Critical Accounting Policies. As of June 30, 2008, the financial statements of Marine have been prepared on the modified cash basis method and are not intended to present financial position and results of operations in conformity with GAAP. Under the modified cash basis method:
• Royalty income is recognized 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.

The preparation of financial statements in conformity with the modified cash basis method of accounting requires the Trustee to make various estimates and assumptions that affect the reported amount of liabilities at the date of the financial statements and the reported amount of expenses during the reporting period. Actual results may differ from such estimates.
Results of Operations. Marine's revenues are derived from the oil and natural gas production activities of unrelated parties. Marine's revenues and distributions fluctuate from period to period based upon factors beyond Marine's control, including, without limitation, the number of leases subject to Marine's interests, the number of productive wells drilled on leases subject to Marine's interests, the level of production over time from such wells and the prices at which the oil and natural gas from such wells are sold.
Marine's results of operations are significantly impacted by oil and natural gas commodity prices and the quantity of oil and natural gas production. Oil and natural gas prices have historically experienced significant volatility. Marine is not permitted to manage its commodity price risk through the use of fixed price contracts or financial derivatives.
Marine's income consists primarily of oil and natural gas royalties and is based on the value at the well of its percentage interest in oil and natural gas sold without reduction for any of the expenses of production. "Value at the well" for oil means the purchasers' selling price at its receiving point onshore, less the cost of transportation from the offshore lease to the onshore receiving point. "Value at the well" for natural gas means the selling price less the cost of compression, dehydration and transportation from the lease to the delivery point of the pipeline transporting the product to market. In general, value at the well is determined on the basis of the selling price of oil, natural gas and other minerals produced, saved and sold, or at wellhead prices determined by industry standards, where the selling price does not reflect value at the well. In the event an agreement is not arms-length in nature, the value is based upon current market prices.
Summary Review. 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 received limited information regarding the effects of the hurricanes on production. However, based on the limited information that Marine 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, with the exception of Ship Shoal Block 154, were back on production during the first quarter of 2009. Production volumes may be slow to reach and may not reach the volumes realized before damage was caused by the hurricanes. Production is expected to commence on Ship Shoal Block 154 when its pipeline is able to take delivery of the oil produced on the lease; however, Marine does not have information regarding when the pipeline will be able to take delivery.
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.
In general, Marine receives royalties two months after oil production and three months after natural gas production. Partially due to damage cause by the hurricanes, the March 2009 distribution decreased 65.9% from the December 2008 distribution, from $0.885216 per unit to $0.301562 per unit, and the June 2009 distribution decreased 13.3% from the March 2009 distribution, from $0.301562 per unit to $0.261404 per unit. The September 2009 distribution decreased 5.9% from the June 2009 distribution, from $0.261404 per unit to $0.246003 per unit.
Marine's distributable income for the year ended June 30, 2009 amounted to $3,818,752 or $1.91 per unit as compared to $5,864,499 or $2.93 per unit in fiscal 2008 and $5,118,174 or $2.56 per unit in fiscal 2007.
These results also include income from the Trust's interest in Tidelands, which amounted to $1,419,539 for fiscal 2009, $1,313,536 for fiscal 2008 and $623,391 for fiscal 2007. Income from Tidelands contributed approximately 34% of Marine's royalty income for fiscal 2009 as compared to 21% and 12% of Marine's royalty income for fiscal 2008 and 2007, respectively.
The following table shows the number of wells drilled or recompleted on leases in which Marine has an interest (including its interest in Tidelands) and the number of active wells at the end of each of the past three fiscal years.

                                                        Year Ended June 30,
                                                     2009       2008      2007
            Wells Drilled or Recompleted (Gross)        21        24        48
            Active Wells (Gross)                       220       240       240

The following table and related discussion and analysis shows the royalty income, the net quantities sold, and the average price received for oil and natural gas during fiscal years 2009 and 2008, excluding the Trust's interest in Tidelands.

                                                Year Ended June 30,
                                         2009            2008         % Change
             Income from:
             Oil royalties           $ 1,690,654     $ 2,916,843       (42.0 )%
             Natural gas royalties   $ 1,058,045     $ 1,909,973       (44.6 )%
             Totals                  $ 2,748,699     $ 4,826,816       (43.1 )%

             Net quantities sold:
             Oil (bbls)                   16,885          35,620       (52.6 )%
             Natural gas (mcf)           114,730         239,484       (52.1 )%

             Average price:
             Oil (1)                 $    100.13     $     81.89        22.3 %
             Natural gas (1)         $      9.22     $      7.98        15.5 %

(1) These amounts are net of the cost of transportation from offshore leases to onshore receiving points.

The following table and related discussion and analysis shows the royalty income, the net quantities sold, and the average price received for oil and natural gas during fiscal years 2008 and 2007, excluding Marine's interest in Tidelands.

