What changed in this filing

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Item 1. Financial Statements

2020-11-09 compared with 2020-08-10 · 158 added, 143 removed, 225 unchanged (57% of the section changed)

2 unchanged sentences

Three months ended

Six months ended

September 30,

Nine months ended

September 30,

Income from net profits interest

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Distributable income

Distributions per Trust unit (11,500,000 Trust units issued and outstanding at June 30, 2020 and 2019)

(1) Includes $50,951 and $0 paid to MV Partners, LLC during the three months ended June 30, 2020 and 2019, respectively, and

$76,926 and $48,992 during the six months ended June 30, 2020 and 2019, respectively.

Also includes $37,500 paid to The Bank

of New York Mellon Trust Company, N.A.

during each of the three months ended June 30, 2020 and 2019 and $75,000 during each

of the six months ended June 30, 2020 and 2019.

Distributions per Trust unit (11,500,000 Trust units issued and outstanding at September 30, 2020 and 2019)

$0 and $49,952 paid to MV Partners, LLC during the three months ended September 30, 2020 and 2019, respectively, and $76,926

and $ 98,944 during the nine months ended September 30, 2020 and 2019, respectively.

Also includes $37,500 paid to The Bank of New York Mellon Trust Company, N.A.

during each of the three months ended September 30,

2020 and 2019 and $112,500 during each of the nine months ended September 30, 2020 and 2019.

CONDENSED STATEMENTS OF ASSETS AND TRUST

September 30,

Cash and cash equivalents

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(38,097,825 )

Trust corpus, 11,500,000 Trust units issued and outstanding at June 30, 2020 and December 31, 2019

Trust corpus, 11,500,000 Trust units issued and outstanding at September 30, 2020 and December 31, 2019

CONDENSED STATEMENTS OF CHANGES IN TRUST

Three months ended

Six months ended

September 30,

Nine months ended

September 30,

Trust corpus, beginning of period

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Assets and Trust Corpus as of December 31, 2019, which has been derived from audited financial statements, and the unaudited

interim condensed financial statements as of June 30, 2020 and for the three and six months ended June 30, 2020 and June 30,

2019, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).

Accordingly, certain information and note disclosures normally included in annual financial statements have been condensed or omitted

pursuant to those rules and regulations.

interim condensed financial statements as of September 30, 2020 and for the three and nine months ended September 30,

2020 and September 30, 2019, have been prepared pursuant to the rules and regulations of the Securities and Exchange

Commission (the “SEC”).

Accordingly, certain information and note disclosures normally included in annual financial

statements have been condensed or omitted pursuant to those rules and regulations.

The preparation of financial statements

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Note 3—Trust Accounting Policies

Trust uses the modified cash basis of accounting to report receipts of the net profits interest and payments of expenses incurred.

The net profits interest represents the right to receive revenues (oil, gas and natural gas liquid sales) less direct operating

expenses (lease operating expenses, lease maintenance, lease overhead, and production and property taxes) and an adjustment for

lease equipment costs and lease development expenses (which are capitalized in financial statements prepared in accordance with

accounting principles generally accepted in the United States of America (“U.S.

GAAP”)) of the underlying properties

Actual cash receipts may vary due to timing delays of actual cash receipts from the property operators or purchasers

and due to wellhead and pipeline volume balancing agreements or practices.

The actual cash distributions of the Trust will be made

based on the terms of the conveyance creating the Trust’s net profits interest.

Expenses of the Trust, which include

accounting, engineering, legal and other professional fees, Trustee fees, an administrative fee paid to MV Partners and out-of-pocket

expenses, are recognized when paid.

The Trust uses the modified cash basis of

accounting to report receipts of the net profits interest and payments of expenses incurred.

The net profits interest represents

the right to receive revenues (oil, gas and natural gas liquid sales) less direct operating expenses (lease operating expenses,

lease maintenance, lease overhead, and production and property taxes) and an adjustment for lease equipment costs and lease development

expenses (which are capitalized in financial statements prepared in accordance with accounting principles generally accepted in

the United States of America (“U.S.

GAAP”)) of the underlying properties times 80%.

Actual cash receipts may vary due

to timing delays of actual cash receipts from the property operators or purchasers and due to wellhead and pipeline volume balancing

agreements or practices.

The actual cash distributions of the Trust will be made based on the terms of the conveyance creating

the Trust’s net profits interest.

Expenses of the Trust, which include accounting, engineering, legal and other professional

fees, Trustee fees, an administrative fee paid to MV Partners and out-of-pocket expenses, are recognized when paid.

