What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2023-03-16 compared with 2022-03-17 · 16 added, 448 removed, 264 unchanged (64% of the section changed)

1 unchanged sentence

Operating Risks

Prices of oil, natural gas and natural gas liquids fluctuate, and lower prices could reduce proceeds to the trust and cash distributions to unitholders.

Prices of oil, natural gas and natural gas liquids fluctuate, and lower prices could reduce proceeds to the trust and cash distributions to trust unitholders.

The reserves attributable to the underlying properties and the quarterly cash distributions of the trust are highly dependent upon the prices realized from the sale of oil, natural gas and natural gas liquids.

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political conditions or hostilities in oil and natural gas producing regions, including the Middle East, North Africa and South America;

the outbreak of armed conflict between Russia and Ukraine and the potential destabilizing effect such conflict may pose for the European continent or the global oil and gas markets;

the armed conflict between Russia and Ukraine and the potential destabilizing effect such conflict may pose for the global oil and gas markets;

weather conditions or force majeure events;

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The NYMEX crude oil spot prices per Bbl were $48.52, $75.21 and $80.26 as of December 31, 2020, 2021 and 2022, respectively.

Commodity prices displayed dramatic volatility in 2020, when the COVID-19 pandemic and various governmental actions taken to mitigate the impact of COVID-19 resulted in an unprecedented decline in demand for oil and natural gas.

Although worldwide demand for oil, natural gas and natural gas liquids recovered in 2021 and 2022, governmental responses to COVID-19 remain dynamic, with certain countries, such as China, continuing to impose periodic lockdowns in response to rising case numbers.

To the extent strains or variants of COVID-19 resurge, or if other epidemic or pandemic diseases or other public health event were to occur, the negative impact to global demand for oil, natural gas and natural gas liquids could be material.

Neither MV Partners nor the trust can predict the timing or the duration of any economic cycle and, depending on the prices realized, the operating results of MV Partners and the financial condition of the trust could be materially and adversely affected.

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Low prices of oil, natural gas and natural gas liquids will reduce the amount of the net proceeds to which the trust is entitled and may ultimately reduce the amount of oil, natural gas and natural gas liquids that is economic to produce from the underlying properties.

As a result, the operator of any of the underlying properties could determine during periods of low commodity prices to shut in or curtail production from wells on the underlying properties.

In addition, the operator of the underlying properties could determine during periods of low commodity prices to plug and abandon marginal wells that otherwise may have been allowed to continue to produce for a longer period under conditions of higher prices.

As a result, the operator of any of the underlying properties could determine during periods of low commodity prices to shut in or curtail production from wells on the underlying properties, or to plug and abandon marginal wells that otherwise may have been allowed to continue to produce for a longer period under conditions of higher prices.

Because the underlying properties are mature, with many of them being in production since the early 1900s, decreases in commodity prices could have a more significant effect on the economic viability of these properties compared to more recently discovered properties.

The commodity price sensitivity of these mature wells is due to a culmination of factors that vary from well-to-well, including the additional costs associated with water handling and disposal, chemicals, surface equipment maintenance, downhole casing repairs and reservoir pressure maintenance activities that are necessary to maintain production.

As a result, the volatility of commodity prices may cause the amount of future cash distributions to trust unitholders to fluctuate, and a substantial decline in the price of oil, natural gas or natural gas liquids will reduce the amount of cash available for distribution to the trust unitholders.

The ongoing COVID-19 pandemic and related economic turmoil have affected and could continue to adversely affect proceeds to the Trust and quarterly cash distributions to unitholders.

The COVID-19 pandemic and the measures put in place to address it have created significant volatility, uncertainty, and economic disruption since the first quarter of 2020.

Over the course of the pandemic, public health officials have recommended or mandated certain precautions to mitigate the spread of COVID-19, including quarantines, shelter-in-place orders and business and government shutdowns.

Although some of these limitations and mandates have been relaxed in certain jurisdictions, others have been reinstated in areas that have experienced a resurgence of COVID-19 cases and there is no guarantee restrictions will not be reimposed in the future.

Despite the increased availability of vaccines in certain jurisdictions, the COVID-19 pandemic may continue or worsen during the upcoming months, including as a result of the emergence of more infectious variants of the virus, vaccine hesitancy or increased business and social activities, which may cause governmental authorities to reinstate restrictions.

As a result, the ongoing impact of the COVID-19 pandemic remains uncertain and will depend on the severity, location and duration of the effects and spread of the disease, the effectiveness and duration of actions taken by authorities to contain the virus or treat its effect, the availability and effectiveness of vaccines or other treatments, and how quickly and to what extent economic conditions improve.

Furthermore, the impact of the pandemic, including a resulting reduction in demand for oil and natural gas, coupled with the sharp decline in commodity prices following the announcement of price reductions and production increases in March 2020 by members of OPEC, led to significant global economic

contraction generally and in the oil and gas industry in particular, which experienced a significant downturn during 2020 and into 2021.

Oil and natural gas prices are expected to continue to be volatile as a result of the ongoing COVID-19 pandemic and other factors affecting the global economy, and the trust cannot predict whether or when prices will stabilize.

The trust cannot predict the full impact that COVID-19 or the significant disruption and volatility currently being experienced in the oil and natural gas markets will have on MV Partners’ business, financial condition and results of operations or on proceeds to the trust and the trust’s reserves and quarterly cash distributions to unitholders due to numerous uncertainties.

The extent to which COVID-19 negatively impacts the operators of and production from the underlying properties will depend on the severity, location and duration of the effects and spread of COVID-19, the actions undertaken by federal, state and local governments and health officials to contain the virus or treat its effects, and how quickly and to what extent economic conditions improve and normal business and operating conditions resume.

A prolonged period of low crude oil prices will adversely affect the operators of the underlying properties.

