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MVO > SEC Filings for MVO > Form 10-Q on 8-May-2013All Recent SEC Filings

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Form 10-Q for MV OIL TRUST


8-May-2013

Quarterly Report


Item 2. Trustee's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion 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.

Results of Operations for the Quarters Ended March 31, 2013 and 2012

The cash received by the Trust from MV Partners during the quarter ended March 31, 2013 substantially represents the production by MV Partners from September 2012 through November 2012. The cash received by the Trust during the quarter ended March 31, 2012 substantially represents the production by MV Partners from September 2011 through November 2011. The revenues from oil production are typically received by MV Partners one month after production. The Trust's net profits interest decreased $1,629,231 to $8,025,297 for the quarter ended March 31, 2013 from $9,654,528 for the quarter ended March 31, 2012. The decrease was primarily due to a $2,036,539 decrease in excess of revenues over direct operating expenses and lease equipment and development costs for the underlying properties to $10,031,621 from $12,068,160 for the prior period. Additionally, the Trustee held back $205,297 for future expenses for the quarter ended March 31, 2013 and $109,528 for the quarter ended March 31, 2012, resulting in distributable income of $7,820,000 and $9,545,000 for the quarters ended March 31, 2013 and 2012, respectively.

The Trustee paid general and administrative expenses of $297,566 and $273,849 for the quarters ended March 31, 2013 and 2012, respectively. The distributable income for the quarter ended March 31, 2013 was $7,820,000, a decrease of $1,725,000 from a distributable income of $9,545,000 for the quarter ended March 31, 2012.

The average price received for crude oil sold was $83.79 per Bbl and the average price received for natural gas sold was $2.63 per Mcf for the period from October 1, 2012 through December 31, 2012. The average price received for crude oil sold was $83.08 per Bbl and the average price received for natural gas sold was $3.78 per Mcf for the period from October 1, 2011 through December 31, 2011.

The overall production sales volumes attributable to the net profits interest for the oil and gas production collected during the period from October 1, 2012 through December 31, 2012 were 173,165 Bbls of oil, 13,953 Mcf of natural gas and 623 Bbls of natural gas liquids for a total equivalent barrels of oil of 175,895. The overall production sales volumes attributable to the net profits interest that is for the oil and gas production collected during the period from October 1, 2011 through December 31, 2011 were 181,396 Bbls of oil, 15,412 Mcf of natural gas and 785 Bbls of natural gas liquids for a total equivalent barrels of oil of 184,475.

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 an 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 for that quarter. Available funds are reduced by any cash the Trustee decides to hold as a reserve against future expenses. As of March 31, 2013, $25,000 was held by the Trustee as such a reserve. 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 expenses. If the Trust borrows funds, the Trust unitholders will not receive distributions until the borrowed funds are repaid. During the quarters ended March 31, 2012 and 2013, there were no such borrowings. MV Partners has provided a letter of credit in the amount of $1 million to the Trustee to protect the Trust against the risk that it does not have sufficient cash to pay future expenses.

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

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.

Note Regarding Forward-Looking Statements

This Form 10-Q includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact included in this Form 10-Q, including without limitation the statements under "Trustee's Discussion and Analysis of Financial Condition and Results of Operations" are forward-looking statements. Although MV Partners advised the Trust that it believes that the expectations reflected in the forward-looking statements contained herein are reasonable, no assurance can be given that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from expectations ("Cautionary Statements") are disclosed in this Form 10-Q and in the Trust's Annual Report on Form 10-K for the year ended December 31, 2012, including under the section "Item 1A. Risk Factors". All subsequent written and oral forward-looking statements attributable to the Trust or persons acting on its behalf are expressly qualified in their entirety by the Cautionary Statements.

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