What changed in this filing

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Item 1A. Risk Factors

2024-03-20 compared with 2023-03-16 · 105 added, 67 removed, 213 unchanged (45% of the section changed)

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These factors include, among others:

regional, domestic and foreign supply and perceptions of supply of oil, natural gas and natural gas liquids;

the level of demand and perceptions of demand for oil, natural gas and natural gas liquids;

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

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;

the armed conflicts between Russia and Ukraine and between Israel and Hamas and the potential destabilizing effects such conflicts may pose for the global oil and gas markets;

the occurrence or threat of epidemic or pandemic diseases, such as the COVID-19 pandemic, or any government response to such occurrence or threat;

the actions of OPEC and other foreign, oil-exporting countries;

regional, domestic and foreign levels of supply of and demand for oil, natural gas and natural gas liquids;

the actions of OPEC, its members and other oil-producing nations, such as Russia, relating to oil price and production levels, including announcements of potential changes to such levels;

the levels of production of oil and natural gas of non-OPEC countries;

anticipated future prices of oil and natural gas and other commodities;

weather conditions and seasonal trends;

technological advances affecting energy consumption and energy supply;

and worldwide economic conditions;

the price and availability of alternative fuels;

the proximity to, and capacity of, refineries and gathering and transportation facilities;

the proximity, capacity, cost and availability of refineries and gathering and transportation facilities;

the volatility and uncertainty of regional pricing differentials;

governmental regulations and taxation;

energy conservation and environmental measures;

acts of force majeure.

Crude oil prices have been volatile during the last several years, and in 2023 ranged from a high of $93.68 to a low of $66.74.

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.

The NYMEX crude oil prices per Bbl were $75.21, $80.26 and $71.65 as of December 31, 2021, 2022 and 2023, 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.

The effects of the economic disruption caused by the governmental responses to the COVID-19 pandemic continued to be felt through 2023, in the form of lingering supply chain disruptions, higher inflation and higher interest rates, which affected supply and demand for oil and natural gas.

Meanwhile, as 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 and natural gas 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.

The terms of the conveyance of the net profits interest prohibit MV Partners from entering into hedging arrangements for the benefit of the trust.

The terms of the Conveyance prohibit MV Partners from entering into hedging arrangements for the benefit of the Trust.

As a result, the amounts of cash distributions by the Trust may fluctuate significantly as a result of changes in commodity prices because there will be no hedge contracts in place to reduce the effects of any changes in commodity prices.

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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.

Sustained lower prices of oil and natural gas also could negatively affect the price of the Trust Units and the qualification of the Trust Units to remain listed on the New York Stock Exchange.

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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assumptions about future prices of oil, natural gas and natural gas liquids, production and development expenses, gathering and transportation costs, severance and excise taxes and capital expenditures.

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

Changes in these assumptions could materially 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.

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Risks associated with the production, gathering, transportation and sale of oil, natural gas and natural gas liquids could adversely affect cash distributions by the Trust.

The revenues of the trust, the value of the trust units and the amount of cash distributions to the trust unitholders depend upon, among other things, the costs incurred by MV Partners to develop and exploit oil and natural gas reserves attributable to the underlying properties.

Drilling, production or transportation accidents that temporarily or permanently halt the production and sale of oil, natural gas and natural gas liquids at any of the underlying properties will reduce trust distributions by reducing the amount of net proceeds available for distribution.

The net proceeds payable to the Trust, the value of the Trust Units and the amount of cash distributions to the Trust unitholders depend upon, among other things, the costs incurred by MV Partners to develop and exploit oil and natural gas reserves attributable to the underlying properties.

Drilling, production, or transportation accidents that temporarily or permanently halt the production and sale of oil, natural gas, and natural gas liquids at any of the underlying properties will reduce Trust distributions by reducing the

amount of net proceeds available for distribution.

For example, accidents may occur that result in personal injuries, property damage, damage to productive formations or equipment and environmental damages.

Any costs incurred by MV Partners in connection with any such accidents that are not insured against will have the effect of reducing the net proceeds available for distribution to the trust.

Any costs incurred by MV Partners in connection with any such accidents that are not insured against will have the effect of reducing the net proceeds payable to the Trust and available for distribution to Trust unitholders.

In addition, curtailments or damage to pipelines used by MV Partners to transport oil, natural gas and natural gas liquid production to markets for sale could reduce the amount of net proceeds available for distribution.