For example, as a result of the decreased price of crude oil during the second quarter of 2020, there was no distribution made to unitholders in the third quarter of 2020.

If commodity prices for crude oil were to decline again, quarterly cash distributions to unitholders will be substantially lower than historical distributions, and in certain periods there may be no distribution to unitholders.

Low prices of oil may ultimately reduce the amount of oil that is economic to produce from the underlying properties.

As a result, the operator of the underlying properties could determine, during periods of low commodity prices, to shut in or curtail production on the underlying properties.

In addition, the operator of the underlying properties could determine, during periods of low commodity prices, to plug and abandon marginal wells that otherwise may have been allowed to continue to produce for a longer period under conditions of higher prices.

The ultimate impact of COVID-19 will depend on future developments, which are highly uncertain, difficult to predict and largely outside of the trust’s control, including, among others, the continued spread, duration and severity of the pandemic outbreak;

the occurrence, spread, duration and severity of any new variants of COVID-19, such as the Delta or Omicron variants;

the consequences of governmental and other measures designed to prevent the spread of the virus;

the development of effective treatments;

actions taken by governmental authorities, MV Partners’ customers and other third parties;

workforce availability;

and the timing and extent to which normal economic and operating conditions resume.

To the extent COVID-19 adversely affects production from the underlying properties or the business, results of operations and financial condition of the operators of the underlying properties, it may also have the effect of heightening many of the other risks described in this Form 10-K.

As a result, the volatility of commodity prices may cause the amount of future cash distributions to trust unitholders to fluctuate, and a substantial decline in the price of oil, natural gas or natural gas liquids, such as the significant and rapid decline that occurred in 2020, will reduce the amount of cash available for distribution to the trust unitholders.

Actual reserves and future production may be less than current estimates of proved reserves, which could reduce cash distributions by the trust and the value of the trust units.

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Changes in these assumptions can materially increase or decrease production and reserve estimates.

The estimated reserves attributable to the net profits interest and the estimated future net revenues attributable to the net profits interest are based on estimates of reserve quantities and revenues for the

underlying properties.

Business — Description of the Underlying Properties — Reserves” for a discussion of the method of allocating proved reserves to the underlying properties and the net profits interest.

21 unchanged sentences

weather-related damage to pipelines and other transportation facilities.

Interruptions in production could have a material adverse effect on the trust’s financial condition, results of operations and cash flows, and could reduce the amount of cash distributions to unitholders.

Shortages or increases in costs of oil field equipment, services and qualified personnel available to MV Partners could reduce the amount of cash available for distribution to the trust unitholders.

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As a result, the trust is not permitted to acquire other oil and natural gas properties or net profits interests to replace the depleting assets and production attributable to the net profits interest.

Because the net proceeds payable to the trust are derived from the sale of depleting assets, the portion of the distributions to unitholders attributable to depletion may be considered to have the effect of a return of capital as opposed to a return on investment.

Because the net proceeds payable to the trust are derived from the sale of depleting assets, the portion of the distributions to trust unitholders attributable to depletion may be considered to have the effect of a return of capital as opposed to a return on investment.

Eventually, the underlying properties burdened by the net profits interest may cease to produce in commercially paying quantities and the trust may, therefore, cease to receive any distributions of net proceeds therefrom.

9 unchanged sentences

If annual cash proceeds received by the trust are less than $1.0 million for each of two consecutive years, then under the terms of the trust agreement, the trust would be required to dissolve.

The trust has established a cash reserve for contingent liabilities and to pay expenses in accordance with the trust agreement, which would reduce net profits payable to the trust and distributions to unitholders.

The trust’s source of capital is the cash flows from the net profits interest.

Pursuant to the trust agreement, the trust may establish a cash reserve through the withholding of cash for contingent liabilities and to pay expenses, which will reduce the amount of cash otherwise available for distribution to unitholders.

In November 2021 the trustee notified MV Partners that the trustee intends to build a reserve for the payment of future known, anticipated or contingent expenses or liabilities.

Commencing with the distribution paid to unitholders in February 2022, the Trustee is withholding, and in the future intends to withhold, a portion of the proceeds otherwise available for distribution each month to gradually build a cash reserve of approximately $1.265 million.

This cash is reserved for the payment of future known, anticipated or contingent expenses or liabilities of the trust.

As previously disclosed, the trustee intends to build a reserve for the payment of future known, anticipated or contingent expenses or liabilities of the trust.

Since January 2022, the Trustee has been withholding, and in the future intends to withhold, a portion of the proceeds otherwise available for distribution each quarter to build a cash reserve of approximately $1.265 million.

The trustee may increase or decrease the targeted amount at any time, and may increase or decrease the rate at which it is withholding funds to build the cash reserve at any time, without advance notice to the unitholders.

Through March 16, 2023, the trustee has withheld a total of $1,001,460 from the proceeds otherwise available for distribution towards the building of the cash reserve described above.

A purchaser’s failure to pay MV Partners for purchased production could have a significant adverse impact on MV Partners, which in turn could result in MV Partners not having sufficient net proceeds attributable to the net profits interest for MV Partners to distribute cash to the trust.

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In a separate executive order issued on January 20, 2021, President Biden asked the heads of all executive departments and agencies to review and take action to address any Federal regulations, orders, guidance documents, policies and any similar agency actions promulgated during the prior administration that may be inconsistent with or present obstacles to the administration’s stated goals of protecting public health and the environment, and conserving national monuments and refuges.

The executive order also established an Interagency Working Group on the Social Cost of Greenhouse Gases, which is called on to, among other things, capture the full costs of greenhouse gas emissions, including the “social cost of carbon,” “social cost of nitrous oxide” and “social cost of methane,” which are “the monetized damages associated with incremental increased in greenhouse gas emissions,” including “changes in net agricultural productivity, human health, property damage from increased flood risk, and the value of ecosystem services.” Although it is not currently possible to predict how executive orders or any proposed or future state or federal greenhouse gas legislation or regulation will impact the business of MV Partners, any regulation of greenhouse gas emissions that may be imposed in areas in which MV Partners conduct business could result in increased compliance costs or additional operating restrictions or reduced demand for MV Partners’ production.

