10-K: United States 12 Month Natural Gas Fund, LP Reports Annual Results for 2024

United States 12 Month Natural Gas Fund, LP files its annual report on Form 10-K, detailing its performance and financial condition for the year ended December 31, 2024.

Summary

• The United States 12 Month Natural Gas Fund, LP (UNL) is a commodity pool that issues limited partnership interests traded on the NYSE Arca.
• UNL's investment objective is to reflect the daily changes in percentage terms of the price of natural gas delivered at the Henry Hub, Louisiana, as measured by the daily changes in the average of the prices of specified short-term futures contracts on natural gas.
• UNL seeks to achieve its investment objective by investing primarily in futures contracts for natural gas.
• As of December 31, 2024, UNL had 2,300,000 shares outstanding.
• For the year ended December 31, 2024, UNL's per share NAV decreased by approximately (5.36)% to $8.12.
• The average daily total net assets for the year ended December 31, 2024, were $18,119,892.
• UNL's management fee is 0.60% per annum on its average daily total net assets, effective May 1, 2024.
• UNL's total expenses paid or accrued for the year ended December 31, 2024, were $2,897,216, excluding expenses waived by USCF.
• USCF endeavors to manage UNL's investments so that the average daily percentage change in UNL's per share NAV for any period of 30 successive valuation days will be within plus/minus ten percent (10%) of the average daily percentage change in the prices of the Benchmark Futures Contracts over the same period.

Sentiment

Score: 5

Explanation: The document presents a factual overview of the fund's performance, with both positive and negative aspects. The decrease in NAV is a negative, but the fund's ability to track its benchmark is a positive. Overall, the sentiment is neutral.

Positives

• Average interest rates earned on short-term investments held by UNL, including cash, cash equivalents and Treasuries, were higher during the year ended December 31, 2024, compared to the year ended December 31, 2023.
• For the 30-valuation days ended December 31, 2024, UNL's NAV performed within the plus or minus 10% range established as its benchmark tracking goal.
• Since the commencement of the offering of UNL’s shares to the public on November 18, 2009 to December 31, 2024, UNL’s NAV performed within the plus or minus 10% range established as its benchmark tracking goal.

Negatives

• UNL's per share NAV decreased by approximately (5.36)% to $8.12 as of December 31, 2024.
• Natural gas futures prices were volatile during the year ended December 31, 2024.

Risks

• The NAV of UNL's shares relates directly to the value of the Benchmark Futures Contracts and other assets held by UNL, and fluctuations in the prices of these assets could materially adversely affect an investment in UNL's shares.
• Natural disasters, public health disruptions (such as the COVID-19 pandemic), and international armed conflicts could impact the price of commodities and/or the value, pricing and liquidity of UNL’s investments or assets which, in turn, could cause the loss of your investment in UNL.
• Natural forces in the natural gas futures market known as backwardation and contango may increase UNL's tracking error and/or negatively impact total return.
• Accountability levels, position limits, and daily price fluctuation limits set by the exchanges have the potential to cause tracking error by limiting UNL's investments, including its ability to fully invest in the Benchmark Futures Contracts, which means that changes in the price of shares could substantially vary from the changes in the price of the Benchmark Futures Contracts.
• Risk mitigation measures imposed by UNL's FCMs have the potential to cause tracking error by limiting UNL's investments, including its ability to fully invest in the Benchmark Futures Contracts and other Futures Contracts, which means that the change in the price of UNL's shares could substantially vary from the price of the Benchmark Futures Contracts.

Future Outlook

UNL intends to continue to pursue its investment objective as described in the document.

Management Comments

• USCF believes that market arbitrage opportunities will cause daily changes in UNL's share price on the NYSE Arca on a percentage basis to closely track daily changes in UNL's 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 tracked the daily changes in the spot price of natural gas.
• USCF believes that the net effect of these relationships will be that the daily changes in the price of UNL's shares on the NYSE Arca on a percentage basis will closely track, the changes in the spot price of a barrel of natural gas on a percentage basis, plus interest earned on UNL's collateral holdings, less UNL's expenses.

Industry Context

The document provides context on the natural gas market, including factors affecting supply and demand, and discusses the role of futures contracts in managing exposure to natural gas prices.

Comparison to Industry Standards

• The document compares UNL's performance to its benchmark, the average of the prices of the Benchmark Futures Contracts.
• The document provides correlation data comparing natural gas price movements to other energy commodities and investment asset classes.
• The document notes that UNL's investment objective is not for its NAV or market price of shares to equal, in dollar terms, the spot price of natural gas or any particular futures contract based on natural gas.

Legal Proceedings

• USCF and USO were named as defendants in an action filed by Optimum Strategies Fund I, LP, which was dismissed by the court.
• USCF and USO announced a resolution with each of the SEC and the CFTC relating to matters set forth in certain Wells Notices.
• USCF, USO, John P. Love, and Stuart P. Crumbaugh were named as defendants in a putative class action filed by purported shareholder Robert Lucas.
• Purported shareholder Momo Wang filed a putative class action complaint, which was voluntarily dismissed.
• Purported shareholder Darshan Mehan filed a derivative action on behalf of nominal defendant USO, against defendants USCF, John P. Love, Stuart P. Crumbaugh, Nicholas D. Gerber, Andrew F Ngim, Robert L. Nguyen, Peter M. Robinson, Gordon L. Ellis, and Malcolm R. Fobes, III.
• Purported shareholders Michael Cantrell and AML Pharm. Inc. DBA Golden International filed two separate derivative actions on behalf of nominal defendant USO, against defendants USCF, John P. Love, Stuart P. Crumbaugh, Andrew F Ngim, Gordon L. Ellis, Malcolm R. Fobes, III, Nicholas D. Gerber, Robert L. Nguyen, and Peter M. Robinson.

Related Party Transactions

• UNL pays management fees to USCF, its general partner.
• USCF pays the fees of the Marketing Agent and BNY Mellon for their services to UNL.
• UNL pays a portion of the fees and expenses of the independent directors of USCF.

Stakeholder Impact

• The document provides information relevant to shareholders regarding the fund's performance, risks, and fees.
• The document discusses the fund's ability to track its benchmark, which is important for investors seeking exposure to natural gas prices.

Key Dates