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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 Form 10-K þ     
ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d)        
OF THE SECURITIES EXCHANGE ACT OF 1934  OR o      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934  Commission file number 0-8677 Tidelands Royalty Trust B  Texas
    
    75-6007863(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)c/o The Corporate TrusteeBank of America, N.A.
    
    75283-0650P.O. Box 830650, Dallas, Texas
    
    (Zip Code)(Address of principal executive offices)
 Registrants telephone number, including area code: (800) 985-0794 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Units of Beneficial Interest    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. þ o
 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. þ Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Act). o þ
 Aggregate market value of the Units of Beneficial Interest held by non-affiliates of the
Registrant at June 30, 2004: $7,472,072. Number of Units of Beneficial Interest outstanding as of March 29, 2005: 1,386,375
Units. Documents incorporated by reference: None.




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TABLE OF CONTENTS PART IItem 1. Business
    
    
    3Item 2. Properties
    
    
    5Item 3. Legal Proceedings
    
    
    7Item 4. Submission of Matters to a Vote of Security Holders
    
    
    7PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
    
    
    7Item 6. Selected Financial Data
    
    
    8Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operation
    
    
    8Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    11Item 8. Financial Statements and Supplementary Data
    
    
    11Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    11Item 9A. Controls and Procedures
    
    
    11Item 9B. Other Information
    
    
    11PART IIIItem 10. Directors and Executive Officers of the Registrant
    
    
    12Item 11. Executive Compensation
    
    
    12Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    12Item 13. Certain Relationships and Related Transactions
    
    
    13Item 14. Principal Accountant Fees and Services
    
    
    13PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    13Subsidiaries of the RegistrantCertification of the Principal Accounting Officer - Section 302Certification of the Corporate Trustee - Section 302Certification of the Principal Accounting Officer - Section 906Certification of the Corporate Trustee - Section 906
  2




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Part I 
 Item 1. Business Organization. Tidelands Royalty Trust B (Tidelands) is a royalty trust that was created on
June 1, 1954, under the laws of the State of Texas. Tidelands 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 interests in any oil,
natural gas or other mineral leases obtained by Gulf Oil Corporation (Gulf) in a designated area
of the Gulf of Mexico. These rights are evidenced by a contract between Tidelands predecessors and
Gulf dated April 30, 1951 (the 1951 Contract), which is binding upon the assignees of Gulf. As a
result of various transactions that have occurred since 1951, the Gulf interests that were subject
to the 1951 Contract now are held by Chevron U.S.A., Inc. (Chevron), which is a subsidiary of
ChevronTexaco Corporation, Elf Exploration, Inc. (Elf), and their respective assignees. The Tidelands Royalty Trust B Indenture, effective June 1, 1954, as amended (the
Indenture), provides that the corporate trustee is to distribute all cash in Tidelands, excluding
cash retained by its subsidiary, less an amount reserved for the payment of accrued liabilities and
estimated future expenses, to unitholders of record on the last business day of March, June,
September, and December of each year. Pursuant to the terms of the Indenture, all distributions
will be sent within 15 calendar days of the record date. Bank of America, N.A. serves as corporate
trustee. The Indenture, and the charter and bylaws of Tidelands wholly-owned subsidiary, prohibit
the operation of any kind of trade or business. Since Tidelands sole purpose is to collect and
distribute cash collected from royalties, there are no requirements for capital. The Indenture provides that the term of the royalty trust created to hold the rights under the
1951 Contract will expire on April 30, 2021, unless extended by the vote of the holders of a
majority of the outstanding units of beneficial interest. Tidelands wholly-owned subsidiary, Tidelands Royalty B Corporation (Tidelands
Corporation), holds title to interests in properties subject to the 1951 Contract that are
situated offshore of Louisiana. Ninety-five percent of all oil, natural gas, and other mineral
royalties collected by this subsidiary are paid to Tidelands. Tidelands Corporation, like
Tidelands, is prohibited from engaging in a trade or business and does only those things necessary
for the administration and liquidation of its properties. The 1951 Contract. The 1951 Contract identifies 60 specific tracts in the Gulf of Mexico.
These tracts are not all the same size and collectively contain approximately 1,370,000 acres
(sometimes referred to herein as the Royalty Area). Prior to the expiration of the 50-year lease
acquisition period on April 30, 2001 (the Acquisition Expiration Date), if Chevron, Elf or their
assignees had acquired a lease or leases on one of the 60 tracts, and if oil or natural gas were
produced and sold from any such tract, then Chevron, Elf or their assignees had to make production
payments to Tidelands, in an amount equal to approximately 12.5% of the value at the wellhead of
the oil and natural gas subject to such lease until the sum of $1,500,000 has been paid under the
lease. After the Acquisition Expiration Date, Tidelands interest in such tract converts to an
overriding royalty, and Tidelands receives payments equal to approximately 4.17%, as adjusted based
on the leasehold interest acquired, of the value of the oil and natural gas sold as long as the
lease on such tract exists. Tidelands has seven assigned leases. At December 31, 2004 five of Tidelands assigned leases
contained producing wells and had paid out their $1,500,000 production payments. Tidelands
royalty interest on four of the five leases is 4.17%. On the fifth lease the overriding royalty is
1.0416%. Two leases acquired in 2001 do not contain any producing wells. These leases have not
yet paid $1,500,000 in production payments. 3




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Since the Acquisition Expiration Date, Chevron, Elf and their assignees are no longer
obligated to assign an interest to Tidelands out of any lease that was acquired after that date.
Tidelands will continue to receive payments on the leases acquired by Chevron, Elf or their
assignees prior to the Acquisition Expiration Date. These leases are listed in the table below. LeaseArea
    
    Block
    
    
    Number
    
    
    Acres
    
    
    Decimal
    
    
    OperatorGalveston
    
    
    303
    
    
    
    4565
    (1)
    
    
    5,760
    
    
    
    0.041662
    
    
    W&T Offshore Inc.Sabine Pass
    
    
    13
    
    
    
    3959
    (1)
    
    
    3,438
    
    
    
    0.041662
    
    
    Newfield Exploration CompanyWest Cameron
    
    
    165
    
    
    
    758
    (1)
    
    
    5,000
    
    
    
    0.041662
    
    
    Linder Oil CompanyWest Cameron
    
    
    225
    
    
    
    900
    (1)
    
    
    3,750
    
    
    
    0.010416
    
    
    Dominion Exploration and Production Inc.West Cameron
    
    
    251
    
    
    