                                                Year Ended June 30,
                                         2008            2007         % Change
             Income from:
             Oil royalties           $ 2,916,843     $ 2,621,591        11.3 %
             Natural gas royalties   $ 1,909,973     $ 2,032,813        (6.0 )%
             Totals                  $ 4,826,816     $ 4,654,404         3.7 %

             Net quantities sold:
             Oil (bbls)                   35,620          43,242       (17.6 )%
             Natural gas (mcf)           239,484         288,247       (16.9 )%

             Average price:
             Oil (1)                 $     81.89     $     60.63        35.1 %
             Natural gas (1)         $      7.98     $      7.05        13.2 %

(1) These amounts are net of the cost of transportation from offshore leases to onshore receiving points.

Fiscal Year 2009 Compared to Fiscal Year 2008. During fiscal 2009, Marine received approximately 61.5% of its royalty income from the sale of oil and 38.5% from the sale of natural gas. Income from oil and natural gas royalties in fiscal 2009 decreased approximately 43.1% from fiscal 2008, primarily due to decreased production of oil and natural gas. As previously discussed, Hurricanes Gustav and Ike 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, which had an effect on Marine's royalty income in the first and second quarters of fiscal 2009. Revenue from oil royalties amounted to $1,690,654 in fiscal 2009, a decrease of 42.0% from the $2,916,843 realized in fiscal 2008. The average price realized for a barrel of oil increased 22.3% to $100.13 from $81.89 realized in fiscal 2008. In fiscal 2009, oil production decreased 52.6% to 16,885 barrels from the amount produced in fiscal 2008. Revenue from natural gas royalties amounted to $1,058,045 in fiscal 2009, a decrease of 44.6% from $1,909,973 realized in fiscal 2008. In fiscal 2009, the average price of an mcf of natural gas increased 15.5% to $9.22 and production decreased 52.1% to 114,730 mcf from the average price and amount produced in fiscal 2008. General and administrative expenses for fiscal 2009 amounted to $380,400, an increase of 21.2% from $313,865 in fiscal 2008, due to an increase in professional fees and expenses. Interest income decreased to $12,189 in fiscal 2009 from $58,712 realized in fiscal 2008 due to a decrease in interest rates and a decrease in undistributed royalties. Fiscal Year 2008 Compared to Fiscal Year 2007. During fiscal 2008, Marine received approximately 60.4% of its royalty income from the sale of oil and 39.6% from the sale of natural gas. Income from oil and natural gas royalties in fiscal 2008 increased approximately 3.7% from fiscal 2007, primarily due to increased oil and natural gas prices. Revenue from oil royalties amounted to $2,916,843 in fiscal 2008, an increase of 11.3% from the $2,621,591 realized in fiscal 2007. In fiscal 2008, the average price of a barrel of oil increased 35.1% to $81.89 from $60.63 realized in fiscal 2007. In fiscal 2008, oil production decreased 17.6% to 35,620 barrels from the amount produced in fiscal 2007.

Revenue from natural gas royalties amounted to $1,909,973 in fiscal 2008, a decrease of 6.0% from the $2,032,813 realized in fiscal 2007. In fiscal 2008, the average price of an mcf of natural gas increased 13.2% to $7.98 and production decreased 16.9% to 239,484 mcf from the average price and amount produced in fiscal 2007.
General and administrative expenses for fiscal 2008 amounted to $313,865, an increase of 43.9% from $218,089 in fiscal 2007, due to an increase in professional fees and expenses.
Interest income decreased to $58,712 in fiscal 2008 from $78,418 realized in fiscal 2007 due to a decrease in interest rates.
Capital Resources and Liquidity. The Trust's Indenture (and the charter and by-laws of MPC) expressly prohibits the operation of any kind of trade or business. Due to the limited purpose of the Trust as stated in the Trust's Indenture, there is no requirement for capital. Its 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 income monthly, pays expenses of administration and disburses all distributable income collected to its unitholders each quarter. Because all of Marine's revenues are invested in liquid funds pending distribution, Marine does not experience liquidity problems.
Marine'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. All income and deductions, for tax purposes, should flow through to each individual unitholder. The Trust is not a taxable entity. MPC will owe state and U.S. Federal income taxes with respect to its income after deducting statutory depletion. 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 Trust does not currently have any long term contractual obligations, other than the obligation to make distributions to unitholders pursuant to the Indenture. The Trust does not maintain any off-balance sheet arrangements within the meaning of Item 303 of Regulation S-K promulgated by the SEC.
Forward-Looking Statements. The statements discussed in this Annual Report on Form 10-K regarding Marine's future financial performance and results of operations, and other statements that are not historical facts, are forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended. Marine 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 prices 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. 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 contained in the forward-looking statements included in this Annual Report on Form 10-K.
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 (the "Exchange Act"), 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.