8-K: United States 12 Month Natural Gas Fund, LP Releases 2023 Annual Financial Statements

The United States 12 Month Natural Gas Fund, LP (UNL) has released its annual financial statements for the year ended December 31, 2023, showing a net loss and a decrease in net asset value per share.

Summary

• The United States 12 Month Natural Gas Fund, LP (UNL) reported its annual financial results for the year ended December 31, 2023.
• The fund experienced a net loss of $13,280,208 for the year.
• The net asset value (NAV) per share decreased from $17.24 to $8.58.
• The fund's total assets decreased from $25,109,987 to $16,389,738.
• The fund held 589 natural gas futures contracts at the end of 2023.
• The fund's investment objective is to track the average daily percentage change of natural gas spot prices using 12 consecutive month futures contracts.
• The fund's total return for 2023 was -50.23%, compared to 47.98% in 2022.
• The fund's management fee is 0.75% per annum of average daily total net assets.

Sentiment

Score: 2

Explanation: The document reveals a significant net loss, a substantial decrease in NAV per share, and a negative total return, indicating a very negative sentiment from an investment perspective.

Positives

• The fund's financial statements were audited by an independent registered public accounting firm, providing assurance on the accuracy of the results.
• The fund has a clear investment objective to track natural gas spot prices using futures contracts.
• The fund provides a cost-effective way for investors to indirectly invest in natural gas.

Negatives

• The fund experienced a significant net loss of $13,280,208 for the year.
• The net asset value per share decreased substantially from $17.24 to $8.58.
• The fund's total return was a negative 50.23% for the year.
• The fund's assets decreased significantly from $25,109,987 to $16,389,738.

Risks

• The fund is exposed to market risk due to changes in the value of futures contracts.
• The fund is subject to credit risk from counterparties in OTC swap transactions.
• The fund's performance is impacted by contango and backwardation in the natural gas futures market.
• The fund's assets are subject to loss if the custodian or futures commission merchant becomes insolvent.
• Significant market volatility in the natural gas markets could affect the fund's value and liquidity.

Future Outlook

The document does not contain specific forward-looking statements or guidance, but it does mention that the fund's performance will likely continue to be impacted by contango and backwardation.

Management Comments

• USCF believes that market arbitrage opportunities will cause daily changes in UNLs share price on the NYSE Arca on a percentage basis to closely track average daily changes in UNLs per share NAV on a percentage basis.
• USCF further believes that the daily changes in average of the prices of the Benchmark Futures Contracts have historically closely tracked the daily changes in the spot price of natural gas.

Industry Context

This announcement is relevant to the broader exchange-traded fund (ETF) industry, particularly those funds focused on commodities. The performance of UNL reflects the volatility and challenges inherent in the natural gas market. The document also highlights the regulatory requirements and operational complexities of managing a commodity pool.

Comparison to Industry Standards

• The fund's performance is significantly worse than the previous year, with a total return of -50.23% compared to 47.98% in 2022.
• The fund's net loss of $13,280,208 is a substantial decline compared to the net income of $3,632,266 in 2022.
• The decrease in NAV per share from $17.24 to $8.58 indicates a significant loss of value for investors.
• Other commodity-based ETFs, such as the United States Oil Fund (USO) and the United States Natural Gas Fund (UNG), may have experienced similar volatility due to market conditions, but a direct comparison would require analysis of their individual financial statements.
• The fund's management fee of 0.75% is within the typical range for commodity-based ETFs, but the overall expense ratio of 1.11% excluding management fees is higher than some comparable funds.

Related Party Transactions

• USCF, the general partner, receives a management fee of 0.75% per annum of average daily total net assets.
• USCF paid certain expenses on a discretionary basis typically borne by UNL, where expenses exceed 0.15% (15 basis points) of UNLs NAV, on an annualized basis.
• UNL shares fees and expenses with other related public funds on a pro rata basis.
• USCF bears the marketing agent fee.

Stakeholder Impact

• Shareholders experienced a significant decrease in the value of their investment due to the net loss and decrease in NAV per share.
• The fund's performance may impact the confidence of investors in commodity-based ETFs.
• The fund's management will need to address the negative results and outline strategies for future performance.

Next Steps

• The fund will continue to operate in accordance with its investment objective.
• The fund will continue to monitor market conditions and regulatory requirements.
• The fund will continue to provide financial reports to investors.

Key Dates

Keywords

natural gas, futures contracts, commodity pool, financial statements, net asset value, UNL, USCF, commodity, investment, derivatives