As a royalty trust, Marine Petroleum Trust (NASDAQ: MARPS) manages the rights to payments from oil and natural gas leases. Through its subsidiary – Marine Petroleum Corporation – the company has a royalty interest in 55 oil and natural gas leases in the Gulf of Mexico. Following the recent surge in oil prices, MARPS stock and other oil stocks have been attracting many investors. As a result, MARPS stock ran over 350% – leaving many investors hoping for a multi-day run.
MARPS Stock News
As a result of the Russian invasion of Ukraine, oil and gas prices have been soaring. As the conflict in Ukraine continues to escalate, President Biden decided to ban Russian oil and gas purchases as a response to Russian aggression. Describing the ban as “a step to inflict further pain on Putin”, Biden’s decision was preceded by the UK which also announced a ban on Russian oil. In response, oil prices rose over $128. Following this news, oil and gas stocks – including MARPS have witnessed a massive surge.
On that note, MARPS is in a prime position to capitalize on the oil rush as the company – through its subsidiary Marine Petroleum Corporation (MPC) – holds interests in 55 oil and natural gas leases in the Gulf of Mexico covering over 199 thousand acres.
The Marine Petroleum Trust was created in 1956 but in 2018 Simmons Bank became corporate trustee of the Trust due to a merger between Simmons Bank and Southwest Bank. As is, the Trust can not engage in any business activity since its only purpose is to provide the means for the administration and liquidation of rights to payments from certain oil and natural gas leases. Currently, MARP holds title to interests in properties offshore of Texas.
Since the trust was formed in 1956, many transactions have taken place which means these interests are now held by Chevron. The Trust holds title to interests in properties that are situated offshore of Texas. But its subsidiary – Marine Petroleum Corporation (MPC) – holds title to interests in properties offshore of Louisiana.
According to its last quarterly report, oil production had increased to 3,241 barrels from 2,148 barrels compared to the year prior. Natural gas production also increased to 3,808 thousand cubic feet compared to 2,154 thousand cubic feet during the same period in 2020. At the time, the average price for oil was $64.40 per bbl – a $41.21 increase from 2020. Natural gas experienced a similar increase in price. Considering the surging oil prices now, MARPS could potentially generate more revenues – since the Gulf is responsible for 15% of total US oil production.
Given that the trust is prohibited from doing trades or business, the company does not reinvest its funds. Meanwhile, the trust collects 98% of all oil and natural gas royalties – and distributes these funds to its shareholders. During the last quarter, income from oil royalties increased to $208,729 and income from natural gas royalties increased to $20,511.
Recently, MARPS announced its Q1 cash distribution to its shareholders as a result of the higher demand for oil and natural gas, the trust distributed $.107 per unit – a marginal increase from its previous distribution of $.106. With this in mind, the next cash distribution could be significantly higher if oil demand continues to increase. With an OS of 2 million and a low float of only 1.61 million, MARPS stock could continue to rise as more countries ban Russian oil.
Media Sentiment
@JustJessTrading had her eye on MARPS after Russia’s announcement.
@KingShard1 is watching for MARPS to hit its support before looking for a reversal.
Technical Analysis
Currently trading at $13.50 during premarket after hitting $31.66 the day before, MARPS stock shows a resistance at 23.48 and a support at 12.05 with a secondary support at 9.79. Accumulation dropped with profit taking, the MACD is bearish and the RSI is cooling off at 49.
Bullish investors should look to secure a position near its support as MARPS continues to drop pre-market. Considering its low float and impressive run the day before, MARPS could be prepping for a retest today which means many investors will be watching for a bullish sign.
MARPS Stock Forecast
Given the market uncertainty following the ban of Russian oil, investors are looking to the oil industry as a profitable investment. The oil industry has been witnessing massive gains recently and oil stocks like MARPS have the potential to continues rising with oil prices. As a result, MARPS stock could be one to watch this week. But its unlikely that oil prices will continue to climb. Investors should watch for a severe correction in the days ahead which could cause MARPS and other oil plays to return to their average PPS.
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