    21544
    (2)
    
    
    2,500
    
    
    
    0.125000
    
    
    ChevronWest Cameron
    
    
    261
    
    
    
    22537
    (2)
    
    
    2,500
    
    
    
    0.062500
    
    
    Spinnaker Exploration Company LLCWest Cameron
    
    
    291
    
    
    
    4397
    (1)
    
    
    5,000
    
    
    
    0.041662
    
    
    Houston Exploration CompanyTotal acres
    
    
    
    
    
    
    
    
    
    
    27,948
   (1)
    
    The $1,500,000 production payment has been paid.(2)
    
    There are no wells on these leases. In 2004, approximately 24% of Tidelands royalty revenues were attributable to oil and
approximately 76% were attributable to natural gas. The production payments and royalty revenues
received by Tidelands are affected by the producing capability of the wells, seasonal fluctuations
in demand and by changes in the market price for oil and natural gas. During 2004, Tidelands
received royalty payments from six working interest owners. The following table shows the
percentage received each year for the past 3 years from those working interest owners: Company
    
    2004
    
    
    2003
    
    
    2002Devon Energy Production Company
    
    
    80
    %
    
    
    65
    %
    
    
    49
    %Burlington Resources
    
    
    
    
    
    
    3
    %
    
    
    20
    %Millenium Offshore Group Inc
    
    
    
    
    
    
    
    
    
    
    1
    %Petroquest Energy Inc
    
    
    
    
    
    
    
    
    
    
    5
    %Dominion Exploration & Production Co
    
    
    
    
    
    
    2
    %
    
    
    5
    %Forest Oil Corp
    
    
    1
    %
    
    
    1
    %
    
    
    1
    %W&T Offshore Inc
    
    
    12
    %
    
    
    12
    %
    
    
    Dunhill Resources
    
    
    1
    %
    
    
    12
    %
    
    
    17
    %Barron Petroleum Inc
    
    
    4
    %
    
    
    5
    %
    
    
    2
    %Orca Management LLC
    
    
    2
    %
    
    
    
    
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 Tidelands derives no revenues from foreign sources and has no export sales. Trust Functions. Tidelands is administered by officers and employees of its Trustee, Bank of
America, N.A. and Tidelands principal accounting officer who performs certain management,
financial and administrative services for Tidelands. See Directors and Executive Officers of the
Registrant. All aspects of Tidelands operations are conducted by third parties. These operations include
the production and sale of oil and natural gas and the calculation of royalty payments to
Tidelands, which are conducted by oil and natural gas companies that lease tracts subject to
Tidelands interests. Prior to November 1, 2004, Tidelands distributions were processed and paid
by the Bank of New York as the agent for Tidelands. Effective November 1, 2004, Mellon Investor
Services LLC became the agent for Tidelands for the processing and payment of distributions. Marine Petroleum Corporation, a wholly-owned subsidiary of Marine Petroleum Trust (Marine),
a 32.6% unitholder of Tidelands, leases office space in Dallas, Texas to provide work space and
record storage for Marine, Marine Petroleum Corporation and Tidelands Corporation. The cost of this
office facility is shared by these two corporations in proportion to each entitys gross income to
the total of such income of both entities. 4




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The ability of Tidelands to receive revenues is entirely dependent upon its entitlement to its
rights with respect to the leases held by Chevron, Elf and their assignees in the Gulf of Mexico
(as more fully described in Item 2. Properties below). Moreover, no revenues are payable to
Tidelands until sales of production commence from any such lease. The royalty interests held by Tidelands are depleting with each barrel of oil and cubic foot
of natural gas produced. No funds are reinvested by Tidelands; thus, these depleting assets are not
being replaced. 
 Item 2. Properties General. Tidelands is not engaged in oil and natural gas operations. Its income is based on
the oil and natural gas operations of others. Tidelands income is derived from contracts that
provide for payments in the nature of overriding royalty payments made to Tidelands based on oil
and natural gas sales from certain leases in the Gulf of Mexico. Tidelands does not own or directly
lease any physical properties. Reserves. Tidelands is not engaged in the production of oil or natural gas. Tidelands income
is derived from overriding royalty payments that are carved out of working interests in oil and
natural gas leases in the Gulf of Mexico. Tidelands does not have the engineering data necessary
to make an estimate of the proved oil and natural gas reserves attributable thereto (nor the
present value of future net cash flows from such reserves), and is not entitled to receive such
data from the owners of the working interests from which Tidelands interests are derived. See
also Difficulty in Obtaining Certain Data below. Since Tidelands does not have access to this reserve information, Tidelands is unable to
compute the standardized measure of discounted future net cash flows therefrom. No reports on oil and natural gas reserves were filed with any federal authority or agency
during 2004 by Tidelands. Production. Information regarding the net quantities of oil and natural gas produced with
respect to Tidelands overriding royalty interests for each of the last three fiscal years, as well
as the average sales price per unit of oil and natural gas produced upon which payments to
Tidelands are based, is set forth below in the following table: 2004
    
    
    2003
    
    
    2002Quantity of royalty oil and natural gas sold:Oil (in barrels (bbls))
    
    
    8,022
    
    
    
    8,043
    
    
    
    8,614Natural gas (in thousand cubic feet (mcf))
    
    
    175,835
    
    
    
    180,196
    
    
    
    229,038Weighted average sales price for royalty oil and natural gas
sold:Oil (per bbl) (1)
    
    $
    41.73
    
    
    $
    31.86
    
    
    $
    25.98Natural gas (per mcf) (1)(2)
    
    $
    5.92
    
    
    $
    5.44
    
    
    $
    3.44
   (1)
    
    The weighted average sales price is calculated from data provided by the operators.(2)
    
    The $127,234 restored contingency reserve is excluded from the computation. Information about average production cost (lifting cost) per unit of production has been
omitted due to its unavailability and inapplicability to Tidelands. For more information regarding
crude oil sales prices, see Managements Discussion and Analysis of Financial Condition and
Results of Operation below. Interests in Properties. Tidelands properties consist of production payments and overriding
royalty interests in 7 oil and natural gas leases covering 27,948 gross acres located in the Gulf
of Mexico in the Galveston, Sabine Pass and West Cameron areas. Productive Properties.Set forth in the table below is certain information as of December 31,
2004, concerning gross productive oil and natural gas wells and gross leased acres in which
Tidelands owns interests: 5




