MV Oil Trust 10-Q

Item 1A. Risk Factors. There have not been any material changes from the risk factors previously disclosed in the Trust’s response to Item 1A to Part I of the Form 10-K, other than as set forth below. The market price for the Trust units may not reflect the value of the net profits interest held by the Trust and, in addition, over time will decline to zero around or shortly after the termination date of the net profits interest, June 30, 2026. 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 amounts available for distribution by the Trust will vary in response to numerous factors outside the control of the Trust, including prevailing sales prices of oil, natural gas and natural gas liquids production attributable to the underlying properties. Further, the market price of Trust units may be affected by factors other than the anticipated future Trust distributions. Consequently, the market price for the Trust units may not necessarily be indicative of the value that the Trust would realize if it sold the net profits interest to a third-party buyer. In addition, such market price may not necessarily reflect the fact that since the assets of the Trust are depleting assets, a portion of each cash distribution paid, if any, on the Trust units should be considered by investors as a return of capital, with the remainder, if any, being considered as a return on investment. As a result, distributions made to a Trust unitholder over the life of these depleting assets may not equal or exceed the purchase price paid by the unitholder, and over time the market price of the Trust units will decline to zero around or shortly after the net profits interest termination date of June 30, 2026. After the net profits interest termination date of June 30, 2026, it is anticipated that the Trustee will make a final quarterly cash distribution, if any, shortly after the termination date to the Trust unitholders of record on the 15th day following June 30, 2026. If the Trust units are trading at a price substantially in excess of the aggregate distributions that may reasonably be expected to be made prior to the termination of the Trust, the price decline is likely to include one or more abrupt substantial decreases. The Trustee may, under certain circumstances, sell the net profits interest and dissolve the Trust prior to the expected termination of the Trust. As a result, Trust unitholders may not recover their investment. 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 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 unitholders may not recover their investment in the Trust units. The Trust will wind up its affairs and terminate shortly after June 30, 2026. After the net profits interest termination date of June 30, 2026, it is anticipated that the Trustee will make a final quarterly cash distribution, if any, shortly after the termination date to the Trust unitholders of record on the 15th day following June 30, 2026. Other than such potential payment, the Trust unitholders will not be entitled to receive any net proceeds from the sale of production from the underlying properties following the termination of the net profits interest. Therefore, the market price of the Trust units will approach and eventually reach zero shortly after the end of the net profits interest term because cash distributions from the Trust will cease following the termination of the net profits interest, and the Trust will have no right to any additional production from the underlying properties after the term of the net profits interest.