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 was formed on August 3, 2006. The conveyance of the net profits interest, however, did not occur until January 24, 2007. As a result, the trust did not recognize any income or make any distributions during the year ended December 31, 2006. The trust's first quarterly distribution was paid on February 23, 2007 and consisted of an amount in cash paid by MV Partners equal to the amount that would have been payable to the trust had the net profits interest been in effect during the period from July 1, 2006 through December 31, 2006. The trust's purpose is, in general, to hold the net profits interest and the assigned interest in the hedge contracts, to distribute to the trust unitholders cash that the trust receives in respect of the net profits interest and the assigned interest in the hedge contracts 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 and the hedge contracts.

Critical Accounting Policies

The trust's financial statements are prepared on the following basis:

º (a)
º Net profits are recorded when received, including the effect of negative or positive adjustments, by the trustee on the last business day of each calendar quarter; and

º (b)
º Trust general and administrative expenses are recorded when paid.

º (c)
º The investment in net profits interest is amortized over the life of the trust based on units of production using the net Boe received by the trust over the 11.5 million Boe to be received.

º (d)
º The trustee reviews the carrying value of the net profits interest annually for impairment based on the projected income based on the current reserve report.

This manner of reporting income and expenses is considered to be the most meaningful because the quarterly distributions to trust unitholders are based on net cash receipts received from MV Partners. The financial statements of the trust differ from financial statements prepared in accordance with generally accepted accounting principles, because, under such principles, net profits and general and administrative expenses of the trust for a quarter would be recognized on an accrual basis.

Historical Results of the Underlying Properties

The following table sets forth revenues, direct operating expenses and the excess of revenues over direct operating expenses relating to the underlying properties for the three years in the period ended December 31, 2007 (the information for the two years ended December 31, 2006 is derived from the underlying properties' audited statements of historical revenues and direct operating expenses included in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K). Because the net profits interest had not been conveyed to the trust as of December 31, 2006 and because the trust had not engaged in any activities other than organizational activities prior to December 31, 2006, the trust is providing financial information with respect to the underlying properties so that investors can review the historical results of the underlying properties. The historical results of the underlying properties are

not indicative of the future distributions of the trust, and such historical results do not give effect to the conveyance of the net profits interest and related transactions that occurred on January 24, 2007.

                                                             Year ended December 31,
                                                      -------------------------------------
                                                        2005        2006          2007
                                                      ---------   ---------   -------------
                                                                               (unaudited)
                                                                 (in thousands)
Revenues:
    Oil sales                                         $  57,353   $  64,150   $      66,430
    Natural gas sales                                       609         572             546
    Natural gas liquid sales                                312         311             256
    Hedge and other derivative activity                 (22,319 )   (14,394 )        (8,003 )
                                                      ---------   ---------   -------------
        Total                                            35,955      50,639          59,229
                                                      ---------   ---------   -------------
Direct operating expenses:
    Lease operating expenses                             11,307      11,676          12,894
    Lease maintenance                                     1,916       2,162           1,959
    Lease overhead                                        2,068       2,224           2,417
    Production and property tax                           1,867       3,459           2,453
                                                      ---------   ---------   -------------
        Total                                            17,158      19,521          19,723
                                                      ---------   ---------   -------------
Excess of revenues over direct operating expenses     $  18,797   $  31,118   $      39,506
                                                      ---------   ---------   -------------

The above table sets forth information as it relates to the underlying properties on the accrual basis which the books and records are kept. These numbers do not relate to the trust as the trust reports on a cash basis. For the year ended December 31, 2007, the trust's net profits interest represents the cash proceeds received by the trust, which is based upon the cash receipts from MV Partners for the oil and gas production subsequent to July 1, 2006 and collected by September 30, 2007.