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Gross Productive Wells:Oil
    
    
    3Natural Gas
    
    
    912Gross Leased Acres:Productive
    
    
    22,948Non-Productive
    
    
    5,00027,948
 Information regarding net wells or acres is not included since Tidelands does not own any
working interests. The following table contains information about the average daily production attributable to
Tidelands interest, by field, for the six months ended June 30, 2004 2003 and 2002. The
information contained in the following table is the information most recently available to us. Net Mcf Oil & Natural GasYear
    
    
    Equivalent Per Day (1)First
    
    
    Six Months Ended June 30,Field
    
    Produced
    
    
    2004
    
    
    2003
    
    
    2002Offshore TexasGalveston Block
303
    
    
    1987
    
    
    
    103
    
    
    
    142
    
    
    
    179Offshore LouisianaSabine Pass
Block
13
    
    
    1981
    
    
    
    138
    
    
    
    140
    
    
    
    183West Cameron
Block
165(2)
    
    
    1969
    
    
    
    285
    
    
    
    409
    
    
    
    424West Cameron
Block
225
    
    
    1969
    
    
    
    51
    
    
    
    63
    
    
    
    61
   (1)
    
    Net oil production is reflected in the amount of its mcf equivalent of natural gas on a btu
basis (6 to 1).(2)
    
    In October 2004 the average daily production for this field was 764 mcf equivalent. Present Activities. Tidelands currently receives royalties from oil and natural gas sold from
five leases in the Royalty Area, although delivery quantities are subject to the producing
capability of the wells and seasonal demand. Tidelands is not obligated to provide any fixed and determinable quantities of oil or natural
gas in the future under any existing contracts or agreements. Tidelands understands from public
records that no activity is being undertaken with respect to drilling or workover operations on the
five leases from which it receives royalties and the two non-producing leases. Tidelands has received information from Devon that Well A-7 on West Cameron Block 165 has been
drilled and is being completed and tested. Since this well has not been completed, there can be no
assurance that it will be completed as a producing well. Also, according to development plans
filed by Devon with the Minerals Management Service, drilling is planned to commence on Well A-8 on
the same lease in April subject to receipt of a drilling permit. Difficulty in Obtaining Certain Data. Tidelands only activities are the collection and
distribution of revenues from overriding royalties on certain oil and natural gas leases in the
Gulf of Mexico, pursuant to purchase agreements between Tidelands predecessors and Gulf and its
transferees. The leasehold working interests that are subject to the rights held by Tidelands were
originally owned in whole or in part by Chevron and, except for two non-producing leases, have been
assigned to other oil and natural gas exploration and production companies. Certain information
including, but not limited to, reserves, availability of oil and natural gas, average production
cost (lifting cost) per unit, undeveloped acreage and net wells and net acres, with respect to the
particular leases subject to Tidelands interests lies solely within the knowledge of these
concerns. Engineering data, if any, regarding these leaseholds would have been compiled
principally by or for the working interest owners of these
leaseholders and Tidelands believes that it will not be provided access to such information.
Because of this, it 6




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appears that unreasonable efforts and expense would be involved in seeking to
obtain all of the information required under Item 102 of Regulation S-K and Securities Exchange Act
of 1934 Industry Guide 2. 
 Item 3. Legal Proceedings Neither Tidelands nor Tidelands Corporation, nor any of their respective properties, is a
party to or subject to any material pending litigation as of the date hereof. 
 Item 4. Submission of Matters to a Vote of Security Holders During the last quarter of 2004 no matters were presented to the unitholders for a vote. 
 Part II 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchaser of
Equity Securities Tidelands is authorized to issue 1,386,525 units of beneficial interest. As of December 31,
2004, 1,386,375 units were held by 357 unitholders of record. The remaining 150 units are reserved
to be issued to specific parties if and when they decide to transfer their rights under the 1951
Contract to Tidelands. There were no changes in the number of outstanding units of beneficial
interest during 2004. The units of beneficial interest in Tidelands trade in the over-the-counter market and are
listed in the NASDs Bulletin Board under the symbol TIRTZ.OB. There is limited trading in
Tidelands units of beneficial interest. The following table presents information obtained from
public internet sources for 2003 and 2004 as to the high and low bid prices and includes
distributions to unitholders, by quarter, for the past two years: Bid Quotation
    
    
    DistributionsYear Ended December 31,
    
    High
    
    
    Low
    
    
    (Per Unit)2004First
quarter
    
    $
    10.25
    
    
    $
    6.85
    
    
    $
    .14Second
quarter
    
    
    9.50
    
    
    
    5.75
    
    
    
    .16Third
quarter
    
    
    8.00
    
    
    
    6.10
    
    
    
    .16Fourth
quarter
    
    
    8.25
    
    
    
    6.50
    
    
    
    .232003First
quarter
    
    $
    5.25
    
    
    $
    4.40
    
    
    $
    .23Second
quarter
    
    
    7.00
    
    
    
    4.70
    
    
    
    .29Third
quarter
    
    
    8.25
    
    
    
    6.10
    
    
    
    .21Fourth
quarter
    
    
    8.00
    
    
    
    6.50
    
    
    
    .24
 Such over-the-counter market quotations reflect interdealer prices without retail mark-up,
mark-down or commission and may not necessarily represent actual transactions. Tidelands must distribute to its unitholders all cash accumulated each quarter, less an amount
reserved for accrued liabilities and estimated future expenses. Such distributions have been made
since the third quarter of 1977 and will continue so long as the income from oil and natural gas
royalties exceeds administrative costs. Tidelands does not maintain any equity compensation plans. While Tidelands complete Form 10-K (excluding exhibits) for the year ended December 31, 2004,
is distributed to unitholders, a copy of such Form 10-K (without exhibits) is available without
charge to interested parties. There will be copying and mailing charges for copies of any exhibits
requested. Written requests should be directed to Mr. Ron E. Hooper, Bank of America, N.A., P.O.
Box 830650, Dallas, Texas 75283-0650. 7




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Item 6. Selected Financial Data (In Thousands, Except Per Unit Amounts)2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Income  oil and natural gas
royalties
    