The executive order also established an Interagency Working Group on the Social Cost of Greenhouse Gases, which is called on to, among other things, capture the full costs of greenhouse gas emissions, including the “social cost of carbon,” “social cost of nitrous oxide” and “social cost of methane,” which are “the monetized damages associated with incremental increases in greenhouse gas emissions,” including “changes in net agricultural productivity, human health, property damage from increased flood risk, and the value of ecosystem services.” Although it is not currently possible to predict how executive orders or any proposed or future state or federal greenhouse gas legislation or regulation will impact the business of MV Partners, any regulation of greenhouse gas emissions that may be imposed in areas in which MV Partners conduct business could result in increased compliance costs or additional operating restrictions or reduced demand for MV Partners’ production.

Existing or future laws, regulations, treaties or international agreements related to greenhouse gases and climate change, including incentives to conserve energy or use alternative energy sources, could have a negative impact on the operations of the underlying properties and the trust if such laws, regulations, treaties or international agreements reduce the worldwide demand for oil and natural gas or otherwise result in reduced economic activity generally.

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Reference is made to “Item 1 — Business” and “Item 7 — Trustee’s Discussion and Analysis of Financial Condition and Results of Operations — Planned Development and Workover Program,” which are incorporated herein by reference.

Legal Proceedings.

Currently, there are no legal proceedings pending to which the trust is a party or of which any of its property is the subject.

Mine Safety Disclosures.

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Market for Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities.

The trust units commenced trading on the New York Stock Exchange on January 19, 2007 under the symbol “MVO.” As of March 17, 2022, the 11,500,000 units outstanding were held by 10 unitholders of record.

Each quarter, the trustee determines the amount of funds available for distribution to the trust unitholders.

Available funds are the excess cash, if any, received by the trust from the net profits interest and other sources (such as interest earned on any amounts reserved by the trustee) that quarter, less the trust’s expenses for that quarter.

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

Quarterly cash distributions during the term of the trust are made by the trustee on or before the 25 th day of the month following the end of each quarter to the trust unitholders of record on the 15 th day of the month following the end of each quarter (or the next succeeding business day).

Equity Compensation Plans

The trust does not have any employees and, therefore, does not maintain any equity compensation plans.

Recent Sales of Unregistered Securities

There were no equity securities sold by the trust during the year ended December 31, 2021 that were not registered under the Securities Act of 1933, as amended, which we refer to herein as the “Securities Act.”

Purchases of Equity Securities

There were no purchases of trust units by the trust or any affiliated purchaser during the fourth quarter of the year ended December 31, 2021.

Trustee’s Discussion and Analysis of Financial Condition and Results of Operations.

The following review of the trust’s financial condition and results of operations should be read in conjunction with the financial statements and notes thereto.

The trust’s purpose is, in general, to hold the net profits interest, to distribute to the trust unitholders cash that the trust receives in respect of the net profits interest, and to perform certain administrative functions in respect of the net profits interest and the trust units.

The trust derives substantially all of its income and cash flows from the net profits interest.

Critical Accounting Policies

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

The net profits interest represents the right to receive revenues (oil, gas and natural liquid gas sales) less direct operating expenses (lease operating, maintenance and overhead expenses and production and property taxes) and an adjustment for lease equipment cost 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%.

Cash distributions of the trust will be made based on the amount of cash received by the trust pursuant to terms of the conveyance creating the net profits interest.

The financial statements of the trust, as prepared on a modified cash basis, reflect the trust’s assets, trust corpus, earnings and distributions as follows:

Income from the net profits interest is recorded when distributions are received by the trust;

Distributions to trust unitholders are recorded when paid by the trust;

Trust general and administrative expenses (which include the trustee’s fees as well as accounting, engineering, legal and other professional fees) are recorded when paid;

Cash reserves for trust expenses may be established by the trustee for certain expenditures that would not be recorded as contingent liabilities under U.S.

Amortization of the investment in net profits interest, calculated using the units-of-production method based upon total estimated proved reserves, is charged directly to trust corpus and does not affect distributable income;

The trust evaluates its investment in the net profits interest periodically to determine whether its aggregate value has been impaired below its total capitalized cost based on the underlying properties.

The trust will provide a write-down to its investment in the net profits interest if and when total capitalized costs, less accumulated amortization, exceed undiscounted future net cash flows attributable to the trust’s interests in the proved oil and gas reserves of the underlying properties.

While these statements differ from financial statements prepared in accordance with U.S.

GAAP, the modified cash basis of reporting revenues and distributions is considered most meaningful because quarterly distributions to the trust unitholders are based on net cash receipts received from MV Partners.

This comprehensive basis of accounting other than U.S.

GAAP corresponds to the accounting permitted for royalty trusts by the SEC as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty Trusts.

Comparison of Results of the Trust for the Years Ended December 31, 2021 and 2020

The following represents a discussion of the Comparison of Results of the Trust for the Years ended December 31, 2021 and 2020.

Refer to “Item 7.

Trustee’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 16, 2021 for a discussion of the Comparison of Results of the Trust for the Years ended December 31, 2020 and 2019.

Income for the trust from the net profits interest was $12.1 million for the year ended December 31, 2021 compared to $6.8 million for the year ended December 31, 2020.

The trustee withheld $0.8 million and $1.2 million for future trust expenses for the years ended December 31, 2021 and 2020, respectively.

General and administrative expense for the trust was $0.96 million for 2021 and $0.85 million for 2020.

These factors resulted in distributable income of $11.3 million, or $0.985 per unit, in 2021 compared to $5.6 million, or $0.490 per unit, in 2020.

