8-K: UNL Reports 2025 Annual Results Amid Natural Gas Market Volatility
Annual Results
United States 12 Month Natural Gas Fund, LP (UNL) released its annual financial statements for 2025, showing a decrease in net asset value per share despite a reduced net loss compared to prior years.
Summary
- Net loss for 2025 was $(971,479), an improvement from $(1,219,474) in 2024 and $(13,280,208) in 2023.
- Realized gains on closed commodity futures contracts significantly improved to $1,855,894 in 2025, compared to losses of $(7,409,144) in 2024 and $(17,944,426) in 2023.
- Net asset value per share decreased to $7.34 at December 31, 2025, from $8.12 at December 31, 2024.
- Total return for 2025 was (9.61)%, a decline from (5.36)% in 2024, but a substantial improvement from (50.23)% in 2023.
- The management fee was reduced from 0.75% to 0.60% per annum effective May 1, 2024.
- The voluntary expense waiver by USCF was terminated on April 30, 2024, resulting in no waiver for 2025 compared to $80,982 in 2024.
- Total expenses decreased to $235,619 in 2025 from $375,082 in 2024.
- Limited Partner shares outstanding increased to 2,550,000 at December 31, 2025, from 2,300,000 at December 31, 2024.
Sentiment
Score: 4
Explanation: StockSavvy.ai views this as a mixed report. While the overall net loss decreased and realized gains improved, the decline in NAV per share and total return for 2025, coupled with a significant unrealized loss on futures, indicates ongoing challenges in the natural gas market and for the fund's performance.
Positives
- Net loss significantly decreased to $(971,479) in 2025 from $(1,219,474) in 2024 and $(13,280,208) in 2023, indicating improved operational performance.
- Realized gains on closed commodity futures contracts turned positive at $1,855,894 in 2025, a substantial recovery from significant losses in prior years.
- The management fee was reduced from 0.75% to 0.60% per annum effective May 1, 2024, potentially benefiting investors.
- Total expenses decreased to $235,619 in 2025 from $375,082 in 2024.
Negatives
- Net asset value per share decreased to $7.34 at December 31, 2025, from $8.12 at December 31, 2024.
- Total return for 2025 was (9.61)%, a worse performance compared to (5.36)% in 2024.
- A significant negative change in unrealized gain (loss) on open commodity futures contracts of $(3,186,175) in 2025, compared to a gain of $5,565,625 in 2024.
- The voluntary expense waiver by USCF was terminated on April 30, 2024, leading to higher net expenses excluding management fees (1.05% in 2025 vs 0.97% in 2024).
- Net income (loss) per limited partner share was worse at $(0.78) in 2025 compared to $(0.46) in 2024.
Risks
- Market Risk: Exposure to changes in the market value of commodity futures contracts, specifically commodity price risk.
- Credit Risk: Risk of failure by a counterparty (e.g., clearinghouse, FCM) to perform according to contract terms.
- Liquidity Risk: Possibility of an illiquid market for futures contracts.
- Correlation Risk: Imperfect correlation between movements in the price of futures contracts and the market value of underlying securities.
- Valuation Risk (OTC Swaps): Less certainty in valuing OTC derivatives due to individually negotiated prices and terms, and difficulty in obtaining independent valuations.
- Market Volatility: Events such as the COVID-19 pandemic, Russia-Ukraine war, political unrest, conflicts in the Middle East, tariffs, and trade wars could cause volatility, affecting investment value, pricing, and liquidity.
- FCM Insolvency Risk: In the event of an FCM's insolvency, recovery of deposited cash and property may be limited to a pro rata share of segregated funds, potentially less than the total deposited.
- Custodian Failure Risk: The failure or insolvency of UNL's custodian could result in a substantial loss of UNL's assets.
- Money Market Fund Risk: Exposure to any risk of loss associated with investments in money market funds.
- Cash Deposit Loss Risk: Cash deposits with custodians and FCMs may be subject to loss if these entities cease operations.
- Contango and Backwardation: Natural market forces that may impact the total return on an investment in UNL's shares relative to a hypothetical direct investment in natural gas.
Future Outlook
UNL's investment objective is to track the average daily percentage changes of spot natural gas prices, as measured by a basket of 12 natural gas futures contracts, plus interest earned on collateral holdings, less expenses. The fund acknowledges that natural market forces like contango and backwardation will likely continue to impact the relationship between its share price and spot natural gas prices over time periods greater than one day. The fund may invest in other natural gas-related investments if market conditions or regulatory requirements limit its ability to invest substantially in Benchmark Futures Contracts.
Management Comments
- "To the best of his knowledge and belief, the information contained in this Annual Report for the years ended December 31, 2025, 2024 and 2023 is accurate and complete." (John P. Love, President & CEO of USCF)
- "Thank you for your continued interest in UNL." (John P. Love, President & CEO of USCF)
Industry Context
StockSavvy.ai notes that the natural gas market continues to be influenced by significant global events, including geopolitical conflicts and supply chain disruptions, which contribute to price volatility. UNL's performance reflects these broader market dynamics, particularly the shift from realized losses to gains on futures contracts, indicating active management in a fluctuating environment. The decrease in trading volume of open future contracts suggests a potential adjustment in strategy or market participation compared to the previous year.
Comparison to Industry Standards
- UNL's total return of (9.61)% in 2025, while negative, represents a significant improvement from its (50.23)% return in 2023, suggesting a partial recovery in the natural gas commodity market or improved fund management relative to extreme prior downturns.