MV Partners has historically entered into certain hedging arrangements and other derivatives to reduce the exposure of the revenues from oil production for the underlying properties to fluctuations in crude oil prices. In addition, MV Partners was required under the terms of its original agreement of limited partnership to hedge approximately 80% of its expected annual proved producing reserves. This requirement is no longer in effect. From 2005 to 2006 approximately 73% to 84% of the actual oil production volumes were subject to these hedging arrangements with settlement prices ranging from $20.10 to $63.96 per barrel. During that same period, the average NYMEX price per barrel of crude oil was between $31.07 and $66.22. These hedging arrangements have now expired and will not impact the amount of cash available for distribution to the trust; however, the settlement prices of the existing hedge contracts range from $56 to $71.

The following table provides oil and natural gas sales volumes, average sales prices and capital expenditures relating to the underlying properties for the three years in the period ended December 31,

2007. Sales volumes for natural gas liquids during the periods presented were not significant. Average prices do not include the effect of hedge and other derivative activity.

                                             Year ended December 31,
                                          ------------------------------
                                            2005        2006      2007
                                          ---------    -------   -------
Operating data:
   Sales volumes:
      Oil (MBbls)                             1,058      1,024       992
      Natural gas (MMcf)                         89        102        98
   Average Prices:
      Oil (per Bbl)                       $   54.21    $ 62.65   $ 66.96
      Natural gas (per Mcf)               $    6.83    $  5.63   $  5.58
Capital expenditures (in thousands):
   Property acquisition                   $   1,895    $ 1,714   $ 2,096
   Well development                             381      1,315     1,979
                                          ---------    -------   -------
      Total                               $   2,276    $ 3,029   $ 4,075
                                          ---------    -------   -------

Results of the trust for the year ended December 31, 2007

Income for the trust from the net profits interest and hedge and other derivative activities was $33.6 million for the year ended December 31, 2007. General and administrative expense for the trust was $0.8 million for 2007. Included in this amount was a one-time listing fee of $0.2 million for the New York Stock Exchange. The trust paid administration fees of $0.1 million to MV Partners, which included the period of July 2006 through December 2007. The trust withheld a minimal amount for future expenses. Distributable income was $32.9 million or $2.8567 per unit in 2007.

Income for the trust and distributable income for the trust's second quarter was impacted by production curtailment as a result of severe winter storms that severely impacted western Kansas and eastern Colorado. The snow and ice associated with these storms disabled electrical power to the affected underlying properties for an extended period of time and rendered some properties inaccessible. Significant snow accumulations, along with ice and subsequent melting, created difficult working conditions that extended the curtailment period. It was estimated that production from the underlying properties of approximately 32,000 to 36,000 net barrels of oil has been deferred as the result of curtailment due to the storms during the first quarter. Most of the production curtailed as a result of these storms was restored by the end of March 2007, and the storm effects on production from the underlying properties were greatly reduced during the second quarterly payment period.

Excess of revenues over direct operating expenses and lease equipment and development costs from the underlying properties was $41,413,897 for the period from July 1, 2006 through September 30, 2007. Included in this amount are payments to settle hedge and other derivatives totaling $3,513,167. In addition, amounts received to settle hedge and other derivatives was $1,249,954 for the period from July 1, 2006 through September 30, 2007, which resulted in total cash receipts over cash disbursements of $42,663,850. The trust's net profits interest (80%) of this total was $34,131,080. This amount was reduced by a reserve for future capital expenditures of $750,000 and increased by net proceeds from business interruption insurance of $200,000 resulting in the income from net profits interest and hedge and other derivative activities of $33,581,080. The trust's net profits interest represents the cash proceeds received by the trust during the year ended December 31, 2007, which is based upon the cash receipts from MV Partners for the oil and gas production subsequent to July 1, 2006 and collected by September 30, 2007.

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, 2007 substantially represents the production

by MV Partners from July 2006 through August 2007. The trust's first quarterly distribution consisted of an amount in cash paid by MV Partners equal to the amount that would have been payable to the trust had the net profits interest been in effect during the period from July 1, 2006 through December 31, 2006. The trustee has reserved $1,913 for future trust expenses and paid general and administrative expenses of $757,588 for the year ended December 31, 2007, which resulted in distributable income of $32,851,579, or $2.8567 per unit.