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

thus, the cash received by the trust during the year ended December 31, 2021 substantially represented the production by MV Partners from September 2020 through August 2021, and the cash received by the trust during the year ended December 31, 2020 substantially represented the production by MV Partners from September 2019 through August 2020.

MV Partners computes net proceeds quarterly on a calendar basis and distributes to the trust 80% of the aggregate of such net proceeds attributable to a computation period on or before the 25th day of the month following the computation period.

As a result, for the year ended December 31, 2021, the trust’s net profits interest represented the cash proceeds received by the trust, which was based upon the cash receipts for the oil and gas production collected by MV Partners from October 1, 2020 through September 30, 2021.

For the year ended December 31, 2020, the trust’s net profits interest represented the cash proceeds received by the trust, which was based upon the cash receipts for the oil and gas production collected by MV Partners from October 1, 2019 through September 30, 2020.

Excess of revenues over direct operating expenses and lease equipment and development costs from the underlying properties was $15.1 million for the period from October 1, 2020 through September 30, 2021.

The trust’s net profits interest (80%) of this total was $12.1 million for the year ended December 31, 2021.

During the year ended December 31, 2021, MV Partners did not withhold or release any dollar amounts due to the Trust from previously established cash reserves for future capital expenditures, which resulted in total cash proceeds received by the trust of $12.1 million for the year ended December 31, 2021.

Excess of revenues over direct operating expenses and lease equipment and development costs from the underlying properties was $8.5 million for the period from October 1, 2019 through September 30, 2020.

The trust’s net profits interest (80%) of this total was $6.8 million for the year ended December 31, 2020.

During the year ended December 31, 2020, MV Partners released $0.4 million during the third quarter and withheld $0.4 million during the fourth quarter from previously established cash reserves for future capital expenditures, which resulted in total cash proceeds received by the trust of $6.8 million for the year ended December 31, 2020.

The average price received for crude oil sold during 2021 was $51.97 per Bbl, while the average price received for crude oil sold during 2020 was $41.44 per Bbl.

The average price received for natural gas sold during 2021 was $2.22 per Mcf, while the average price received for natural gas sold during 2020 was $1.42 per Mcf.

The average prices for 2021 related to production by MV Partners from September 2020 through August 2021, and the average prices for 2020 related to production by MV Partners from September 2019 through August 2020.

The overall production volumes sold and delivered to purchasers attributable to the 80% net profits interest that was for the oil and gas production sold and delivered during the period from October 1, 2020 to September 30, 2021 were 519,518 Bbls of oil, 31,708 Mcf of natural gas and 94 Bbls of natural gas liquids, for a total of 524,864 Boe.

The overall production volumes sold and delivered to purchasers attributable to the 80% net profits interest that was for the oil and gas production sold and delivered during the period from October 1, 2019 to September 30, 2020 were 530,915 Bbls of oil, 24,029 Mcf of natural gas and 239 Bbls of natural gas liquids, for a total of 535,075 Boe.

As noted above, the amounts reflected in the accompanying financial statements for the trust’s year ended December 31, 2021 reflect cash received by the trust during the year.

Such cash is primarily derived from production by MV Partners from September 2020 through August 2021.

The amounts reflected in the accompanying financial statements for the trust’s year ended December 31, 2020 reflect cash received by the trust during the year.

Such cash is primarily derived from production by MV Partners from September 2019 through August 2020.

Liquidity and Capital Resources

Other than trust administrative expenses, including any reserves established by the trustee for future liabilities, the trust’s only use of cash is for distributions to trust unitholders.

Administrative expenses include payments to the trustee as well as an annual administrative fee to MV Partners pursuant to the administrative services agreement.

Each quarter, the trustee determines the amount of funds available for distribution.

Available funds are the excess cash, if any, received by the trust from the net profits interest and payments from other sources (such as interest earned on any amounts reserved by the trustee) in that quarter, over the trust’s expenses paid for that quarter.

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

As of December 31, 2021, the trustee held $297,000 as such a reserve.

In November 2021, the Trustee notified MV Partners that the Trustee intends to build a reserve for the payment of future known, anticipated or contingent expenses or liabilities, commencing with the distribution payable in the first quarter of 2022.

The Trustee intends to withhold a portion of the proceeds otherwise available for distribution each quarter to gradually build a cash reserve to approximately $1.265 million.

This amount is in addition to the letter of credit in the amount of $1.8 million provided to the Trustee by MV Partners to protect the Trust against the risk that it does not have sufficient cash to pay future expenses.

The Trustee may increase or decrease the targeted amount at any time, and may increase or decrease the rate at which it is withholding funds to build the cash reserve at any time, without advance notice to the unitholders.

Cash held in reserve will be invested as required by the Trust Agreement.

Any cash reserved in excess of the amount necessary to pay or provide for the payment of future known, anticipated or contingent expenses or liabilities eventually will be distributed to unitholders, together with interest earned on the funds.

The trustee may cause the trust to borrow funds required to pay expenses if the trustee determines that the cash on hand and the cash to be received are insufficient to cover the trust’s liabilities.

If the trust borrows funds, the trust unitholders will not receive distributions until the borrowed funds are repaid.

During each of 2020 and 2021, the trust made no borrowings.

Income to the trust from the net profits interest is based on the calculation and definitions of “gross proceeds” and “net proceeds” contained in the conveyance.

As further discussed below, MV Partners’ development and workover program will require MV Partners to make future capital expenditures in connection with the development, exploration and production of oil and gas.

Substantially all of the underlying properties are located in mature fields and MV Partners does not expect future costs for the underlying properties to change significantly as compared to recent historical costs other than increases due to increases in the general cost of oilfield services.

The trust does not have any transactions, arrangements or other relationships with unconsolidated entities or persons that could materially affect the trust’s liquidity or the availability of capital resources.

