Overview of the Company’s Financial Performance

The Trust uses the modified cash basis of accounting to report its financial performance. This means the Trust records income when it receives distributions from the net profits interest and records expenses when they are paid. The Trust’s key financial metrics include:

• Income from the net profits interest
• Distributable income and distributions per Trust Unit
• General and administrative expenses

Revenue and Profit Trends

• Income from the net profits interest was $18.6 million in 2024 compared to $18.1 million in 2023, an increase of 2.8%.
• Distributable income was $17.7 million ($1.535 per Trust Unit) in 2024 compared to $16.8 million ($1.460 per Trust Unit) in 2023, an increase of 5.4%.
• General and administrative expenses decreased from $1.1 million in 2023 to $0.9 million in 2024.

The increase in income and distributable income was primarily due to higher oil prices, which offset a decline in production volumes. The average oil price increased from $74.03 per barrel in 2023 to $75.52 per barrel in 2024, while total production declined from 490,320 Boe in 2023 to 481,018 Boe in 2024.

Strengths and Weaknesses

Strengths:

• Stable cash flow from the net profits interest
• Declining general and administrative expenses
• Ability to build cash reserves to cover future expenses

Weaknesses:

• Declining production volumes over time as the underlying properties mature
• Exposure to commodity price volatility, which can impact cash flow
• Limited control over capital expenditures and development decisions

Outlook

The Trust’s net profits interest is set to terminate on June 30, 2026 once the minimum production threshold of 14.4 MMBoe has been reached. The Trustee anticipates making a final distribution to unitholders shortly after the termination date, and the Trust will then dissolve and wind up its affairs.

In the meantime, MV Partners plans to continue a development program focused on recompletions, workovers, and other projects to help offset the natural decline in production. However, the Trust’s ability to generate cash flow will remain subject to commodity price fluctuations and the level of capital expenditures incurred by MV Partners.

Overall, the Trust appears to be managing its finances prudently by building cash reserves and controlling costs. However, the impending termination of the net profits interest means unitholders should expect declining distributions in the coming years as the Trust approaches its end.