    $
    1,376
    
    
    $
    1,365
    
    
    $
    1,011
    
    
    $
    1,166
    
    
    $
    1,580Net income
    
    $
    1,264
    
    
    $
    1,271
    
    
    $
    879
    
    
    $
    1,092
    
    
    $
    1,532Net income per unit
    
    $
    .91
    
    
    $
    .92
    
    
    $
    .63
    
    
    $
    .79
    
    
    $
    1.11Distributions to
unitholders
    
    $
    954
    
    
    $
    1,349
    
    
    $
    668
    
    
    $
    1,332
    
    
    $
    1,213Distributions per
unit
    
    $
    .69
    
    
    $
    .97
    
    
    $
    .48
    
    
    $
    .96
    
    
    $
    .87Total assets
    
    $
    1,804
    
    
    $
    1,489
    
    
    $
    1,533
    
    
    $
    1,299
    
    
    $
    1,688
 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operation Critical Accounting Policies. As an overriding royalty owner, actual production results are
not known to Tidelands until reported by the operator, which could be a period of 60-90 days later.
To comply with accounting principles generally accepted in the United States of America, we must
estimate earned but unpaid royalties from this production. To estimate this amount, we utilize
historical information based on the latest production reports from the individual leases and
current average prices as reported for oil by Chevron and the well head price for natural gas as
reported by the Energy Information Agency (a division of the Department of Energy) for the period
under report. Results of Operations. Tidelands revenues are derived from the oil and natural gas production
activities of unrelated parties. Tidelands revenues and distributions fluctuate from period to
period based upon factors beyond Tidelands control, including, without limitation, the number of
leases subject to Tidelands interests, the number of productive wells drilled on leases subject to
Tidelands 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. Tidelands believes that it will continue to have
revenues sufficient to permit distributions to be made to unitholders for the foreseeable future,
although no assurance can be made regarding the amounts thereof. The foregoing sentence is a
forward-looking statement, as described in Forward Looking Statements below. 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 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 Tidelands interests. Tidelands results of operations are significantly impacted by crude oil and natural gas
commodity prices and the quantity of oil and natural gas production. Crude oil and natural gas
prices have historically experienced significant volatility. Historically, Tidelands has not
attempted to manage its commodity price risk through the use of fixed price contracts or financial
derivatives. Tidelands income consists primarily of oil and natural gas royalties and is based on the
value at the well of Tidelands percentage interest in oil and natural gas sold without reduction
for production expenses. Value at the well for oil is the purchasers posted price at its receiving
point onshore, less the cost of transportation from the offshore lease to the onshore receiving
point. 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. Tidelands net income in 2004 amounted to $1,264,280 or $.91 per unit as
compared to $1,271,278 or $.92 per unit in 2003 and $879,197 or $.63 per unit in 2002.
Distributions per unit were $.69 in 2004, $.97 in 2003 and $.48 in 2002. Administrative expenses decreased approximately $48,000, or 30%, in 2003 due primarily to a
reduction in legal expenses following the settlement of litigation in connection with a successful
claim for an overriding royalty interest in a lease. 8




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Administrative expenses increased approximately $8,000, or 7%, in 2004 due primarily to an
increase in legal and audit expenses. Production of oil and natural gas and price received has fluctuated over the past three years.
The following table presents the results of these factors for the past three years: 2004
    
    
    2003
    
    
    2002Quantity of royalty oil and natural gas sold:Oil (bbls)
    
    
    8,022
    
    
    
    8,043
    
    
    
    8,614Natural gas (mcf)
    
    
    175,835
    
    
    
    180,196
    
    
    
    229,038Weighted average sales price for royalty oil and
natural gas sold:Oil (per bbl)(1)
    
    $
    41.73
    
    
    $
    31.86
    
    
    $
    25.98Natural gas (per mcf)(1)(2)
    
    $
    5.92
    
    
    $
    5.44
    
    
    $
    3.44
   (1)
    
    The weighted average sale price is calculated from data provided by the operators.(2)
    
    The $127,234 restored contingency reserve is excluded from the computation. During the year ended December 31, 2003, Tidelands restored to income $127,234 of its
contingency reserve that management determined was no longer needed to cover refunds that may be
required upon redetermination of natural gas prices for royalty payments in prior periods. Net
income per unit was increased $.09 by this decision. 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 the past three
years. The following table presents comparative operating data which reflects these underlying
circumstances. For Years Ended December 31,2004
    
    
    2003
    
    
    2002Income:Oil royalties
(1)
    
    $
    334,770
    
    
    $
    256,257
    
    
    $
    223,812Natural gas royalties
(2)
    
    
    1,040,881
    
    
    
    981,234
    
    
    
    787,267$
    1,375,651
    
    
    $
    1,237,491
    
    
    $
    1,011,079Net production quantities:Oil (bbls)
    
    
    8,022
    
    
    
    8,043
    
    
    
    8,614Natural gas
(mcf)
    
    
    175,835
    
    
    
    180,196
    
    
    
    229,038Average net prices:Oil (1)
    
    $
    41.73
    
    
    $
    31.86
    
    
    $
    25.98Natural gas
(1)(2)
    
    $
    5.29
    
    
    $
    5.44
    
    
    $
    3.44
   (1)
    
    These amounts are net of the cost of transportation from offshore leases to onshore receiving
points.(2)
    
    The $127,234 restored contingency reserve is excluded from the computation. Oil and Natural Gas Royalties  2004 and 2003.During fiscal 2004, Tidelands received
approximately 24% of its royalty income from the sale of oil and 76% from the sale of natural gas.
Income from such oil and natural gas royalties in fiscal 2004 increased approximately 1% from
fiscal 2003. Oil royalties during fiscal 2004 in the amount of $334,770 were 31% higher than oil royalties
received in fiscal 2003 in the amount of $256,257. There was an increase in the average price
received that offset a slight decrease in the quantity of oil sold. Natural gas royalties during fiscal 2004 in the amount of $1,040,881 were 6% lower than
natural gas royalties received in fiscal 2003 in the amount of $1,108,476. This decrease in
natural gas royalties was the result of an increase in the price received for natural gas offset by
a decrease in the quantity sold. 9