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Actions taken by OPEC members, including those taken alongside other oil exporting nations, have a significant impact on global oil supply and pricing.

For example, OPEC and certain other oil exporting nations have previously agreed to take measures, including production cuts, to support crude oil prices.

There can be no assurance that OPEC members and other oil exporting nations will agree to future production cuts or other actions to support and stabilize oil prices, nor can there be any assurance that they will not further reduce oil prices or increase production.

Uncertainty regarding future actions to be taken by OPEC members or other oil exporting countries could lead to increased volatility in the price of oil, which could adversely affect the financial condition and economic performance of the operators of the underlying properties and may reduce the net proceeds to which the trust is entitled, which could materially reduce or completely eliminate the amount of cash available for distribution to trust unitholders.

For example, OPEC and certain other oil exporting nations have previously agreed to take measures, including production cuts, to support crude oil prices OPEC members and other oil exporting nations might not agree to future production cuts or other actions to support and stabilize oil prices, and they may not reduce oil prices or increase production in the future.

Uncertainty regarding future actions that OPEC members or other oil exporting countries may take could lead to continued volatility in the price of oil, which could adversely affect the financial condition and economic performance of the operators of the underlying properties and may reduce the net proceeds to which the Trust is entitled, which could materially reduce or completely eliminate the amount of cash available for distribution to Trust unitholders.

Production of oil, natural gas and natural gas liquids on the underlying properties could be materially and adversely affected by severe or unseasonable weather.

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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 Trust 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.

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 Trust unitholders.

The demand for qualified and experienced field personnel to drill wells and conduct field operations, geologists, geophysicists, engineers and other professionals in the oil and natural gas industry can fluctuate significantly, often in correlation with oil and natural gas prices, causing periodic shortages.

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The net proceeds payable to the Trust from the net profits interest are derived from the sale of oil, natural gas and natural gas liquids produced from the underlying properties.

The reserves attributable to the underlying properties are depleting assets, which means that the reserves attributable to the underlying properties will decline over time.

The reserves attributable to the underlying properties are depleting assets, which means that those reserves will decline over time.

As a result, the quantity of oil and natural gas produced from the underlying properties is expected to decline over time.

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The amount of cash available for distribution by the Trust will be reduced by the amount of any production and development costs, taxes, capital expenditures and post-production costs.

Production and development costs on the underlying properties are deducted in the calculation of the trust’s share of net proceeds.

In addition, production and property taxes, capital expenditures or post-production costs are deducted in the calculation of the trust’s share of net proceeds.

Production and development costs on the underlying properties are deducted in the calculation of the net proceeds payable to the Trust.

In addition, production and property taxes, capital expenditures or post-production costs are deducted in the calculation of the net proceeds payable to the Trust.

Accordingly, higher production and development expenses, taxes, capital expenditures and post-production costs will directly decrease the amount of cash received by the Trust in respect of its net profits interest.

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Development activities may not generate sufficient additional revenue to repay the costs.

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.

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 Trust unitholders.

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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 Trust unitholders.

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.

Beginning in the first quarter of 2022, the Trustee withheld a portion of the proceeds otherwise available for distribution each quarter to gradually build an approximately $1.265 million cash reserve for the payment of future known, anticipated or contingent expenses or liabilities of the Trust.

Although the targeted $1.265 million cash reserve was fully funded as of April 25, 2023, the Trustee may increase or decrease the targeted amount at any time and may increase or decrease the rate at which it withholds funds to build the cash reserve at any time, without advance notice to the unitholders.

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.

A purchaser’s failure to pay for purchased production could have a significant adverse impact on MV Partners’ business, which in turn could adversely affect the Trust.

The recent tightening of credit in the financial markets may make it more difficult for purchasers to obtain financing and depending on the degree to which this occurs, there may be a material increase in the nonpayment and nonperformance by such purchasers, which may reduce the net proceeds payable to the Trust and the amount of cash available for distribution to Trust unitholders.

If the financial position of MV Partners degrades in the future, MV Partners may not be able to satisfy its obligations to the Trust.

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The Conveyance provides that MV Partners is obligated to market, or cause to be marketed, the production related to the underlying properties.

