This came from the original SEC files on MVO. I like this trust because it sells little Natural Gas from it wells just oil. As of June 30, 2006, the underlying properties produced predominantly oil from approximately 985 wells, and the projected reserve life of the underlying properties was in excess of 50 years. Based on the reserve report, the net profits interest would entitle the trust to receive net proceeds from the sale of production of 11.5 MMBoe of proved reserves during the term of the trust, calculated as 80% of the proved reserves attributable to the underlying properties expected to be produced during the term of the trust. Of these reserves, approximately 85% were classified as proved developed producing reserves as of June 30, 2006. Production from the underlying properties for the year ended December 31, 2005, was approximately 98% oil and approximately 2% natural gas and natural gas liquids. The underlying properties are all located in mature fields that are characterized by long production histories and numerous additional development opportunities to help reduce the natural decline in production from the underlying properties. See "—Planned Development and Workover Program" for a summary of MV Partners' development plans.
The net profits interest will terminate on the later to occur of (1) June 30, 2026, or (2) the time when 14.4 MMBoe have been produced from the underlying properties and sold (which amount is the equivalent of 11.5 MMBoe in respect of the trust's right to receive 80% of the net proceeds from the underlying properties pursuant to the net profits interest.
Why would they buy an 80% interest in something that they already have 100% ownership just by waiting ? The stock that MV Partners owns currently they received as part of the original IPO process. I do admire your faith in your fellow man. It's been my experience that, when it comes to money, people do what's best for themselves.
Currently, MV Partners has a 20% profit interest in the producing oil wells and MV Trust has an 80% profit interest. When the trust ends, MV Partners has a 100% profit interest in the producing oil wells and MV Trust has 0% profit interest. The trust ceases to exist and there is no residual value. Your share value goes to $0.00. So once production has reached 14.4 million barrels of oil, there is little reason for MV Partners to "knock themselves out" producing oil. Why give away 80% when, if they wait a little while, they can keep it all ? I don't think they will shut off the wells, but I also don't think they are going to work overtime producing once they reach 14.4 million barrels.