GAAP, revenues and expenses would be recognized on an accrual basis.

of the investment in net profits interest is recorded on a unit-of-production method in the period in which the cash is received

with respect to such production.

Such amortization does not reduce distributable income, rather it is charged directly to Trust

Amortization of the investment in net profits interest is

recorded on a unit-of-production method in the period in which the cash is received with respect to such production.

Such amortization

does not reduce distributable income, rather it is charged directly to Trust Corpus.

This comprehensive basis of accounting other

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No new accounting pronouncements have been

adopted or issued during the quarter ended June 30, 2020 that would impact the financial statements of the Trust.

adopted or issued during the quarter ended September 30, 2020 that would impact the financial statements of the Trust.

Note 4—Investment in Net Profits Interest

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Three months ended

Six months ended

Excess of revenues over direct operating expenses and lease equipment and development costs(1)

Times net profits interest over the term of the Trust

Income from net profits interest before reserve adjustments

September 30,

Nine months ended

September 30,

Excess (deficit) of revenues over direct operating expenses and lease equipment and development costs(1)

Times net profits interest over the term of the

Income (loss) from net profits interest before reserve adjustments

MV Partners reserve for future capital expenditures(2)

Income from net profits interest(3)

(1) Excess of revenues over direct operating expenses and lease equipment and development costs reflect expenses and costs incurred

by MV Partners during the December through February production periods for the three months ended June 30, 2020

and 2019, respectively, and during each of the September through February production periods for the six months ended

June 30, 2020 and 2019, respectively.

Pursuant to the terms of the conveyance of the net profits interest, lease equipment

and development costs are to be deducted when calculating the distributable income to the Trust.

(2) Pursuant to the terms of the conveyance of the net profits interest, MV Partners can reserve up to $1.0 million for future

capital expenditures at any time.

During the three and six months ended June 30, 2020, MV Partners did not withhold or release

of revenues over direct operating expenses and lease equipment and development costs reflect expenses and costs incurred by MV

Partners during the March through May production periods for the three months ended September 30, 2020 and 2019,

respectively, and during each of the September through May production periods for the nine months ended September 30,

2020 and 2019, respectively.

Pursuant to the terms of the conveyance of the net profits interest, lease equipment and development

costs are to be deducted when calculating the distributable income to the Trust.

to the terms of the conveyance of the net profits interest, MV Partners can reserve up to $1.0 million for future capital expenditures

During the three and nine months ended September 30, 2020, MV Partners released $440,532 previously held for

future capital expenditures.

During the three and nine months ended September 30, 2019, MV Partners did not withhold or release

any dollar amounts due to the Trust.

During the three and six months ended June 30, 2019, MV Partners did not withhold or

release any dollar amounts due to the Trust.

The reserve balance was $1,000,000 at June 30, 2020 and 2019.

(3) The income from net profits interest is based upon the cash receipts from MV Partners for the oil and gas production.

The reserve balance was $559,468 at September 30, 2020 and $1,000,000 at September 30,

income from net profits interest is based upon the cash receipts from MV Partners for the oil and gas production.

from oil production are typically received by MV Partners one month after production;

thus, the cash received by the Trust during

the three months ended June 30, 2020 substantially represents the production by MV Partners from December 2019 through

February 2020 and the cash received by the Trust during the three months ended June 30, 2019 substantially represents

the production by MV Partners from December 2018 through February 2019.

The cash received by the Trust during the six

months ended June 30, 2020 substantially represents the production by MV Partners from September 2019 through February 2020

and the cash received by the Trust during the six months ended June 30, 2019 substantially represents the production by MV

Partners from September 2018 through February 2019.

For the three and six months ended June 30,

the three months ended September 30, 2020 substantially represents the production by MV Partners from March 2020 through

May 2020 and the cash received by the Trust during the three months ended September 30, 2019 substantially represents

the production by MV Partners from March 2019 through May 2019.

The cash received by the Trust during the nine months

ended September 30, 2020 substantially represents the production by MV Partners from September 2019 through May 2020

and the cash received by the Trust during the nine months ended September 30, 2019 substantially represents the production

by MV Partners from September 2018 through May 2019.

For the three and nine months ended September 30,

2020 and 2019, MV Purchasing, LLC, which is majority-owned by the indirect equity owners of MV Partners, purchased a majority of

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through March 31, 2020.

There was no quarterly distribution during

the third quarter of 2020 to Trust unitholders owning Trust units as of July 15, 2020.

The revenue collected by MV Partners from

April 1, 2020 through June 30, 2020 was not sufficient to cover the costs paid during the period.

MV Partners applied $440,532

from the reserve for future expenditures to cover the deficit.