The ability of MV Partners to perform its obligations related to the operation of the underlying properties will depend on MV Partners’ future financial condition and economic performance, which in

turn will depend upon the supply and demand for oil and natural gas, prevailing economic conditions, collections of payments due from third parties, and upon financial, business and other factors, many of which are beyond the control of MV Partners.

The ability of MV Partners to perform its obligations related to the operation of the underlying properties will depend on MV Partners’ future financial condition and economic performance, which in turn will depend upon the supply and demand for oil and natural gas, prevailing economic conditions, collections of payments due from third parties, and upon financial, business, and other factors, many of which are beyond the control of MV Partners.

If MV Partners were to be unable to perform its obligations to the Trust, it could have a material adverse effect on the net proceeds payable to the Trust and the amount of cash available for distribution to Trust unitholders.

Risks Related to the Structure of the Trust

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The typical operating agreement contains procedures whereby the owners of the working interests in the property designate one of the interest owners to be the operator of the property.

Under these arrangements, the operator is typically responsible for making all decisions relating to drilling activities, sale of production, compliance with regulatory requirements and other matters that affect the property.

Under these arrangements, the operator is typically responsible for

making all decisions relating to drilling activities, sale of production, compliance with regulatory requirements and other matters that affect the property.

MV Partners is currently designated as the operator of substantially all of the underlying properties.

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Trust unitholders are not entitled to vote on any transfer of the underlying properties, and the Trust will not receive any proceeds from any such transfer, except in the limited circumstances when the net profits interest is released in connection with such transfer, in which case the Trust will receive an amount equal to the fair market value of the net profits interest released.

See “Business — Description of the Underlying Properties — Sale and Abandonment of Underlying Properties.” Following any material sale or transfer of any of the underlying properties, such underlying properties will continue to be subject to the net profits interest of the trust, and the net proceeds attributable to the transferred property will be calculated as part of the computation of net proceeds described in this Form 10-K.

Business — Description of the Underlying Properties — Sale and Abandonment of Underlying Properties.” Following any material sale or transfer of any of the underlying properties, such underlying properties will continue to be subject to the net profits interest of the Trust, and the net proceeds attributable to the transferred property will be calculated as part of the computation of net proceeds described in this Form 10-K.

MV Partners may delegate to the transferee responsibility for all of MV Partners’ obligations relating to the net profits interest on the portion of the underlying properties transferred.

In addition, MV Partners may, without the consent of the Trust unitholders, require the Trust to release the net profits interest associated with any lease that accounts for no more than 0.25% of the total production from the underlying properties in the prior 12 months and provided that the net profits interest covered by such releases cannot exceed, during any 12-month period, an aggregate fair market value to the Trust of $500,000.

These releases will be made only in connection with a sale by MV Partners to a non-affiliate of the relevant underlying properties and are conditioned upon the Trust’s receiving an amount equal to the fair market value to the Trust of such net profits interest.

Any net sales proceeds paid to the Trust will be distributable to Trust unitholders for the quarter in which they are received.

MV Partners or any transferee of the underlying properties may abandon any well or property if it reasonably believes that the well or property can no longer produce oil or natural gas in commercially economic quantities.

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The Trustee must sell the net profits interest if the holders of a majority of the Trust Units approve the sale or vote to dissolve the Trust.

The trustee must also sell the net profits interest if the annual cash proceeds from the underlying properties attributable to the net profits interest are less than $1.0 million for each of

any two consecutive years.

The Trustee must also sell the net profits interest if the annual cash proceeds from the underlying properties attributable to the net profits interest are less than $1.0 million for each of any two consecutive years.

The sale of the net profits interest will result in the dissolution of the Trust.

The net proceeds of any such sale will be distributed to the Trust unitholders;

however, Trust unitholder may not recover their investment in the Trust Units.

Conflicts of interest could arise between MV Partners and the Trust unitholders.

The interests of MV Partners and the interests of the trust and the trust unitholders with respect to the underlying properties could at times differ.

As a working interest owner in the underlying properties, MV Partners could have interests that conflict with the interests of the Trust and the Trust unitholders.

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MV Partners may make decisions with respect to development expenditures that adversely affect the underlying properties.

These decisions include reducing development expenditures on these properties, which could cause oil and natural gas production to decline at a faster rate and thereby result in lower cash distributions by the trust in the future, or increasing development expenditures on the underlying properties during the final years of the term of the trust, which expenditures will benefit the unitholders only to the extent that they reduce the natural decline in oil and natural gas production during the term of the trust by an amount that more than offsets the cost of these development expenditures.