- The reduction in UNL's management fee from 0.75% to 0.60% per annum aligns with competitive pressures in the ETF and commodity fund space, where lower fees are often a differentiator. For example, the United States Natural Gas Fund, LP (UNG), another USCF product, also has a 0.60% management fee, indicating a consistent fee structure across similar offerings.
- The fund's exposure to contango and backwardation is a standard characteristic of commodity futures-based ETFs, differentiating their performance from direct spot price exposure. This is a common challenge for funds like UNL and USO (United States Oil Fund, LP) when the futures curve is in contango, leading to negative roll yield.
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Management Fee Reduction | The management fee that UNL is contractually obligated to pay USCF was reduced from 0.75% per annum to 0.60% per annum. | May 1, 2024 | This change reduces the ongoing cost for the fund, potentially benefiting shareholders by improving net returns, all else being equal. |
| Expense Waiver Termination | The voluntary expense waiver by USCF, where expenses exceeding 0.15% of UNL's NAV were paid by USCF, was terminated. | April 30, 2024 | This termination means UNL now bears all its expenses, which could lead to higher total expense ratios for the fund, as seen by the increase in net expense excluding management fees from 0.97% in 2024 to 1.05% in 2025. |
Related Party Transactions
- USCF, as the General Partner, receives a management fee from UNL (0.60% per annum of average daily total net assets).
- USCF pays the fees of the Marketing Agent (ALPS Distributors, Inc.) and BNY Mellon for custodial, administrative, accounting, and transfer agency services.
- UNL shares independent directors and officers liability insurance and fees with Related Public Funds (USO, UNG, USL, UGA, BNO, USCI, CPER) on a pro rata basis.
- UNL pays licensing fees to NYMEX, as do other Related Public Funds (excluding BNO, USCI, CPER).
Stakeholder Impact
- Shareholders: Experienced a negative total return of (9.61)% in 2025 and a decrease in NAV per share. Benefit from a reduced management fee but face higher net expenses due to the termination of the expense waiver. Exposed to significant market and credit risks inherent in commodity futures investments.
- General Partner (USCF): Continues to receive management fees from UNL. Bears the cost of marketing agent and BNY Mellon services. Terminated its voluntary expense waiver, shifting more costs to the fund.
- Authorized Participants: Continue to facilitate creations and redemptions of shares in blocks of 50,000, paying a $350 transaction fee per order.
- FCMs (RBC, Marex, Macquarie, ADMIS): Continue to earn commissions on futures trades, though total commissions decreased in 2025 due to lower trading volume.
Next Steps
- UNL will continue to pursue its investment objective of tracking natural gas prices through futures contracts and other related investments.
- USCF will continue to manage UNL's assets and provide administrative services.
- Investors can obtain additional information from the SEC's website or USCF's website, or by calling USCF.
Key Dates
| Date | Description |
|---|---|
| 2005-12-01 | USCF became registered as a commodity pool operator with the CFTC. |
| 2006-04-10 | UNL entered into a licensing agreement with the NYMEX (amended October 20, 2011). |
| 2007-06-27 | UNL was organized as a limited partnership under Delaware law. |
| 2007-12-04 | UNL and NYMEX entered into a licensing agreement (amended October 20, 2011). |
| 2009-10-30 | Marketing agent agreement with ALPS Distributors, Inc. and USCF (amended from time to time). |
| 2009-11-18 | UNL commenced investment operations and listed its shares on the NYSE Arca under ticker symbol UNL. |
| 2013-08-08 | USCF became a swaps firm. |
| 2013-10-10 | UNL entered into a brokerage agreement with RBC Capital Markets LLC to serve as FCM. |
| 2017-12-15 | Third Amended and Restated Agreement of Limited Partnership (LP Agreement) dated. |
| 2020-03-20 | BNY Mellon Agreements for custodial, administrative, accounting, and transfer agency services dated (effective April 1, 2020). |
| 2020-05-28 | Marex North America, LLC engaged as an additional FCM. |
| 2020-06-05 | Marex Capital Markets, Inc. engaged as an additional FCM. |
| 2020-12-03 | Macquarie Futures USA LLC engaged as an additional FCM. |
| 2022-04-26 | SEC declared effective UNL's registration statement for an unlimited number of shares. |
| 2022-10-01 | Marketing Agent fee structure amended, fee borne by USCF. |
| 2023-08-08 | ADM Investor Services Inc. engaged as an additional FCM. |
| 2024-04-30 | Voluntary expense waiver by USCF terminated. |
| 2024-05-01 | Management fee reduced from 0.75% to 0.60% per annum. |
| 2025-12-31 | End of the fiscal year for which annual financial statements are reported. |
| 2026-02-27 | Date of the Independent Registered Public Accounting Firm's report. |
| 2026-03-27 | Date of the 8-K report and issuance of annual financial statements. |
Recommendation
holdWhile UNL showed an improvement in its net loss and realized gains on futures contracts in 2025 compared to previous years, the decline in net asset value per share and a negative total return of (9.61)% for the year indicate ongoing challenges. The termination of the expense waiver also means higher effective costs for the fund. Given the inherent volatility and risks associated with natural gas futures, including contango and backwardation, and the mixed financial performance, a 'hold' recommendation is appropriate. Investors should monitor natural gas market trends and the fund's ability to mitigate the impact of futures roll costs.
Keywords
Natural Gas Fund, Commodity Pool, Futures Contracts, NYMEX, UNL, USCF, Financial Statements, Annual Report, Commodity Exchange Act, Investment Performance, Market Risk, Credit Risk, Contango, Backwardation
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