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##### Table of Contents



Production of oil and natural gas commenced in August 2004 from Well A-6 on West Cameron Block
165. In the month of October 2004, the well produced 509 mcf equivalent of natural gas per day to
Tidelands 4.17% interest. Oil and Natural Gas Royalties  2003 and 2002.During fiscal 2003, Tidelands received
approximately 19% of its royalty income from the sale of oil and 81% from the sale of natural gas.
Income from such oil and natural gas royalties in fiscal 2003 increased approximately 35% from
fiscal 2002. Revenue from oil royalties amounted to $256,257 in fiscal 2003, an increase of 14% as compared
to the $223,812 realized in fiscal 2002. The increase was due to the increase in the average price
realized during 2003. Revenue from natural gas royalties amounted to $1,108,476, an increase of 41% as compared to
the $787,267 realized in fiscal 2002. The increase was due to an increase in the price realized
for natural gas, the inclusion of $127,234 from the reduction of the reserved funds slightly offset
by a decrease in the volume of natural gas produced during 2003. General and administrative expenses for 2003 amounted to $110,384, a decrease of 30% over
$158,656 in 2002. The primary cause of this decrease was due to a reduction in legal fees and expenses
following settlement of the lawsuit against Chevron. Capital Resources and Liquidity. Because of the nature of Tidelands as a trust entity, there
is no requirement for capital. Its only obligation is to distribute to unitholders the net income
actually collected. As an administrator of oil and natural gas royalty properties, Tidelands
collects income monthly, pays expenses of administration, and disburses all net income collected to
its unitholders each quarter. Because all of Tidelands revenues are invested in liquid funds
pending distribution, Tidelands does not experience liquidity problems. Tidelands Indenture (and the charter and by-laws of Tidelands Corporation) expressly
prohibits the operation of any kind of trade or business. Tidelands oil and natural gas properties
are depleting assets and are not being replaced due to the prohibition against these investments.
Because of these restrictions, Tidelands does not require short term or long term capital. These
restrictions, along with other factors, allow Tidelands to be treated as a grantor trust. All
income and deductions, for tax purposes, should flow through to each individual unitholder.
Tidelands is not a taxable entity. Tidelands does not currently have any long term contractual obligations, other than the
obligation to make distributions to unitholders pursuant to the Indenture. Tidelands does not
maintain any off-balance sheet arrangements within the meaning of Item 303 of Regulation S-K
promulgated by the Securities and Exchange Commission. Forward-Looking Statements.The statements discussed in this annual report on Form 10-K
regarding our 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. We use the words may, will, 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 our financial condition, and/or state
other forward-looking information. Events may occur in the future that we are unable to
accurately predict, or over which we have 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 Form 10-K. 10




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##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosure About Market Risk As described elsewhere herein, Tidelands only function is to collect overriding royalties
from leases operated by others and distribute those royalties to its unitholders after paying the
cost of collection and administration. Tidelands income is highly dependent on the prices realized
from the sale of oil and natural gas and the quantities of production from wells in which it has a
royalty interest. Oil and natural gas prices have historically experienced significant volatility.
Tidelands does not attempt to manage its commodity price risk though the use of fixed price
contracts or financial derivatives. Due to the short span of time between receipts and disbursements, cash held by Tidelands is
held in a non-interest bearing trust account. Oil and natural gas royalties received by Tidelands Corporation prior to payment of the 95%
net profits interest are held in money market accounts that invest in U.S. Treasury securities and
are considered not at risk. The retained earnings of Tidelands Corporation are held in either money market accounts or
U.S. Treasury or agency securities to be held to maturity. Funds held in money market accounts and
U.S. Treasury securities that mature in less than one year are considered not at risk. 
 Item 8. Financial Statements and Supplementary Data Tidelands consolidated financial statements listed in the following index, together with the
related notes and the report of KPMG LLP, independent registered public accounting firm, are
presented on pages 14 through 21 hereof: Page Report of Independent Registered Public Accounting Firm
    
    14 Consolidated Balance Sheets as of December 31, 2004 and 2003
    
    15 Consolidated Statements of Income and Undistributed Income for the Three Years
Ended December 31, 2004
    
    16 Consolidated Statements of Cash Flows for the Three Years Ended December 31,
2004
    
    17 Notes to Consolidated Financial Statements
    
    18
 See also Exhibits and Financial Statement Schedules of this Form 10-K for further
information concerning the financial statements of Tidelands and its subsidiary. All schedules
have been omitted because they are not required or because the required information is shown in the
consolidated financial statements or notes thereto. 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure During 2004 and 2003 there were no disagreements by Tidelands with its principal accountants
on any matter of accounting principles or practices or financial statement disclosure. 
 Item 9A. Controls and Procedures As of the end of the period covered by this report, the Trustee carried out an evaluation of
the effectiveness of the design and operation of Tidelands disclosure controls and procedures
pursuant to Exchange Act Rules 13a-15 and 15d-15. Based upon that evaluation, the Trustee
concluded that Tidelands disclosure controls and procedures are effective in timely alerting the
Trustee to material information relating to Tidelands required to be included in Tidelands
periodic filings with the Securities and Exchange Commission. There has not been any change in
Tidelands internal control over financial reporting during the period covered by this report that
has materially affected, or is reasonably likely to materially affect, Tidelands internal control
over financial reporting. 
 Item 9B. Other Information None. 11




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##### Table of Contents



Part III 
 Item 10. Directors and Executive Officers of the Registrant Tidelands is a trust created under the laws of the State of Texas. Tidelands Indenture does
not provide for directors or officers or the election of directors or officers. Under the
Indenture, Bank of America, N.A. serves as Trustee. R. Ray Bell may be considered a significant employee of Tidelands. Mr. Bell has been involved
in the administration of Tidelands since its inception. He is 77 years old, and since July 1,
1977, Mr. Bell has been employed by Marine Petroleum Corporation, a subsidiary of Marine, as
president, vice president and director. Mr. Bell will serve in such capacities until the next
annual meeting of directors of Marine Petroleum Corporation or until his successor is elected and
qualified. Mr. Bell acts as the principal accounting officer of Tidelands for purposes of
Tidelands filings with the Securities and Exchange Commission. Tidelands has no directors and officers and Marine is the only unitholder that is a beneficial
owner of more than ten percent of the outstanding units. Tidelands is unaware of any person that
failed to report on a timely basis reports required by Section 16(a) of the Exchange Act. Because Tidelands has no employees, it does not have a code of ethics. Employees of the
corporate trustee, Bank of America, N.A., must comply with the banks code of ethics, a copy of
which will be made available to unitholders without charge, upon request by appointment at Bank of
America Plaza, 17th Floor, 901 Main Street, Dallas, Texas, 75202. Tidelands has no directors and therefore has no audit committee or audit committee financial
expert and no nominating committee. 
 Item 11. Executive Compensation During Tidelands fiscal year ended December 31, 2004, Tidelands paid or accrued fees of
$23,279 to Bank of America, N.A., as corporate trustee. During Tidelands fiscal year ended
December 31, 2004, Tidelands paid $24,525 to Marine Petroleum Corporation as its share of certain
administrative expenses. These expenses are shared in the ratio of each of Tidelands and Marines
gross receipts to the total gross receipts of both trusts. 
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters The following table sets forth the persons known to Tidelands who own beneficially more than
five percent of its outstanding units of beneficial interest: Amount BeneficiallyName and Address of
    