These decisions include reducing development expenditures on these properties, which could cause oil and natural gas production to decline at a faster rate and thereby result in lower cash distributions by the Trust in the future, or increasing development expenditures on the underlying properties during the final years of the term of the Trust, which expenditures will benefit the Trust unitholders only to the extent that they reduce the natural decline in oil and natural gas production during the term of the Trust by an amount that more than offsets the cost of these development expenditures.

MV Partners may sell some or all of the underlying properties and such sale may not be in the best interests of the Trust unitholders.

In the event MV Partners sells all or any portion of the underlying properties, the purchaser of such underlying properties will acquire such underlying properties subject to the net profits interest relating thereto and, in connection therewith, such purchaser will be subject to the same standards of conduct with respect to development, operation and abandonment of such underlying properties as are imposed on MV Partners.

If MV Partners sells all or any portion of the underlying properties, the purchaser of such underlying properties will acquire such underlying properties subject to the net profits interest relating thereto and, in connection therewith, such purchaser will be subject to the same standards of conduct with respect to development, operation and abandonment of such underlying properties as are currently imposed on MV Partners.

MV Partners also has the right, subject to significant limitations as described herein, to cause the Trust to release all or a portion of the net profits interest in connection with a sale of a portion of the underlying properties to which such net profits interest relates.

In such an event, the Trust is entitled to receive its proportionate share of the proceeds from the sale attributable to the net profits interest released.

See “Business — Description of the Underlying Properties — Sale and Abandonment of Underlying Properties.”

Business — Description of the Underlying Properties — Sale and Abandonment of Underlying Properties.”

In addition, affiliates of MV Partners may engage in activities whereby such affiliates could have interests that conflict with the interests of MV Partners, which could, depending on the circumstances, negatively impact MV Partners’ business.

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Except for specified matters that require approval of the Trust unitholders, the documents governing the Trust do not provide a mechanism for resolving these conflicting interests.

The trust is managed by a trustee who cannot be replaced except by a majority vote of the trust unitholders at a special meeting, which may make it difficult for trust unitholders to remove or replace the trustee.

The Trust is managed by a Trustee who cannot be replaced except by a majority vote of Trust unitholders holding a majority of the Trust Units at a special meeting, which may make it difficult for Trust unitholders to remove or replace the Trustee.

The business and affairs of the Trust are managed by the Trustee.

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As a result, it will be difficult to remove or replace the Trustee, particularly without the approval of the members of MV Partners.

Financial information of the Trust is not prepared in accordance with GAAP.

The financial statements of the Trust 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, or GAAP.

Although this basis of accounting is permitted for royalty trusts by the SEC, the financial statements of the Trust differ from GAAP financial statements because revenues are not accrued in the

month of production and cash reserves may be established for specified contingencies and deducted which could not be accrued in GAAP financial statements.

The Trust is a smaller reporting company and benefits from certain reduced governance and disclosure requirements, including that the Trust’s independent registered public accounting firm is not required to attest to the effectiveness of the Trust’s internal control over financial reporting.

The Trust cannot be certain if the omission of reduced disclosure requirements applicable to smaller reporting companies will make the Trust Units less attractive to investors.

Currently, the Trust is a “smaller reporting company,” meaning that the outstanding Trust Units held by nonaffiliates had a value of less than $250 million at the end of the Trust’s most recently completed second fiscal quarter.

As a smaller reporting company, the Trust is not required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, meaning the Trust’s auditors are not required to attest to the effectiveness of the Trust’s internal control over financial reporting.

As a result, investors and others may be less comfortable with the effectiveness of the Trust’s internal controls and the risk that material weaknesses or other deficiencies in internal controls go undetected may increase.

In addition, as a smaller reporting company, the Trust takes advantage of its ability to provide certain other less comprehensive disclosures in its SEC filings, including, among other things, providing only two years of audited financial statements in annual reports.

Consequently, it may be more challenging for investors to analyze the Trust’s results of operations and financial prospects, as the information the Trust provides to Trust unitholders may be different from what one might receive from other public companies in which one holds shares.

As a smaller reporting company, the Trust is not required to provide this information.