The first quarterly distribution during

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through March 31, 2019.

The third quarterly distribution during

2019 was $3,507,500, or $0.305 per Trust unit, and was made on July 25, 2019 to Trust unitholders owning Trust units as of July

Such distribution included the net proceeds of production collected by MV Partners from April 1, 2019 through June 30,

Note 8—Advance for Trust Expenses

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the Trustee is allowed to borrow money to pay Trust expenses.

During the three months ended June 30, 2020 and 2019, there

During the three months ended September 30, 2020 and 2019, there

were no borrowings or amounts owed for money borrowed in previous quarters.

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Note 9—Subsequent Events

There was no quarterly distribution during

the third quarter of 2020.

The revenue collected by MV Partners from April 1, 2020 through June 30, 2020 was not sufficient

to cover the costs paid during the period.

MV Partners applied $440,532 from the reserve for future expenditures to cover the deficit.

The fourth quarterly distribution during

2020 was $1,092,500, or $0.095 per Trust unit, and was made on October 23, 2020 to Trust unitholders owning Trust units as

of October 15, 2020.

Such distribution included the net proceeds attributable to the sale of production received by MV Partners

from July 1, 2020 through September 30, 2020.

Trustee’s Discussion and Analysis of Financial

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The recent outbreak of the novel form of

coronavirus known as COVID-19 and its development into a global pandemic is negatively impacting worldwide economic

and commercial activity and financial markets, as well as global demand for crude oil and natural gas.

The West Texas Intermediate

spot price of crude oil has declined since the beginning of 2020, from $63.27 per barrel on January 6, 2020 to $41.95 per barrel

on August 6, 2020.

During this time frame, the monthly average price, which is the base price that crude oil sales are based on,

reached a low of $16.70 per barrel for April 2020.

The decline in oil prices is primarily attributable to the economic effects

of the COVID-19 pandemic and the dispute over production levels between Russia and the members of the Organization of Petroleum

Exporting Countries, which resulted in an oversupply of crude oil and exacerbated the decline in crude oil prices.

the responses by federal, state and local governmental authorities to the pandemic have also resulted in significant business

and operational disruptions, including business closures, supply chain disruptions, travel restrictions, stay-at-home orders

coronavirus known as COVID-19 and its development into a global pandemic has had, and continues to have, a negative impact

on worldwide economic and commercial activity and financial markets, as well as global demand for crude oil and natural gas.

West Texas Intermediate spot price of crude oil has declined since the beginning of 2020, from $63.27 per barrel on January 6,

2020 to $38.79 per barrel on November 5, 2020.

During this time frame, the monthly average price, which is the base price that

crude oil sales are based on, reached a low of $16.70 per barrel for April 2020.

The decline in oil prices is primarily attributable

to the economic effects of the COVID-19 pandemic and the dispute over production levels between Russia and the members of the Organization

of Petroleum Exporting Countries, which resulted in an oversupply of crude oil and exacerbated the decline in crude oil prices.

COVID-19 and the responses by federal, state and local governmental authorities to the pandemic have also resulted in significant

business and operational disruptions, including business closures, supply chain disruptions, travel restrictions, stay-at-home orders

and limitations on the availability of workforces.

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of 2020, there was no distribution made to unitholders in the third quarter of 2020.

If commodity prices for crude oil remain

at reduced levels, quarterly cash distributions to unitholders will be substantially lower than historical distributions, and

in certain periods there may be no distribution to unitholders.

If commodity prices for crude oil remain at

reduced levels, quarterly cash distributions to unitholders will be substantially lower than historical distributions, and in certain

periods there may be no distribution to unitholders.

Results of Operations

Results of Operations for the Quarters Ended June 30,

2020 and 2019

The cash received by the Trust from MV Partners

during the quarter ended June 30, 2020 substantially represents the production by MV Partners from December 2019 through February

The cash received by the Trust from MV Partners during the quarter ended June 30, 2019 substantially represents the production

by MV Partners from December 2018 through February 2019.

The revenues from oil production are typically received by MV Partners

one month after production.

The Trust’s income from net profits interest increased $573,413 to $3,221,996 for the quarter

ended June 30, 2020 from $2,648,583 for the quarter ended June 30, 2019.

The increase was primarily due to a $716,765 increase

in excess of revenues over direct operating expenses and lease equipment and development costs for the underlying properties to

$4,027,494 from $3,310,729 for the same period in the prior year.

These amounts were reduced by a Trust holdback for future expenses

of $864,496 and $176,083 for the quarters ended June 30, 2020 and 2019, respectively.