Planned Development and Workover Program

Since acquiring the underlying properties in 1998 and 1999, MV Partners has implemented a development program on the underlying properties to develop further proved undeveloped reserves and to help offset the natural decline in production.

These activities included recompletion of certain existing wells into new producing horizons, workovers of existing wells, and the drilling of infill development wells.

The development program that MV Partners currently intends to implement over the five years ending December 31, 2026 with respect to the underlying properties categorized as proved undeveloped reserves consists of drilling development wells, recompletion and workover projects, and polymer workovers.

The development program that MV Partners currently intends to implement over the next five years with respect to the underlying properties categorized as proved developed non-producing reserves consists of well-reactivation projects, injection well-workover projects, recompletion projects, and well-workover projects.

MV Partners has undertaken 3-D seismic surveys covering several leases constituting a part of the underlying properties.

These leases have over 20 undrilled offset locations of varying quality based on offset production and subsurface mapping.

The 3-D data was utilized to refine the subsurface mapping with respect to the size of mapped sink holes and to define smaller structural features along the edges of the main formation reservoir.

Using this data, MV Partners has scheduled the drilling of one proved undeveloped location over the five years ending December 31, 2026.

MV Partners has expanded its 3-D seismic program into other fields constituting a part of the underlying properties.

MV Partners expects total capital expenditures for the underlying properties during the five years ending December 31, 2026 will be approximately $1.3 million.

Of this total, MV Partners contemplates spending approximately $0.4 million to drill development wells in project areas and approximately $0.9 million for recompletion and workovers of existing wells.

MV Partners expects that these capital projects will add production that will partially offset the natural decline in production otherwise expected to occur with respect to the underlying properties.

The trust is not directly obligated to pay any portion of any capital expenditures made with respect to the underlying properties;

however, capital expenditures made by MV Partners with respect to the underlying properties will be deducted from the gross proceeds in calculating the net proceeds from which cash will be paid to the trust.

As a result, the trust will indirectly bear an 80% (subject to certain limitations during the final three years of the trust, as described above under “Item 1.

Business — Computation of Net Proceeds — Net Profits Interest”) share of any capital expenditures made with respect to the underlying properties.

Accordingly, higher or lower capital expenditures will, in general, directly decrease or increase, respectively, the cash received by the trust in respect of its net profits interest, which will have a corresponding effect on cash available for distribution to unitholders.

As the cash received by the trust in respect of the net profits interest will be reduced by the trust’s pro rata share of these capital expenditures, MV Partners expects that it will incur capital expenditures with respect to the underlying properties throughout the term of the trust on a basis that balances the impact of the capital expenditures on current cash distributions to the trust unitholders with the longer term benefits of increased oil and natural gas production expected to result from the capital expenditures.

In addition, MV Partners may establish a capital reserve of up to $1.0 million in the aggregate at any given time to reduce the impact on distributions of uneven capital expenditure timing.

MV Partners, as the operator of the underlying properties, is entitled to make all determinations related to capital expenditures with respect to the underlying properties, and there are no limitations on the

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amount of capital expenditures that MV Partners may incur with respect to the underlying properties, except as described above under “Item 1.

Business — Computation of Net Proceeds — Net Profits Interest.” As the trust unitholders would not be expected to fully realize the benefits of capital expenditures made with respect to the underlying properties toward the end of the term of the trust, during each twelve-month period beginning on the later to occur of (1) June 30, 2023, and (2) the time when 13.2 MMBoe have been produced from the underlying properties and sold (which is the equivalent of 10.6 MMBoe in respect of the net profits interest), capital expenditures that may be taken into account in calculating net proceeds attributable to the net profits interest will be limited to the average annual capital expenditures during the preceding three years, as adjusted for inflation.

Business — Computation of Net Proceeds — Net Profits Interest.”

Quantitative and Qualitative Disclosures About Market Risk.

The trust is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information under this item.

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Financial Statements and Supplementary Data.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Trustee and Unitholders

Opinion on the financial statements

We have audited the accompanying statements of assets and trust corpus of MV Oil Trust (the “Trust”) as of December 31, 2021 and 2020, the related statements of distributable income and changes in trust corpus for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the assets and trust corpus of the Trust as of December 31, 2021 and 2020, and its distributable income and its changes in trust corpus for each of the three years in the period ended December 31, 2021, in conformity with the modified cash basis of accounting described in Note B to the financial statements.

Basis of accounting

We draw attention to Note B of the financial statements, which describes the basis of accounting.

The financial statements are prepared on a modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America.

Basis for opinion

These financial statements are the responsibility of the Trustee.

Our responsibility is to express an opinion on the Trust’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by the Trustee, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical audit matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the Trustee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ Grant Thornton LLP

We have served as the Trust’s auditor since 2006.

Oklahoma City, Oklahoma

March 17, 2022

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STATEMENTS OF ASSETS AND TRUST CORPUS

Cash and cash equivalents

Investment in net profits interest

Accumulated amortization

(40,304,938 )

(42,771,353 )

Trust corpus, 11,500,000 Trust units issued and outstanding at

December 31, 2020 and 2021

STATEMENTS OF DISTRIBUTABLE INCOME

Year ended December 31,

Income from net profits interest

Cash on hand used (withheld) for Trust expenses

General and administrative expense (1)

Distributable income

Distributions per Trust unit (11,500,000 Trust units issued and outstanding for 2019, 2020 and 2021)

Includes $98,944, $102,902 and $134,032 paid to MV Partners, LLC and $150,000, $150,000, and $150,000 paid to The Bank of New York Mellon Trust Company, N.A.

for the years ended December 31, 2019, 2020 and 2021, respectively.

STATEMENTS OF CHANGES IN TRUST CORPUS

Year ended December 31,

Trust corpus, beginning of year

Income from net profits interest

Cash distributions

(12,075,000 )

(11,327,500 )

Trust expenses

Amortization of net profits interest

Trust corpus, end of year

The accompanying notes are an integral part of these financial statements.