Risks Related to Ownership of the Trust Units

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The market price for the Trust Units may not reflect the value of the net profits interest held by the Trust.

The trading price for publicly traded securities similar to the trust units tends to be tied to recent and expected levels of cash distributions.

The market price for publicly traded securities similar to the Trust Units tends to be tied to recent and expected levels of cash distributions.

The amounts available for distribution by the Trust will vary in response to numerous factors outside the control of the Trust, including prevailing prices for sales of oil, natural gas and natural gas liquid production from the underlying properties.

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As a result, the unitholders will not be able to sue MV Partners or any future owner of the underlying properties to enforce these rights.

Furthermore, the Conveyance provides that, except as set forth in the Conveyance, MV Partners will not be liable to the Trust for the manner in which it performs its duties in operating the underlying properties as long as it acts without gross negligence or willful misconduct.

Courts outside of Delaware may not recognize the limited liability of the Trust unitholders provided under Delaware law.

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The Trust’s net profits interest may be characterized as an executory contract in bankruptcy, which could be rejected in bankruptcy, thus relieving MV Partners from its obligations to make payments to the Trust with respect to the net profits interest.

MV Partners has recorded the conveyance of the net profits interest in Kansas in the real property records in each Kansas county where the properties are located.

MV Partners has informed the trustee that

MV Partners believes that the delivery and recording of the conveyance constitute fully conveyed and vested property interests in the trust under Kansas law.

MV Partners has recorded the Conveyance in Kansas in the real property records in each Kansas county where the properties are located.

MV Partners has informed the Trustee that MV Partners believes that the delivery and recording of the Conveyance constitute fully conveyed and vested property interests in the Trust under Kansas law.

If in a bankruptcy proceeding in which MV Partners becomes involved as a debtor a determination were made that the Conveyance constitutes an executory contract and the net profits interest is not a fully conveyed property interest under the laws of Kansas, and if such contract were not to be assumed in a bankruptcy proceeding involving MV Partners, the Trust would be treated as an unsecured creditor of MV Partners with respect to such net profits interest in the pending bankruptcy proceeding.

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MV Partners has informed the Trustee that MV Partners believes that it is possible that the net profits interest for the underlying properties located in Colorado may not be treated as a real property interest under the laws of Colorado.

MV Partners has recorded the conveyance of the net profits interest in the real property records of Colorado in accordance with local recording acts.

MV Partners has recorded the Conveyance in the real property records of Colorado in accordance with local recording acts.

MV Partners has informed the Trustee that MV Partners believes that, if, during the term of the Trust, MV Partners becomes involved as a debtor in a bankruptcy proceeding, the net profits interest relating to the underlying properties located in Colorado should be treated as a fully conveyed personal property interest under the laws of Colorado.

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Significant costs and liabilities can be incurred as a result of environmental and safety requirements applicable to the oil and natural gas exploration, development and production activities of the underlying properties.

These costs and liabilities could arise under a wide range of federal, state and local environmental and safety laws and regulations, including regulations and enforcement policies, which have tended to become increasingly strict over time.

become increasingly strict over time.

Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, imposition of cleanup and site restoration costs and liens, and to a lesser extent, issuance of injunctions to limit or cease operations.

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Regulation of greenhouse gases and climate change could adversely affect Trust distributions.

Some scientific studies have suggested that emissions of certain gases, commonly referred to as greenhouse gases, including carbon dioxide and methane, may be contributing to the warming of the Earth’s atmosphere and other climatic changes.

In response to such studies, the issue of climate change and the effect of greenhouse gas emissions, in particular emissions from fossil fuels, is attracting increasing attention worldwide.

Legislative and regulatory measures to address concerns that emissions of greenhouse gases are contributing to climate change are in various phases of discussions or implementation at the international, national, regional and state levels.

In response to findings that emissions of carbon dioxide, methane and other “greenhouse gases” present an endangerment to public health and the environment, the EPA has issued regulations to restrict emissions of greenhouse gases under existing provisions of the Clean Air Act.

These regulations include limits on tailpipe emissions from motor vehicles and pre-construction and operating permit requirements for certain large stationary sources.

The EPA also has adopted rules requiring the reporting of greenhouse gas emissions from specified large greenhouse gas emission sources in the United States, including certain onshore oil and natural gas production facilities, on an annual basis.