The average price received for crude oil sold was $60.63 per Bbl while the average price received for natural gas sold was $5.55 per Mcf for the period from July 1, 2006 through December 31, 2007.

The overall production sales volumes collected attributable to the 80% net profits interest for the oil and gas production subsequent to July 1, 2006 and collected before December 31, 2007 were 938,647 Bbls of oil, 90,879 Mcf of natural gas and 5,285 Bbls of natural gas liquids for a total equivalent barrels of oil of 957,229.

As noted above, the amounts reflected in the accompanying financial statements for the trust's year ended December 31, 2007 reflect cash received by the trust during the year. Such cash is primarily derived from production by MV Partners from July 2006 through August 2007. MV Partners distributed cash to the Trust in October 2007, which is reflected in the trust's financial statements for the year ended December 31, 2007. The cash distributed to the trust in October 2007 is primarily derived from production of the underlying properties from June 2007 through August 2007.

Discussion and Analysis of Historical Results of the Underlying Properties

Comparison of Results of the Underlying Properties for the Years Ended December 31, 2007 and 2006

Excess of revenues over direct operating expenses for the underlying properties was $39.5 million for the year ended December 31, 2007, compared to $31.1 million for the year ended December 31, 2006. The increase was primarily a result of an increase in the average price received for the oil and natural gas sold, as well as a reduction in hedge and other derivative expense. This was partially offset by an increase in direct operating expenses.

Revenues. Revenues from oil, natural gas and natural gas liquid sales increased $2.2 million between the periods. This increase in revenues was primarily the result of an increase in the average price received for crude oil sold from $62.65 per Bbl for the year ended December 31, 2006 to $66.96 per Bbl for the year ended December 31, 2007. The increase in revenues was impacted by a decrease in the average price received for natural gas sold from $5.63 per Mcf for the year ended December 31, 2006 to $5.58 per Mcf for the year ended December 31, 2007.

Hedge and other derivative activity. Hedge and other derivative activity expense decreased from $14.4 million for the year ended December 31, 2006 to $8.0 million for the year ended December 31, 2007. This decrease in hedge and other derivative activity expense of $6.4 million for the year ended December 31, 2007 was due to a $5.3 million decrease in realized hedge losses and a $1.1 million increase in ineffectiveness of hedges and other derivatives then in place being recorded to the expense account for the year.

The decrease in realized hedge losses was due to the higher settlement price of hedges in place for 2006. The weighted average settlement price of hedges and other derivatives for 2007 was $62.52 compared to $50.73 for 2006. The average NYMEX price per Bbl of crude oil for 2007 was $72.34 compared to $66.22 for 2006.

Prices. The average price received for the crude oil sold increased primarily as a result of an increase in the oil price index on which the sales prices for a majority of the oil production were based. The average price for natural gas sold decreased as a result of a decrease in the natural gas price index on which the sales prices for a majority of the natural gas production were based.

Direct operating expenses. Direct operating expenses increased from $19.5 million for the year ended December 31, 2006 to $19.7 million for the year ended December 31, 2007. This increase was primarily a result of an increase in lease operating expenses.

Lease maintenance expense. The increase in lease maintenance expense was primarily due to the timing of scheduled projects in 2007.

Production and property taxes. Production and property taxes decreased as a result of lower property tax valuations.

Comparison of Results of the Underlying Properties for the Years Ended December 31, 2006 and 2005

Excess of revenues over direct operating expenses for the underlying properties was $31.1 million for the year ended December 31, 2006, compared to $18.8 million for the year ended December 31, 2005. The increase was primarily a result of an increase in the average price received for the oil and natural gas sold, as well as a reduction in hedge and other derivative expense. This was partially offset by an increase in direct operating expenses.