This increase of $688,413 includes an amount

estimated to be sufficient to pay estimated Trust expenses through approximately April 2021.

The Trustee paid general and administrative

expenses of $265,756 and $164,546 for the quarters ended June 30, 2020 and 2019, respectively.

During the quarters ended June 30,

2020 and 2019, MV Partners did not withhold or release any dollar amounts due to the Trust from the previously established reserve

for future capital expenditures.

These factors resulted in distributable income for the quarter ended June 30, 2020 of $2,357,500,

a decrease of $115,000 from $2,472,500 for the quarter ended June 30, 2019.

The average price received for crude oil sold was $51.70 per

Bbl and the average price received for natural gas sold was $1.92 per Mcf for the period from January 1, 2020 through March 31,

The average price received for crude oil sold was $46.62 per Bbl and the average price received for natural gas sold was

$3.27 per Mcf for the period from January 1, 2019 through March 31, 2019.

The overall production sales volumes attributable to the net

profits interest for the oil and gas production collected during the period from January 1, 2020 through March 31, 2020 were 144,591

Bbls of oil, 7,326 Mcf of natural gas and 21 Bbls of natural gas liquids for total barrels of oil equivalent of 145,826.

production sales volumes attributable to the net profits interest for the oil and gas production collected during the period from

January 1, 2019 through March 31, 2019 were 140,296 Bbls of oil, 7,438 Mcf of natural gas and 27 Bbls of natural gas liquids for

a total of 141,553 barrels of oil equivalent.

Results of Operations for the Six Months Ended June 30,

Results of Operations for the Quarters Ended September 30,

2020 and 2019

cash received by the Trust from MV Partners during the six months ended June 30, 2020 substantially represents the production by

MV Partners from September 2019 through February 2020.

The cash received by the Trust from MV Partners during the six months ended

June 30, 2019 substantially represents the production by MV Partners from September 2018 through February 2019.

The revenues from

oil production are typically received by MV Partners one month after production.

The Trust’s income from net profits interest

decreased $819,879 to $5,648,151 for the six months ended June 30, 2020 from $6,468,030 for the six months ended June 30, 2019.

cash received by the Trust from MV Partners during the quarter ended September 30, 2020 substantially represents the production

by MV Partners from March 2020 through May 2020.

The cash received by the Trust from MV Partners during the quarter ended September

30, 2019 substantially represents the production by MV Partners from March 2019 through May 2019.

The revenues from oil production

are typically received by MV Partners one month after production.

The Trust’s income from net profits interest decreased

$4,121,627 to ($440,532) for the quarter ended September 30, 2020 from $ 3,681,095 for the quarter ended September 30, 2019.

The decrease was primarily due to a $5,152,034 decrease in excess of revenues over direct operating expenses and lease equipment

and development costs for the underlying properties to ($550,665) from $4,601,369 for the same period in the prior year.

Additionally,

the Trustee held back $1,105,650 for future expenses for the six months ended June 30, 2020 and $373,030 for the six months ended

June 30, 2019.

This increase of $732,621 includes an amount estimated to be sufficient to pay estimated Trust expenses through

approximately April 2021.

The Trustee paid general and administrative expenses of $480,914 and $555,869 for the six months ended

June 30, 2020 and 2019, respectively.

During the six months ended June 30, 2020 and 2019, MV Partners did not withhold or release

any dollar amounts due to the Trust from the previously established reserve for future capital expenditures.

These factors resulted

in distributable income for the six months ended June 30, 2020 of $4,542,500, a decrease of $1,552,500 from $6,095,000 for the

six months ended June 30, 2019.

amounts were reduced by a Trust holdback for future expenses of $0 and $173,595 for the quarters ended September 30, 2020 and 2019,

respectively.

The Trustee paid general and administrative expenses of $151,049 and $175,582 for the quarters ended September 30,

2020 and 2019, respectively.

During the quarter ended September 30, 2020, MV Partners released $440,532 due to the Trust from the

previously established reserve for future capital expenditures.

During the quarter ended September 30, 2019, MV Partners did not

withhold or release any dollar amounts due to the Trust from the previously established reserve for future capital expenditures.

These factors resulted in distributable income for the quarter ended September 30, 2020 of $0, a decrease of $3,507,500 from $3,507,500

for the quarter ended September 30, 2019.

average price received for crude oil sold was $22.39 per Bbl and the average price received for natural gas sold was $1.14 per

Mcf for the period from April 1, 2020 through June 30, 2020.