Regulations promulgated under the Clean Air Act may require MV Partners to incur development expenses to install and utilize specific equipment, technologies, or work practices to control methane emissions from its operations.

At the international level, the U.S.

joined the international community at the 21st Conference of the Parties of the United Nations Framework Convention on Climate Change in Paris, France, which resulted in an agreement intended to nationally determine their contributions and set greenhouse gas emission reduction goals every five years beginning in 2020.

While the Agreement did not impose direct requirements on emitters, national plans to meet its pledge could have resulted in new regulatory requirements.

withdrew from the Paris Agreement effective on November 4, 2020, but formally rejoined the Paris Agreement in February 2021.

The trust cannot predict whether re-entry into the Paris Agreement or pledges made in connection therewith will result in new regulatory requirements or whether such requirements will cause MV Partners to incur material costs.

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 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.

In addition, such laws, regulations, treaties or international agreements could result in increased compliance costs or additional operating restrictions, which may have a negative impact on the operations of the underlying properties and the trust.

In addition to potential impacts on the operations of the underlying properties and the trust directly or indirectly resulting from climate change legislation or regulations, the operations of the underlying properties and the trust also could be negatively affected by climate-change-related physical changes or changes in weather patterns.

In response to findings that emissions of carbon dioxide, methane and other greenhouse gases (“GHGs”) may present an endangerment to public health and the environment, the EPA has issued regulations to restrict emissions of greenhouse gases under existing provisions of the CAA.

These regulations include limits on tailpipe emissions from motor vehicles, preconstruction and operating permit requirements for certain large stationary sources, and methane emissions standards for certain new, modified and reconstructed oil and gas sources — as well as the EPA’s recently adopted methane emissions guidelines for existing oil and gas sources.

The EPA also has adopted rules requiring the reporting of GHG emissions from specified large greenhouse gas emission sources in the United States, as well as certain onshore oil and natural gas production facilities, on an annual basis.

In addition to this direct regulation of oil and gas sources, the EPA has recently proposed rules to implement the mandatory Waste Emissions Charge set forth in the Inflation Reduction Act of 2022 (“IRA”), which will charge a fee based on the methane emissions from applicable facilities in the oil and gas sector starting in 2024.

The EPA has established pollution control standards for oil and gas sources under the CAA.

In 2012 and 2016, the EPA adopted federal New Source Performance Standards (“NSPS”) that require the reduction of volatile organic compound and sulfur dioxide emissions from certain fractured and refractured natural gas wells for which well completion operations are conducted and further require that most wells use reduced emission completions, also known as “green completions.” These regulations also establish specific requirements limiting emissions from production-related wet seal and reciprocating compressors, pumps, and from pneumatic controllers and storage vessels, and for equipment leaks.

These NSPS apply to sources that are newly constructed or modified after the rules’ applicability dates.

More recently, in December 2023 the EPA adopted a final rule that will directly regulate volatile organic compound and methane emissions from new oil and gas sources and will require further emissions reductions through its regulation of flaring, compressors, pumps, storage vessels, process controllers, well completions and liquids unloading, and equipment leaks.

At the same time, the EPA adopted emissions guidelines that will apply to existing oil and gas sources and that require reductions in volatile organic compound and methane emissions that are largely equivalent to the requirements for new sources.

The existing source emissions guidelines are to be implemented through state plans, with expected compliance dates for existing sources arriving in 2029.

The IRA included new Clean Air Act section 136(c) directing EPA to collect the Waste Emissions Charge from facilities in the oil and gas sector that report more than 25,000 tons of carbon dioxide equivalent emissions in a calendar year.

The charge will first apply to methane emissions from calendar year 2024.

The charge is determined by comparing actual reported methane emissions to statutorily established “methane intensity figures” that are based on gas production or throughput, with a charge assessed for every ton of methane emissions that exceeds the facility’s allowable emissions based on the applicable methane intensity figure.

The charge will be $900 per ton for 2024 emissions and will increase to $1,200 and then $1,500 per ton in subsequent years.

The program includes key exemptions, most notably a regulatory compliance exemption that applies to and exempts the emissions from facilities that are subject to and in complete compliance with the EPA’s new or existing source methane requirements.

The EPA proposed new rules to implement the Waste Emissions Charge program in January 2024.