TABLE OF CONTENTS

NOTES TO FINANCIAL STATEMENTS

NOTE A — ORGANIZATION OF THE TRUST

MV Oil Trust (the “Trust”) is a statutory trust formed on August 3, 2006, under the Delaware Statutory Trust Act pursuant to a Trust Agreement (the “Trust Agreement”) among MV Partners, LLC (“MV Partners”), as trustor, The Bank of New York Mellon Trust Company, N.A., as Trustee (the “Trustee”), and Wilmington Trust Company, as Delaware Trustee (the “Delaware Trustee”).

The Trust was created to acquire and hold a term net profits interest for the benefit of the Trust unitholders pursuant to a conveyance from MV Partners to the Trust.

The term net profits interest is an interest in underlying properties consisting of MV Partners’ net interests in all of its oil and natural gas properties located in the Mid-Continent region in the states of Kansas and Colorado (the “underlying properties”).

These oil and gas properties include approximately 860 producing oil and gas wells.

The net profits interest is passive in nature, and the Trustee has no management control over and no responsibility relating to the operation of the underlying properties.

The net profits interest entitles the Trust to receive 80% of the net proceeds attributable to MV Partners’ interest from the sale of production from the underlying properties during the term of the Trust.

The net profits interest will terminate on the later to occur of (1) June 30, 2026 or (2) the time when 14.4 million barrels of oil equivalent (MMBoe) have been produced from the underlying properties and sold (which amount is the equivalent of 11.5 MMBoe with respect to the Trust’s 80% net profits interest), and the Trust will soon thereafter wind up its affairs and terminate.

As of December 31, 2021, cumulatively, since inception, the Trust has received payment for 80% of the net proceeds attributable to MV Partners’ interest from the sale of 12.9 MMBoe of production from the underlying properties (which amount is the equivalent of 10.3 MMBoe with respect to the Trust’s net profits interest).

The trust will dissolve prior to its termination if:

the trust sells the net profits interest;

annual cash proceeds received by the trust are less than $1.0 million for each of two consecutive years;

the holders of a majority of the outstanding trust units vote in favor of dissolution;

there is a judicial dissolution of the trust.

The Trustee can authorize the Trust to borrow money to pay Trust administrative or incidental expenses that exceed cash held by the Trust.

The Trustee may authorize the Trust to borrow from the Trustee or the Delaware Trustee as a lender provided the terms of the loan are similar to the terms it would grant to a similarly situated commercial customer with whom it did not have a fiduciary relationship.

The Trustee may also deposit funds awaiting distribution in an account with itself and make other short-term investments with the funds distributed to the Trust.

NOTE B — TRUST ACCOUNTING POLICIES

A summary of the significant accounting policies of the Trust follows.

Basis of accounting

The Trust uses the modified cash basis of accounting to report receipts by the Trust 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, maintenance and overhead expenses and production and property taxes) and an adjustment for lease equipment cost 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% (term net profits interest percentage).

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.

The financial statements of the Trust, as prepared on a modified cash basis, reflect the Trust’s assets, Trust corpus, and distributable income as follows:

Income from net profits interest is recorded when distributions are received by the Trust;

Distributions to Trust unitholders are recorded when paid by the Trust;

Trust general and administrative expenses (which include the Trustee’s fees as well as accounting, engineering, legal and other professional fees) are recorded when paid;

Cash reserves for Trust expenses may be established by the Trustee for certain expenditures that would not be recorded as contingent liabilities under U.S.

Amortization of the investment in Net Profits Interest, calculated using the units-of-production method based upon total estimated proved reserves, is charged directly to trust corpus and does not affect distributable income;

The Trust evaluates its investment in the net profits interest periodically to determine whether its aggregate value has been impaired below its total capitalized cost based on the underlying properties.

The Trust will provide a write-down to its investment in the net profits interest if and when total capitalized costs, less accumulated amortization, exceed undiscounted net future cash flows attributable to the Trust’s interests in the proved oil and gas reserves of the underlying properties.

While these statements differ from financial statements prepared in accordance with U.S.

GAAP, the modified cash basis of reporting income and distributions is considered most meaningful because quarterly distributions to the Trust unitholders are based on net cash receipts.

This comprehensive basis of accounting other than generally accepted accounting principles corresponds to the accounting permitted for royalty trusts by the U.S.

Securities and Exchange Commission (the “SEC”) as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty Trusts.

No new accounting pronouncements have been adopted or issued during the year ended December 31, 2021 that would impact the financial statements of the Trust.

Cash equivalents

For purposes of these statements, the Trust considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Use of estimates

The preparation of financial statements requires estimates and assumptions that affect 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 income and expenses during the reporting period.

Actual results could differ from those estimates.

Significant estimates affecting these financial statements include estimates of proved oil and gas reserves, which are used to compute the Trust’s amortization of net profits interest.

NOTE C — NET PROFITS INTEREST

The net profits interest was recorded at the historical cost of MV Partners on January 24, 2007, the date of conveyance, and is calculated as follows:

Oil and gas properties

Accumulated depreciation and depletion

(40,468,762 )

Net property value to be conveyed

Times 80% net profits interest to Trust

NOTE D — INCOME FROM NET PROFITS INTEREST

Year ended December 31,

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

MV Partners reserve for future capital

expenditures (2)

Income from net profits interest (3)

Pursuant to the conveyance of the net profits interest, direct operating expenses, lease equipment and development costs are deducted when calculating the distributable income to the Trust.

Pursuant to the conveyance of the net profits interest, MV Partners can reserve up to $1,000,000 for future exploration, development, maintenance or operating expenditures at any time.

The reserve balance was $1,000,000 at December 31, 2019, 2020 and 2021, respectively.

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

The revenues from oil production are typically received one month after production;

thus, the cash received by the Trust during the year ended December 31, 2019 substantially represents the production by MV Partners from September 2018 through August 2019 and the cash received by the Trust during the year ended December 31, 2020 substantially represents the production by MV Partners from September 2019 through August 2020 and the cash received by the Trust during the year ended December 31, 2021 substantially represents the production by MV Partners from September 2020 through August 2021.

For the years ended December 31, 2019, 2020 and 2021, MV Purchasing, LLC, which we refer to herein as “MV Purchasing,” purchased 75%, 73% and 73%, respectively, of the production sold from the underlying properties.

MV Purchasing is majority owned by the indirect equity owners of MV Partners.

Sales to MV Purchasing are under short-term arrangements, ranging from one to six months, using market sensitive pricing.

NOTE E — INCOME TAXES

Tax counsel to the Trust advised the Trust at the time of formation that, under then current tax laws, in its opinion the net profits interest should be treated as a debt instrument for federal income tax purposes, and the Trust should be required to treat a portion of each payment it receives with respect to the net profits interest as interest income in accordance with the “noncontingent bond method” under the original issue discount rules contained in the Internal Revenue Code of 1986, as amended, and the corresponding regulations.

Tax counsel to the Trust also advised the Trust at the time of formation that in its opinion the Trust will be treated as a grantor trust for federal income tax purposes.

On the basis of this advice, Trust

unitholders will be considered to own and receive the Trust’s assets and income and will be directly taxable thereon as if no trust were in existence.

No provision for federal or state income taxes has been made in the accompanying statements.

NOTE F — DISTRIBUTIONS TO UNITHOLDERS

The Trustee determines for each quarter the amount available for distribution to the Trust unitholders.

This distribution is expected to be made on or before the 25th day of the month following the end of each quarter to the Trust unitholders of record on the 15th day of the month following the end of each quarter (or the next succeeding business day).

Such amounts will be equal to the excess, if any, of the cash received by the Trust relating to such preceding quarter, over the expenses of the Trust for such quarter, subject to adjustments for changes made by the Trustee during such quarter in any cash reserves established for future expenses of the Trust.

Period covered

(established) (1)

January 25, 2019

October 1, 2018 through December 31, 2018

April 25, 2019

January 1, 2019 through March 31, 2019

July 25, 2019

April 1, 2019 through June 30, 2019

October 25, 2019

July 1, 2019 through September 30, 2019

January 24, 2020

October 1, 2019 through December 31, 2019

April 24, 2020

January 1, 2020 through March 31, 2020

July 24, 2020

April 1, 2020 through June 30, 2020

October 23, 2020

July 1, 2020 through September 30, 2020

January 25, 2021

October 1, 2020 through December 31, 2020

April 23, 2021

January 1, 2021 through March 31, 2021

July 15, 2021

April 1, 2021 through June 30, 2021

October 25, 2021

July 1, 2021 through September 30, 2021

Pursuant to the conveyance of the net profits interest, MV Partners can reserve up to $1,000,000 for future exploration, development, maintenance or operating expenditures at any time.

There was no quarterly distribution during the third quarter of 2020 to Trust unitholders, as 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 released $440,532 from the reserve for future expenditures to cover the deficit.

The reserve was reestablished during the fourth quarter of 2020.

NOTE G — RELATED PARTY TRANSACTIONS

The Trust has entered into an administrative services agreement with MV Partners that obligates the Trust, throughout the term of the Trust, to pay to MV Partners each quarter an administrative services fee for accounting, bookkeeping and informational services performed by MV Partners on behalf of the Trust relating to the net profits interest.

The annual fee was a total of $99,904, $103,901 and $108,057 for 2019, 2020 and 2021, respectively, which will increase by 4% each year.

The administrative services agreement will terminate upon the termination of the net profits interest unless earlier terminated by mutual agreement of the Trustee and MV Partners.

The Trust has entered into a Trust Agreement with the Trustee that obligates the Trust, throughout the term of the Trust, to pay to the Trustee a quarterly fee.

The annual fee was a total of $150,000 for each of 2019, 2020 and 2021.

In addition, the Trustee pays an annual fee of $2,500 to the Delaware trustee.

The Trust Agreement will terminate upon the termination of the net profits interest unless earlier terminated by mutual agreement of a majority of the Trust unitholders.

NOTE H — ADVANCE FOR TRUST EXPENSES

Under the terms of the Trust Agreement, the Trustee is allowed to borrow money to pay Trust expenses.

During 2019, 2020 and 2021, the Trust did not borrow any money, and there were no prior borrowings that had not been repaid.

Since the Trust uses the modified cash basis of accounting, a liability has not been recorded for any advances from MV Partners.

The net advance is shown as an addition to Trust Corpus when the borrowing is made and is shown as a reduction to Trust Corpus when it is repaid.

MV Partners 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 not have sufficient cash to pay future expenses.

The Trustee intends to withhold a portion of the proceeds otherwise available for distribution each quarter to gradually build a cash reserve to approximately $1.265 million.

The Trustee may increase or decrease the targeted amount at any time, without advance notice to the unitholders.

Cash held in reserve will be invested as required by the Trust Agreement.

NOTE I — OTHER EVENTS

Subsequent event

The first quarterly distribution for 2022 was $4,715,000, or $0.410 per Trust unit, and was made on January 25, 2022 to Trust unitholders owning Trust units as of January 14, 2022.

Such distribution included the net proceeds of production collected by MV Partners from October 1, 2021 through December 31, 2021.

The Trustee withheld $105,417 for future expenses from the distribution towards the building of its $1.265 million cash reserve.

NOTE J — DISCLOSURES ABOUT OIL AND GAS ACTIVITIES (UNAUDITED)

The Trust is required to disclose proved reserves in accordance with the SEC’s reporting rules, which require that the average, first-day-of-the-month price during the 12-month period before the end of the year be used when estimating whether reserve quantities are economical to produce.

This same 12-month average price is also used in calculating the aggregate amount of (and changes in) future cash inflows related to the standardized measure of discounted future net cash flows.

The rules also allow for the use of reliable technology to estimate proved oil and gas reserves if those technologies have been demonstrated to result in reliable conclusions about reserve volumes.

The unaudited supplemental information on oil and gas exploration and production activities for 2019, 2020 and 2021 has been presented in accordance with these rules.

Estimates of the proved oil and gas reserves attributable to the Trust as of December 31, 2019, 2020 and 2021 are based on reports of Cawley, Gillespie & Associates, Inc., independent petroleum and geological engineers, and the contract property management engineering staff of the managers of MV Partners who operate the underlying properties, in accordance with the SEC’s rules and definitions.

Users of this information should be aware that the process of estimating quantities of “proved” and “proved developed” and “proved undeveloped” crude oil, natural gas, and natural gas liquids reserves is very complex, requiring significant subjective decisions in the evaluation of all available geological, engineering and economic data for each reservoir.

The data for a given reservoir may also change substantially over time as a result of numerous factors, including additional development activity, evolving production history and continual reassessment

of the viability of production under varying economic conditions.

Consequently, material revisions to existing reserve estimates occur from time to time.

The reserve data below represent estimates only and should not be construed as being exact.

Moreover, the discounted values should not be construed as representative of the current market value of the Net Profits Interest.

A market value determination would include many additional factors, including:

(i) anticipated future oil and gas prices;

(ii) the effect of federal income taxes, if any, on the Trust;

(iii) an allowance for return on investment;

(iv) the effect of governmental legislation;

(v) the value of additional potential reserves, not considered proved at present, which may be recovered as a result of further exploration and development activities;

and (vi) other business risks.

The following tables set forth (i) the estimated net quantities of proved, proved developed and proved undeveloped oil, natural gas and natural gas liquids reserves attributable to the Trust, and (ii) the standardized measure of the discounted future net profits interest income attributable to the Trust and the nature of changes in such standardized measure between years.

These tables are prepared on the accrual basis, which is the basis on which MV Partners maintains its production records and is different from the basis on which the Trust is reporting.

ESTIMATED QUANTITIES OF OIL AND GAS RESERVES

Proved reserves

Balance at December 31, 2018

Revisions of previous estimates

Balance at December 31, 2019

Revisions of previous estimates

Balance at December 31, 2020

Revisions of previous estimates

Balance at December 31, 2021

Proved developed reserves

December 31, 2018

December 31, 2019

December 31, 2020

December 31, 2021

Proved undeveloped reserves

December 31, 2018

Proved undeveloped reserves converted to proved developed reserves by drilling

Additional proved undeveloped reserves added during 2019

Proved undeveloped reserves removed from drilling

Revisions of previous estimates

December 31, 2019

Proved undeveloped reserves converted to proved developed reserves by drilling

Additional proved undeveloped reserves added during 2020

Proved undeveloped reserves removed from

drilling plan

Revisions of previous estimates

December 31, 2020

Proved undeveloped reserves converted to proved developed reserves by drilling

Additional proved undeveloped reserves added during 2021

Proved undeveloped reserves removed from

drilling plan

Revisions of previous estimates

December 31, 2021

The Trust recognized net reductions to reserves for its share of MV Partners’ total during 2019 associated with the production of properties of 577,163 Boe.

The Trust recognized net increases to reserves of 27,366 Boe as a result of changes in the development plan.

Additional reductions to reserves of 130,549 Boe were a result of negative revisions due to lower commodity prices during 2019.

The Trust recognized net reductions to reserves for its share of MV Partners’ total during 2020 associated with the production of properties of 523,031 Boe.

The Trust recognized net decreases to reserves of 112,464 Boe as a result of changes in the development plan.

Additional reductions to reserves of 570,844 Boe were a result of negative revisions due to lower commodity prices during 2020.

The Trust recognized net reductions to reserves for its share of MV Partners’ total during 2021 associated with the production of properties of 520,289 Boe.

The Trust recognized net decreases to reserves of (4,313) Boe as a result of changes in the development plan.

Additional increases to reserves of 682,276 Boe were a result of positive revisions due to higher commodity prices during 2021.

TABLE OF CONTENTS

STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS

FROM PROVED OIL AND GAS RESERVES

Estimates of future net cash flows from proved reserves of crude oil, natural gas, and natural gas liquids are computed using the average, first-day-of-the-month price during the 12-month period for 2019, 2020 and 2021.

Future cash inflows

(86,214,240 )

(44,907,531 )

(65,037,972 )

Future net cash flows

Less 10% discount factor

(14,613,176 )

Standardized measure of discounted future net cash flows

CHANGES IN STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH

FLOWS FROM PROVED OIL AND GAS RESERVES

Standardized measure at beginning of year

Net proceeds to the Trust

(12,994,052 )

(12,078,886 )

Net changes in price and production costs

(24,930,850 )

(29,767,790 )

Changes in estimated future development

Development costs incurred during the year

Revisions of quantity estimates

Accretion of discount

Changes in production rates, timing and other (1)

Standardized measure at end of year

The Trust’s changes in standardized measure of discounted future net cash flows attributable to production rates, timing and other primarily represents changes in the Trust’s estimates of when proved reserve quantities will be realized.

During the years ended December 31, 2019, 2020 and 2021, the operator changed its development drilling capital plans, which had the effect of altering the estimated timing of development and then the ultimate realization of undeveloped proved reserves.

The average, first-day-of-the-month price during the 12-month period for 2019, 2020 and 2021 used in determining future net revenues related to the standardized measure calculation are as follows:

Oil (per Bbl)

Gas (per Mcf)

NGL (per Bbl)

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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-K

Item 1A. Risk Factors