The average price received for crude oil sold was $ 56.08 per

Bbl and the average price received for natural gas sold was $1.77 per Mcf for the period from April 1, 2019 through June 30, 2019.

overall production sales volumes attributable to the net profits interest for the oil and gas production collected during the period

from April 1, 2020 through June 30, 2020 were 117,376 Bbls of oil, 6,800 Mcf of natural gas and 16 Bbls of natural gas liquids

for total barrels of oil equivalent of 118,520.

The overall production sales volumes attributable to the net profits interest for

the oil and gas production collected during the period from April 1, 2019 through June 30, 2019 were 144,024 Bbls of oil,

6,973 Mcf of natural gas and 67 Bbls of natural gas liquids for a total of 145,230 barrels of oil equivalent.

Results of Operations for the Nine Months Ended September 30,

2020 and 2019

The cash received by the Trust from MV Partners

during the nine months ended September 30, 2020 substantially represents the production by MV Partners from September 2019 through

The cash received by the Trust from MV Partners during the nine months ended September 30, 2019 substantially represents

the production by MV Partners from September 2018 through May 2019.

The revenues from oil production are typically received by

MV Partners one month after production.

The Trust’s income from net profits interest decreased $4,941,507 to $5,207,619 for

the nine months ended September 30, 2020 from $10,149,126 for the nine months ended September 30, 2019.

The decrease was primarily

due to a $6,176,884 decrease in excess of revenues over direct operating expenses and lease equipment and development costs for

the underlying properties to $6,509,523 from $12,686,407 for the same period in the prior year.

Additionally, the Trustee held

back $1,105,650 for future expenses for the nine months ended September 30, 2020 and $546,625 for the nine months ended September

This increase of $559,025 includes an amount estimated to be sufficient to pay estimated Trust expenses through approximately

The Trustee paid general and administrative expenses of $631,963 and $731,451 for the nine months ended September 30,

2020 and 2019, respectively.

During the nine months ended September 30, 2020, MV Partners released $440,532 due to the Trust from

the previously established reserve for future capital expenditures.

During the nine months ended September 30, 2019, MV Partners

did not withhold or release any dollar amounts due to the Trust from the previously established reserve for future capital expenditures.

These factors resulted in distributable income for the nine months ended September 30, 2020 of $4,542,500, a decrease of $5,060,000

from $9,602,500 for the nine months ended September 30, 2019.

The average price received for crude oil

sold was $43.10 per Bbl and the average price received for natural gas sold was $1.50 per Mcf for the period from October 1, 2019

through March 31, 2020.

through June 30, 2020.

The average price received for crude oil sold was $54.60 per Bbl and the average price received for natural

gas sold was $2.66 per Mcf for the period from October 1, 2018 through March 31, 2019.

overall production sales volumes attributable to the net profits interest for the oil and gas production collected during the period

from October 1, 2019 through March 31, 2020 were 288,974 Bbls of oil, 13,089 Mcf of natural gas and 174 Bbls of natural gas liquids

for a total barrels of oil equivalent of 291,269.

The overall production sales volumes attributable to the net profits interest

for the oil and gas production collected during the period from October 1, 2018 through March 31, 2019 were 284,441 Bbls of oil,

17,563 Mcf of natural gas and 122 Bbls of natural gas liquids for a total of 287,448 barrels of oil equivalent.

gas sold was $2.41 per Mcf for the period from October 1, 2018 through June 30, 2019.

The overall production sales volumes attributable

to the net profits interest for the oil and gas production collected during the period from October 1, 2019 through June 30, 2020

were 406,350 Bbls of oil, 19,889 Mcf of natural gas and 190 Bbls of natural gas liquids for a total barrels of oil equivalent

The overall production sales volumes attributable to the net profits interest for the oil and gas production collected

during the period from October 1, 2018 through June 30, 2019 were 428,465 Bbls of oil, 24,536 Mcf of natural gas and 190 Bbls of

natural gas liquids for a total of 432,677 barrels of oil equivalent.

Liquidity and Capital Resources

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Available funds are reduced by any cash the Trustee decides to hold as a reserve against future expenses.

As of June 30,

As of September

30, 2020, $675,000 was held by the Trustee as such a reserve.

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funds are repaid.

During the three and six months ended June 30, 2020 and 2019, there were no such borrowings.

During the three and nine months ended September 30, 2020 and 2019, there were no such borrowings.

has provided a letter of credit in the amount of $1.8 million to the Trustee to protect the Trust against the risk that it does

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uneven capital expenditure timing.

As of June 30, 2020, $1,000,000 was held by MV Partners as a capital reserve.

As of September 30, 2020, $559,468 was held by MV Partners as a capital reserve.

The Trust does not have any transactions,

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements