercially economic quantities or for any other reason. This would terminate Marine's royalty interest relating to the abandoned well or property.
Costs - Risk 6
The owner of any properties in the leases may transfer any of the properties to another unrelated third party, which could reduce the amount of royalty payments that are received.The working interest owners may at any time transfer all or part of the property in a lease to another unrelated third party. Unitholders are not entitled to vote on any transfer, and Marine will not receive any proceeds of any such transfer. Following any transfer, the lease will continue to be subject to Marine's royalty interest, but the net proceeds from the transferred property would be calculated separately and paid by the transferee. The transferee would be responsible for all of the obligations relating to calculating, reporting and paying to Marine its royalty interest on the transferred portion of the lease, and the transferor of the transferred property would have no continuing obligation to Marine for that property. Any such transferee may not be as financially sound as the current working interest owner.
Legal & Regulatory
Total Risks: 2/21 (10%)Above Sector Average
Regulation1 | 4.8%
Regulation - Risk 1
The operators of the oil and natural gas leases are subject to extensive governmental regulation.Taxation & Government Incentives1 | 4.8%
Taxation & Government Incentives - Risk 1
If Marine becomes subject to the Texas franchise tax, the Trustee may have to withhold amounts from future distributions to pay the tax liability.Macro & Political
Total Risks: 2/21 (10%)Above Sector Average
Natural and Human Disruptions2 | 9.5%
Natural and Human Disruptions - Risk 1
Terrorism and continued geopolitical hostilities, including the war in Ukraine and the war between Israel and Hamas, could adversely affect Marine's distributions to its unitholders or the market price of its units.Changed
Natural and Human Disruptions - Risk 2
The spread of a pandemic, such as coronavirus ("COVID-19") and its variants, and measures taken to mitigate the impact of such a pandemic could have an adverse effect on trust distributions.The spread of a pandemic such as COVID-19, and the continually changing measures taken to mitigate the impact of such a pandemic, could have an adverse effect on the demand for oil and natural gas and the business and operations of the operators of the properties, which in turn could have an adverse effect on trust distributions.
Tech & Innovation
Total Risks: 1/21 (5%)Above Sector Average
Cyber Security1 | 4.8%
Cyber Security - Risk 1
The Trustee may be subject to attempted cybersecurity disruptions from a variety of sources including state-sponsored actors.See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.
FAQ
What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky.
The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.
They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.
It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
How do companies disclose their risk factors?
Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.
Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.
Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.
According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
How can I use TipRanks risk factors in my stock research?
Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.
You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.
Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.
A simplified analysis of risk factors is unique to TipRanks.
What are all the risk factor categories?
TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.
1. Financial & Corporate
- Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
- Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
- Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
- Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.
2. Legal & Regulatory
- Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
- Regulation – risks related to compliance, GDPR, and new legislation.
- Environmental / Social – risks related to environmental regulation and to data privacy.
- Taxation & Government Incentives – risks related to taxation and changes in government incentives.
3. Production
- Costs – risks related to costs of production including commodity prices, future contracts, inventory.
- Supply Chain – risks related to the company’s suppliers.
- Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
- Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.
4. Technology & Innovation
- Innovation / R&D – risks related to innovation and new product development.
- Technology – risks related to the company’s reliance on technology.
- Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
- Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.
5. Ability to Sell
- Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
- Competition – risks related to the company’s competition including substitutes.
- Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
- Brand & Reputation – risks related to the company’s brand and reputation.
6. Macro & Political
- Economy & Political Environment – risks related to changes in economic and political conditions.
- Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
- International Operations – risks related to the global nature of the company.
- Capital Markets – risks related to exchange rates and trade, cryptocurrency.