    Owned as of
    
    PercentTitle of Class
    
    Beneficial Owner
    
    December 31, 2003
    
    of ClassMarine Petroleum TrustUnits of Beneficial Interest
    
    P.O. Box 830241Dallas, Texas 75283-0241
    
    
    452,366
    
    
    
    32.6
    %
 There are no executive officers or directors of Tidelands. Bank of America, N.A., the
corporate trustee, does not beneficially own any units of beneficial interest. Tidelands does not
maintain any equity compensation plans and Tidelands has not purchased any units during the period
covered. The trustee knows of no arrangements the operation of which may at a subsequent date
result in a change of control of Tidelands. 12




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##### Table of Contents



Item 13. Certain Relationships and Related Transactions During the fiscal year ended December 31, 2004, there were no material transactions or series
of similar transactions, since the beginning of Tidelands last fiscal year, or any currently
proposed transactions or series of similar transactions, to which Tidelands was or is to be a
party, in which the amount involved exceeds $60,000, and in which any executive officer or any
security holder who is known by Tidelands, or any member of the immediate family of any of the
foregoing persons, has an interest. 
 Item 14. Principal Accountant Fees and Services Fees for services performed by KPMG LLP for the years ended December 31, 2004 and 2003 are: 2004
    
    
    2003Audit Fees
    
    $
    30,000
    
    
    $
    25,000Audit-related Fees
    
    
    
    
    
    
    Tax Fees
    
    
    
    
    
    
    All Other Fees
    
    
    
    
    
    
    
 As referenced in Item 10 above, Tidelands has no audit committee, and as a result, has no
audit committee pre-approval policy with respect to fees paid to KPMG LLP. 
 Part IV 
 Item 15. Exhibits and Financial Statement Schedules  (a)
    Financial Statements  See Financial Statements and Supplementary Data above.(b)
    Exhibits  4.1
    Indenture of Trust dated June 1, 1954, as amended, filed as an Exhibit to
Tidelands Quarterly Report on Form 10-Q for the period ended September 30, 2001,
filed with the Securities and Exchange Commission on November 14, 2001, and
incorporated herein by reference.21.1
    Subsidiaries of Tidelands Royalty Trust B.31.1
    Certification of the Principal Accounting Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.31.2
    Certification of the Corporate Trustee pursuant to Section 302 of the Sarbanes-Oxley of
Act of 2002.32.1
    Certification of the Principal Accounting Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.32.2
    Certification of the Corporate Trustee pursuant to Section 906 of the
Sarbanes-Oxley of Act of 2002. (c)     Financial Statement Schedules  All required schedules are included in the financial statements
included in this Annual Report on Form 10-K. 13




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Trustee
Tidelands Royalty Trust B: We have audited the accompanying consolidated balance sheets of Tidelands Royalty Trust B
(Tidelands) and subsidiary as of December 31, 2004 and 2003, and the related consolidated
statements of income and undistributed income and cash flows for each of the years in the
three-year period ended December 31, 2004. These consolidated financial statements are the
responsibility of Tidelands management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Tidelands Royalty Trust B and subsidiary as of
December 31, 2004 and 2003 and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 2004, in conformity with U.S. generally accepted
accounting principles. Dallas, TexasMarch 17, 2005
    
    /s/ KPMG
LLP
 14




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##### Table of Contents



TIDELANDS ROYALTY TRUST B AND SUBSIDIARY 
 CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2004 AND 2003 2004
    
    
    2003AssetsCurrent assets:Cash and cash equivalents
    
    $
    1,206,804
    
    
    $
    605,962Oil and natural gas royalties receivable
    
    
    396,015
    
    
    
    165,765Interest receivable
    
    
    1,403
    
    
    
    5,664Total current assets
    
    
    1,604,222
    
    
    
    777,391Oil, natural gas and other mineral properties
    
    
    2
    
    
    
    2Investment in U.S. Treasury and agency bonds
    
    
    200,000
    
    
    
    712,036$
    1,804,224
    
    
    $
    1,489,429Liabilities and Trust EquityCurrent liabilities:Accounts payable (note 3)
    
    $
    17,984
    
    
    $
    5,132Federal income taxes payable
    
    
    3,560
    
    
    
    702Income distributable to unitholders
    
    
    323,610
    
    
    
    334,960Total current liabilities
    
    
    345,154
    
    
    
    340,794Trust equity:Corpus  authorized 1,386,525
units of beneficial interest,
issued 1,386,375 units at nominal value
    
    
    2
    
    
    
    2Undistributed income (note 2)
    
    
    1,459,068
    
    
    
    1,148,633Total trust equity
    
    
    1,459,070
    
    
    
    1,148,635$
    1,804,224
    
    
    $
    1,489,429
 See accompanying notes to consolidated financial statements. 15




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##### Table of Contents



TIDELANDS ROYALTY TRUST B AND SUBSIDIARY 
 CONSOLIDATED STATEMENTS OF INCOME AND UNDISTRIBUTED INCOME
THREE YEARS ENDED DECEMBER 31, 2004 2004
    
    
    2003
    
    
    2002Income:Oil and natural gas royalties
    
    $
    1,375,651
    
    
    $
    1,364,733
    
    
    $
    1,011,079Interest and other
    
    
    11,916
    
    
    
    22,419
    
    
    
    26,774Total income
    
    
    1,387,567
    
    
    
    1,387,152
    
    
    
    1,037,853Expenses:General and administrative
    
    
    118,087
    
    
    
    110,384
    
    
    
    158,656Income before federal income taxes
    
    
    1,269,480
    
    
    
    1,276,768
    
    
    
    879,197Federal income taxes of subsidiary (note 1(e))
    
    
    5,200
    
    
    
    5,490
    
    
    
    3⁄4Net income
    
    
    1,264,280
    
    
    
    1,271,278
    
    
    
    879,197Undistributed income at beginning of year
    
    
    1,148,633
    
    
    
    1,226,179
    
    
    
    1,014,7072,412,913
    
    
    
    2,497,457
    
    
    