Revenues. Revenues from oil, natural gas and natural gas liquid sales increased $6.8 million between the periods. This increase in revenues was primarily the result of an increase in the average price received for crude oil sold from $54.21 per Bbl for the year ended December 31, 2005 to $62.65 per Bbl for the year ended December 31, 2006. The increase in revenues was impacted by a decrease in the average price received for natural gas sold from $6.83 per Mcf for the year ended December 31, 2005 to $5.63 per Mcf for the year ended December 31, 2006, as well as a small increase in volumes sold.

Hedge and other derivative activity. Hedge and other derivative activity expense decreased from $22.3 million for the year ended December 31, 2005 to $14.4 million for the year ended December 31, 2006. This decrease in hedge and other derivative activity expense of $7.9 million for the year ended December 31, 2006 was due to a $7.8 million decrease in realized hedge losses and a small decrease in ineffectiveness of hedges and other derivatives then in place being recorded to the expense account for the year.

The decrease in realized hedge losses was due to the higher settlement price of hedges in place for 2006. The weighted average settlement price of hedges and other derivatives for 2006 was $50.73 compared to $28.60 for 2005. The average NYMEX price per Bbl of crude oil for 2006 was $66.22 compared to $56.57 for 2005.

Prices. The average price received for the crude oil sold increased primarily as a result of an increase in the oil price index on which the sales prices for a majority of the oil production were based. The average price for natural gas sold decreased as a result of a decrease in the natural gas price index on which the sales prices for a majority of the natural gas production were based.

Volumes. The small decrease in overall production sales volumes was less than the natural decline of the underlying properties. The additional production to partially offset the natural decline of the underlying properties during the year ended December 31, 2006 compared to the year ended December 31, 2005 is primarily attributable to lower production caused by an ice storm in Kansas during the first quarter of 2005 and the results of MV Partners' development program in 2006.

Direct operating expenses. Direct operating expenses increased from $17.2 million for the year ended December 31, 2005 to $19.5 million for the year ended December 31, 2006. This increase was primarily a result of an increase in production and property tax, casing repair to several wells, repair and cleanout of a salt water disposal system well and continuing restoration of wells from inactive status to producing status.

Lease maintenance expense. The increase in lease maintenance expense was primarily due to the timing of scheduled projects in 2006.

Production and property taxes. Production and property taxes increased as a result of the increases in the price of crude oil and in revenues from oil, natural gas and natural gas liquid sales, on which these taxes are based.

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, payments from the hedge contracts and other sources (such as interest earned on any amounts reserved by the trustee) that quarter, over the trust's liabilities for that quarter. Available funds are reduced by any cash the trustee decides to hold as a reserve against future liabilities. The trustee may borrow funds required to pay liabilities if the trustee determines that the cash on hand and the cash to be received are insufficient to cover the trust's liability. If the trustee borrows funds, the trust unitholders will not receive distributions until the borrowed funds are repaid.

Royalty income to the trust is based on the calculation and definitions of "gross proceeds" and "net proceeds" contained in the conveyance.

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 properties comprising the underlying properties to further develop proved undeveloped reserves and 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.

MV Partners has undertaken 3-D seismic surveys covering several leases constituting a part of the underlying properties. These leases have over 31 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 18 proved undeveloped locations over the five years ending December 31, 2012. In the future, MV Partners plans to expand 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, 2012 will be approximately $18.3 million. Of this total, MV Partners contemplates spending approximately $13.8 million to drill approximately 55 to 60 development wells in ten project areas and approximately $4.5 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 "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. 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 amount of capital expenditures that MV Partners may incur with respect to the underlying properties, except as described above under "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 towards 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. See "Business-Computation of Net Proceeds-Net Profits Interest."

The trust has no off-balance sheet arrangements. The trust has not guaranteed the debt of any other party, nor does the trust have any other arrangements or relationships with other entities that could potentially result in unconsolidated debt, losses or contingent obligations.

Contractual Obligations

As of December 31, 2007, the trust had no obligations or commitments to make future contractual payments.

Hedge Contracts

The revenues derived from the underlying properties depend substantially on prevailing crude oil and, to a lesser extent, natural gas and natural gas liquid . . .