Additionally, more than one-third of the states have begun taking actions to control and/or reduce emissions of GHGs, primarily through the planned development of GHG emission inventories and/or regional GHG cap and trade programs.

Although most of the state-level initiatives have to date focused on large sources of GHG emissions, such as coal-fired electric plants, it is possible that smaller sources of emissions could become subject to GHG emission limitations or allowance purchase requirements in the future.

In addition, from time to time Congress has considered adopting legislation to reduce emissions of greenhouse gases.

Any one of these climate change regulatory and legislative initiatives could have a material adverse effect on MV Partners’ business, capital expenditures, financial condition and results of operations.

The adoption and implementation of regulations imposing reporting obligations on, or limiting emissions of GHGs from, MV Partners’ equipment and operations could require MV Partners to incur costs to reduce emissions of GHGs associated with its operations or could adversely affect demand for the natural gas it produces.

Legislation or regulations that may be adopted to address climate change could also affect the markets for MV Partners’ products by making its products less desirable than competing sources of energy.

To the extent that its products are competing with lower GHG-emitting energy, MV Partners’ products may become less desirable in the market with more stringent limitations on greenhouse gas emissions.

MV Partners cannot predict with any certainty at this time how these possibilities may affect its operations.

In addition, new and emerging regulatory initiatives in the U.S.

related to climate change could adversely affect the Trust.

On March 6, 2024, the SEC issued a final rule regarding the enhancement and standardization of mandatory climate-related disclosures for investors.

The final rule mandates extensive disclosure of climate-related data, risks, and opportunities, including financial impacts, physical and transition risks, related governance and strategy and greenhouse gas emissions, for certain public companies.

Compliance with the final rule may result in increased legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place strain on the personnel, systems and resources of MV Partners or the Trust or both.

Finally, some scientists have theorized that increasing concentrations of GHGs in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, and floods and other climatic events.

If any such significant physical effects were to occur, they could have an adverse effect on MV Partners’ assets and operations and cause MV Partners to incur costs in preparing for and responding to them.

Additionally, energy needs could increase or decrease as a result of extreme weather conditions, depending on the duration and magnitude of those conditions.

The operations of the underlying properties are subject to complex federal, state, local and other laws and regulations that could adversely affect the cash distributions to the Trust unitholders.

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MV Partners may incur substantial costs and experience delays in order to maintain compliance with these existing laws and regulations, and the net profits interest will bear its share of these costs.

In addition, the costs of compliance may increase or the operations of the underlying properties may be otherwise adversely affected if existing laws and regulations are revised or reinterpreted, or if new laws and regulations become applicable to such operations.

In addition, the costs of compliance may increase or the operations of the underlying properties may be otherwise adversely affected if existing laws and regulations

are revised or reinterpreted, or if new laws and regulations become applicable to such operations.

Such costs could have a material adverse effect on the cash distributions to the Trust unitholders.

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The effects of this different tax treatment may be less advantageous to Trust unitholders.

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Neither MV Partners nor the trustee has requested a ruling from the IRS regarding these tax questions, and neither MV Partners nor the trust can assure the trust unitholders that such a ruling would be granted if requested or that the IRS will not challenge these positions on audit.

Neither MV Partners nor the Trustee has requested a ruling from the IRS regarding these tax questions.

Such a ruling may not be granted if requested;

moreover, the IRS could challenge these positions on audit.

Business — Federal Income Tax Matters” for more information about the various matters described under this risk factor.

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MV Partners relies on information technology (“IT”) systems and networks in connection with its business activities, including exploration, development and production activities.

MV Partners relies on digital technology, including information systems and related infrastructure, as well as cloud applications and services, to, among other things, estimate quantities of oil and natural gas reserves, analyze seismic and drilling information, process and record financial and operating data and communicate with employees and third parties.

MV Partners relies on

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digital technology, including information systems and related infrastructure, as well as cloud applications and services, to, among other things, estimate quantities of oil and natural gas reserves, analyze seismic and drilling information, process and record financial and operating data and communicate with employees and third parties.

As dependence on digital technologies has increased, cyber incidents, including deliberate attacks and attempts to gain unauthorized access to computer systems and networks, have increased in frequency and sophistication.

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Although steps are taken to prevent and detect such attacks, it is possible that a cyber incident will not be discovered for some time after it occurs, which could increase exposure to these consequences.

Unresolved Staff Comments.

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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.

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