    1,893,904Distributions to unitholders
    
    
    953,845
    
    
    
    1,348,824
    
    
    
    667,725Undistributed income at end of year
    
    $
    1,459,068
    
    
    $
    1,148,633
    
    
    $
    1,226,179Net income per unit
    
    $
    .91
    
    
    $
    .92
    
    
    $
    .63Distributions per unit
    
    $
    .69
    
    
    $
    .97
    
    
    $
    .48Weighted average units outstanding
    
    
    1,386,375
    
    
    
    1,386,375
    
    
    
    1,386,375
 See accompanying notes to consolidated financial statements. 16




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##### Table of Contents



TIDELANDS ROYALTY TRUST B AND SUBSIDIARY 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE YEARS ENDED DECEMBER 31, 2004 2004
    
    
    2003
    
    
    2002Cash flows from operating activities:Net income
    
    $
    1,264,280
    
    
    $
    1,271,278
    
    
    $
    879,197Adjustments to reconcile net income to net cash
provided by
operating activities:Amortization of premium
    
    
    12,760
    
    
    
    15,802
    
    
    
    4,272Loss on sale of U.S. Treasury and agency bonds
    
    
    761
    
    
    
    
    
    
    
    Change in assets and liabilities:Oil and natural gas royalties receivable
    
    
    (230,250
    )
    
    
    108,499
    
    
    
    (151,701
    )Federal income taxes receivable
    
    
    
    
    
    
    12,037
    
    
    
    (1,517
    )Interest receivable
    
    
    4,261
    
    
    
    (1,010
    )
    
    
    (4,654
    )Accounts payable
    
    
    12,852
    
    
    
    (125,901
    )
    
    
    (551
    )Federal income tax payable
    
    
    2,858
    
    
    
    702
    
    
    
    Net cash provided by operating activities
    
    
    1,067,522
    
    
    
    1,281,407
    
    
    
    725,046Cash flows used in investing activities:Investment in U.S. Treasury and agency bonds
    
    
    (201,034
    )
    
    
    (206,301
    )
    
    
    (725,809
    )Proceeds from sale of U.S. agency bonds
    
    
    699,549
    
    
    
    200,000
    
    
    
    Net cash provided by (used in) investing activities
    
    
    498,515
    
    
    
    (6,301
    )
    
    
    (725,809
    )Cash flows
from financing activities  cash distributions
to unitholders
    
    
    (965,195
    )
    
    
    (1,189,519
    )
    
    
    (644,842
    )Net increase (decrease) in cash and cash
equivalents
    
    
    600,842
    
    
    
    85,587
    
    
    
    (645,605
    )Cash and cash equivalents at beginning of year
    
    
    605,962
    
    
    
    520,375
    
    
    
    1,165,980Cash and cash equivalents at end of year
    
    $
    1,206,804
    
    
    $
    605,962
    
    
    $
    520,375
 See accompanying notes to consolidated financial statements. 17




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##### Table of Contents



TIDELANDS ROYALTY TRUST B AND SUBSIDIARY 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2004  (1)
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL  (a)
    General Tidelands Royalty Trust B (Tidelands) was established on June 1, 1954 with a transfer of
contract rights to certain properties to Tidelands in exchange for units of beneficial interest.
The contract rights enable Tidelands to receive an interest in any oil, natural gas or other
mineral leases obtained by Gulf Oil Corporation, now Chevron U.S.A., Inc. (Chevron) which is a
subsidiary of ChevronTexaco Corporation, and its assignees in a designated area of the Gulf of
Mexico during a 50-year period beginning April 30, 1951. Tidelands is required under its indenture to distribute all income, after paying its
liabilities and obligations, to the unitholders quarterly. Tidelands cannot invest any of its money
for any purpose and cannot engage in a trade or business. Tidelands wholly-owned subsidiary, Tidelands Royalty B Corporation (Tidelands
Corporation), holds title to interests in properties that are situated offshore of Louisiana.
Ninety-five percent of all oil, natural gas, and other mineral royalties collected by this
subsidiary are paid to Tidelands. Tidelands Corporation, like Tidelands, is prohibited from
engaging in a trade or business and does only those things necessary for the administration and
liquidation of its properties. Tidelands is authorized to pay the expenses of Tidelands Corporation
should it be necessary. Tidelands and its subsidiary have no employees. Tidelands has entered into an arrangement with
Marine Petroleum Corporation (a wholly-owned subsidiary of Marine Petroleum Trust, an affiliate of
Tidelands) to share certain administrative expenses and to assist the trustees in the
administration of the trust. For the years ended 2004, 2003 and 2002 Tidelands paid $25,000,
$18,000 and $22,000 to Marine Petroleum Corporation, respectively. At December 31, 2004 and 2003,
Marine Petroleum Trust owned 32.6% of Tidelands outstanding units of beneficial interest.  (b)
    Unitholder Voting Matters On March 27, 2001, the unitholders of record at the close of business on February 16, 2001,
approved an amendment to the Indenture to extend the life of the trust beyond the original
expiration date of April 30, 2001 to April 30, 2021.  (c)
    Principles of Consolidation The consolidated financial statements include Tidelands and its wholly-owned subsidiary. All
intercompany accounts and transactions have been eliminated in consolidation.  (d)
    Oil, Natural gas and Other Mineral Properties At the time Tidelands was established, no determinable market value was available for the
assets transferred to Tidelands; consequently, nominal values were assigned. Accordingly, no
allowance for depletion has been computed. 18




