VNR uses hedges to protect its cash flows from fluctuating prices of oil and NG. The way it accounts for those hedges creates some very extreme volatility in its Net Income/Loss. Every quarter there are unrealized gains or losses as a result of these hedges but they are bogus, for the most part. Most of it will never be realized. While the change in the fair value of the hedges is reported in Net Income/Loss quarterly, the opposite side of this, the change in fair value of the reserves of the oil/gas remains at cost. So, the changes in fair value of the hedge hits Net Income/Loss before the change in fair value of the reserves, which is reflected as sales are made. This creates a mismatch from an accounting standpoint. When the value of he hedge increases, the value of the hedge item decreases, and vice versa. But only the change in value of the hedge currently hits Net Income/Loss. This creates an accounting distortion in Net Income/Loss, making the GAAP Income Statement materially unreliable, without adjustment.
VNR does generate Net Income, but not a lot. But distributions are paid out of cash flow, not Net Income. Cash flow is generally sufficient to pay the distribution. This is how MLPs operate. Funding the growth and perhaps a portion of the distribution, at times, with debt and equity. It's not a ponzi scheme. Just a highly levered business structure which is dependent on external financing for its growth.
Are you kidding ebbbr? The only difference between VNR and the typical MLP is that there is no general partner and no IDRs to the general partner to dilute the distribution, which is tax advantaged just like an MLP. You either dont understand, or worse you are hoping others dont. Either way, reflects poorly on you.