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TIDELANDS ROYALTY TRUST B AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED) Tidelands revenues are derived from production payments and overriding royalty interests
related to properties located in the Gulf of Mexico. Net revenues from oil and natural gas royalties related to proved developed oil and natural
gas reserves were $1,375,651, $1,364,733 and $1,011,079 in 2004, 2003, and 2002, respectively.  (e)
    Federal Income Taxes No provision has been made for Federal income taxes on Tidelands income since such taxes are
the liability of the unitholders. Federal income taxes are provided on the income (if any) of
Tidelands Corporation, excluding the 95% of oil and natural gas royalties to be distributed to
Tidelands and after deducting statutory depletion. Tidelands Corporation had federal income taxes
payable of $3,560 as of December 31, 2004. There were no significant deferred tax assets or
liabilities as of December 31, 2004 and 2003. The primary difference between the effective tax
rate and the statutory tax rate is due to nontaxable income.  (f)
    Credit Risk Concentration and Cash Equivalents Financial instruments which potentially subject Tidelands and its wholly-owned subsidiary to
concentrations of credit risk are primarily investments in cash equivalents and unsecured oil and
natural gas royalties receivable. Tidelands and its wholly-owned subsidiary place their cash
investments with financial institutions that management considers creditworthy and limit the amount
of credit exposure from any one financial institution. Royalties receivable are from large
creditworthy companies and Tidelands historically has not encountered collection problems. The
estimated fair values of cash equivalents and oil and natural gas royalties receivable approximate
the carrying values due to the short term nature of these financial instruments. Cash equivalents of $838,297 and $236,426 at December 31, 2004 and 2003, respectively, consist
of cash held in a money market account that invests in U.S. Treasury securities. For purposes of
the statements of cash flows, Tidelands considers all investments with original maturities of three
months or less to be cash equivalents.  (g)
    Statements of Cash Flows Tidelands Corporation paid $2,342, $5,000 and $1,562 in federal income taxes in 2004, 2003,
and 2002, respectively. No payments of interest were made in 2004, 2003 and 2002.  (h)
    Use of Estimates The preparation of financial statements in conformity with accounting principles generally
accepted in the United States requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.  (i)
    Net Income per Unit Net income per unit is determined by dividing net income by the weighted average number of
units of beneficial interest outstanding during the period. 19




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##### Table of Contents



TIDELANDS ROYALTY TRUST B AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)  (j)
    Significant Royalty Sources Royalty revenue received by Tidelands from producers is summarized as follows: 2004
    
    
    2003
    
    
    2002Devon Energy Production Company
    
    
    80
    %
    
    
    65
    %
    
    
    48
    %W & T Offshore
    
    
    12
    %
    
    
    12
    %
    
    
    Burlington Resources Oil and Natural Gas Company
    
    
    
    
    
    
    3
    %
    
    
    20
    %Dunhill Resources, Inc
    
    
    1
    %
    
    
    12
    %
    
    
    17
    %Millenium Offshore Group
    
    
    
    
    
    
    
    
    
    
    1
    %Others
    
    
    7
    %
    
    
    8
    %
    
    
    14
    %100
    %
    
    
    100
    %
    
    
    100
    %
  (2)
    UNDISTRIBUTED INCOME Undistributed income includes $869,175 and $873,425 applicable to the subsidiary corporation
at December 31, 2004 and 2003, respectively.  (3)
    OVERPAID ROYALTIES Tidelands recorded a liability for possible royalty overpayments received in various years
from 1988 through 1993, which is reflected in accounts payable in the accompanying consolidated
balance sheets. During 2003, Tidelands determined that $127,234 was no longer required to be
reserved, because it was no longer probable that repayment of such amounts actually would be
required. Accordingly, accounts payable was reduced and oil and natural gas royalty income was
increased by such amount.  (4)
    SUPPLEMENTAL INFORMATION RELATING TO OIL AND NATURAL GAS RESERVES (UNAUDITED) Oil and natural gas reserve information relating to Tidelands royalty interests is not
presented because such information is not available to Tidelands. Tidelands share of oil and
natural gas produced for its royalty interests was as follows: oil
(barrels)  8,022 in 2004, 8,043
in 2003 and 8,614 in 2002; and natural gas (mcf)   175,835 in 2004, 180,196 in 2003 and 229,038 in
2002.  (5)
    SUMMARY OF QUARTERLY FINANCIAL DATA (UNAUDITED) The following quarterly financial information for the years ended December 31, 2004 and 2003
is unaudited; however, in the opinion of management, all adjustments necessary to present a fair
statement of the results of operations for the interim periods have been included. 20




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##### Table of Contents



Oil andNatural Gas
    
    
    Net
    
    
    Net IncomeRoyalties
    
    
    Income
    
    
    Per UnitQuarter ended:March 31, 2004
    
    $
    255,557
    
    
    $
    224,418
    
    
    $
    .16June 30, 2004
    
    
    194,938
    
    
    
    162,128
    
    
    
    .12September 30, 2004
    
    
    247,336
    
    
    
    228,036
    
    
    
    .16December 31, 2004
    
    
    677,820
    
    
    
    649,698
    
    
    
    .47$
    1,375,651
    
    
    $
    1,264,280
    
    
    $
    .91Quarter ended:March 31, 2003
    
    $
    470,936
    
    
    $
    442,174
    
    
    $
    .32June 30, 2003
    
    
    365,866
    
    
    
    333,038
    
    
    
    .24September 30, 2003
    
    
    179,234
    
    
    
    170,604
    
    
    
    .12December 31, 2003
    
    
    348,697
    
    
    
    325,462
    
    
    
    .24$
    1,364,733
    
    
    $
    1,271,278
    
    
    $
    .92
 21




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##### Table of Contents



SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this Annual Report on Form 10-K to be signed by the undersigned
thereunto duly authorized. Tidelands Royalty Trust BDate: March 29, 2005
    
    (Registrant)By: Bank of America, N.A.(in its capacity as Corporate Trusteeof Tidelands Royalty Trust B and not inits individual capacity or otherwise)
 By:
    /s/ RON E. HOOPERRon E. HooperVice President Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on
Form 10-K has been signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated. NAME
    
    CAPACITIES
    
    DATEBank of America, N.A.
    
    Corporate Trustee
    
    March 29, 2005By:
    
    /s/ RON E. HOOPERRon E. HooperVice President/s/ R. RAY BELL
    
    (Acting as Principal Accounting Officer)
    
    March 29, 2005R. Ray Bell
 22




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##### Table of Contents



Tidelands Royalty Trust B
c/o Bank of America, N.A.
P.O. Box 830241
Dallas, Texas 75283-0241 23




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##### Table of Contents



EXHIBIT INDEX ExhibitNumber
    
    Description4.1
    
    Indenture of Trust dated June 1, 1954, as amended, filed as an Exhibit to Tidelands
Quarterly Report on Form 10-Q for the period ended September 30, 2001, filed with the
Securities and Exchange Commission on November 14, 2001, and incorporated herein by reference.21.1
    
    Subsidiaries of Tidelands Royalty Trust B.31.1
    
    Certification of the Principal Accounting Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Corporate Trustee pursuant to Section 302 of the Sarbanes-Oxley of Act of
2002.32.1
    
    Certification of the Principal Accounting Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    Certification of the Corporate Trustee pursuant to Section 906 of the Sarbanes-Oxley of Act
of 2002.
 24