10-K: UNL Reports 2025 Performance Amid Volatile Natural Gas Market

The United States 12 Month Natural Gas Fund, LP (UNL) filed its annual 10-K report for the fiscal year ended December 31, 2025, detailing its investment strategy, financial performance, and operational risks within a dynamic natural gas market.

Summary

• UNL's investment objective is for the average daily percentage changes in its Net Asset Value (NAV) per share to reflect the average daily percentage changes of the spot price of natural gas delivered at the Henry Hub, Louisiana, as measured by 12 short-term natural gas futures contracts.
• For the 30-valuation days ended December 31, 2025, the average daily change in the Benchmark Futures Contracts was (0.375)%, while UNL's average daily change in NAV was (0.364)%, resulting in an average daily difference of 0.011%.
• Since inception (November 18, 2009) to December 31, 2025, the average daily change in the Benchmark Futures Contracts was (0.029)%, and UNL's average daily change in NAV was (0.027)%, with an average daily difference of 0.002%.
• UNL's actual total return as measured by its per share NAV for the year ended December 31, 2025, was (9.61)%, outperforming its benchmark's expected total return of (12.00)% by 2.39%.
• The per share NAV decreased from $8.12 at December 31, 2024, to $7.34 at December 31, 2025.
• The natural gas futures market experienced both mild contango and backwardation during 2025.
• UNL held 502 Natural Gas NG Futures Contracts traded on the NYMEX as of December 31, 2025.
• The management fee paid to USCF was reduced from 0.75% to 0.60% per annum, effective May 1, 2024.
• The voluntary expense waiver by USCF, which covered expenses exceeding 0.15% of UNL's NAV, was terminated as of May 1, 2024.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this filing as slightly negative due to the decline in NAV and overall net loss for the year, despite effective benchmark tracking and a reduction in management fees. The termination of the expense waiver could also pressure future profitability.

Positives

• UNL consistently met its benchmark tracking goal, with the average daily change in NAV within the plus or minus 10% range of the Benchmark Futures Contracts.
• UNL's actual total return outperformed its benchmark by 2.39% in 2025 and 4.46% in 2024, primarily due to interest income exceeding expenses.
• The management fee was reduced from 0.75% to 0.60% per annum, effective May 1, 2024, potentially benefiting shareholders through lower costs.
• USCF assessed UNL's internal control over financial reporting as effective as of December 31, 2025.
• No material risks from cybersecurity threats were identified as materially affecting UNL's business strategy, results of operations, or financial condition.

Negatives

• UNL's per share NAV decreased by (9.61)% in 2025, from $8.12 to $7.34.
• Total income (loss) for 2025 was $(735,860), indicating a net loss from operations.
• Dividend and interest income earned on Treasuries, cash, and cash equivalents decreased from $906,945 in 2024 to $586,371 in 2025.
• The annualized yield based on average daily total net assets decreased from 5.01% in 2024 to 4.09% in 2025.
• The voluntary expense waiver by USCF was terminated as of May 1, 2024, which could lead to higher net expenses for UNL in the future if interest income does not sufficiently offset them.
• The aggregated total of the Related Public Funds exceeded accountability levels imposed by the NYMEX and ICE Futures for natural gas futures contracts in 2025, although UNL itself did not.

Risks

• The NAV of UNL's shares relates directly to daily changes in the average of the prices of the Benchmark Futures Contracts and other assets, and price fluctuations could materially adversely affect an investment.
• Price volatility may possibly cause the total loss of an investment.
• Natural disasters, public health disruptions (e.g., COVID-19 pandemic), and international armed conflicts (e.g., Russia-Ukraine war, Middle East conflicts) could impact commodity prices and the value, pricing, and liquidity of UNL's investments.
• Historical performance of UNL and the Benchmark Futures Contracts is not indicative of future performance.
• An investment in UNL may provide little or no diversification benefits, potentially leading to losses alongside other asset classes.
• The market price at which investors buy or sell shares may be significantly less or more than NAV.
• Daily percentage changes in UNL's NAV may not correlate with daily percentage changes in the average of the prices of the Benchmark Futures Contracts.
• Daily percentage changes in the price of the Benchmark Futures Contracts may not correlate with daily percentage changes in the spot price of natural gas.
• 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 exchanges have the potential to cause tracking error by limiting UNL's investments.
• Risk mitigation measures imposed by UNL's Futures Commission Merchants (FCMs) have the potential to cause tracking error.
• An investor's tax liability may exceed the amount of distributions, if any, on its shares.
• UNL could be treated as a corporation for U.S. federal income tax purposes, which may substantially reduce the value of the shares.
• UNL will be subject to credit risk with respect to counterparties to OTC contracts.
• Valuing OTC derivatives may be less certain than valuing exchange-traded and/or cleared financial instruments.
• UNL could become leveraged if it had insufficient assets to completely meet its margin or collateral requirements relating to its investments.
• Certain of UNL's investments could be illiquid, which could cause large losses to investors.
• UNL is not actively managed, and its investment objective is to track the Benchmark Futures Contracts within a specified range.
• UNL may not meet the listing standards of NYSE Arca, which would adversely impact an investor's ability to sell shares.
• The NYSE Arca may halt trading in UNL's shares, adversely impacting an investor's ability to sell shares.
• The liquidity of UNL's shares may be affected by the withdrawal from participation of Authorized Participants.
• Limited partners and shareholders do not participate in the management of UNL and do not control USCF.
• There is a risk that UNL will not earn trading gains sufficient to compensate for the fees and expenses that it must pay.
• UNL is subject to extensive regulatory reporting and compliance, with potential sanctions for non-compliance.
• Regulatory changes or actions, including the implementation of new legislation, may significantly and adversely affect UNL.
• UNL is not a registered investment company, so shareholders do not have the protections of the 1940 Act.
• Trading in international markets could expose UNL to credit and regulatory risk.
• UNL and USCF may have conflicts of interest, which may permit them to favor their own interests to the detriment of shareholders.
• UNL could terminate at any time and cause the liquidation and potential loss of an investor's investment.
• UNL does not expect to make cash distributions.
• An unanticipated number of Redemption Basket requests during a short period of time could have an adverse effect on UNL's NAV.
• The suspension in the ability of Authorized Participants to purchase Creation Baskets could cause UNL's NAV to differ materially from its trading price.
• UNL may be subject to interest rate risk, which may prevent it from investing fully at prevailing rates until any current investments in Treasuries mature.
• As inflation increases, the present value of UNL's assets may decline.
• UNL may potentially lose money by investing in government money market funds.
• The failure or bankruptcy of a clearing broker could result in a substantial loss of UNL's assets and could impair its ability to execute trades.
• The failure or bankruptcy of UNL's Custodian could result in a substantial loss of UNL's assets.
• Competing claims of intellectual property rights may adversely affect UNL and an investment in its shares.
• Due to the increased use of technologies, intentional and unintentional cyber-attacks pose operational and information security risks.
• UNL's investment returns could be negatively affected by climate change and greenhouse gas restrictions.
• USCF is the subject of class action, derivative, and other litigation, which could materially adversely affect USCF's financial condition.

Future Outlook

Management anticipates that interest rates may continue to stagnate over the near term from historical lows, and expects that fees and expenses paid by UNL may be lower than interest earned, potentially leading to outperformance of its benchmark. If UNL increases in size, it may invest more in Other Natural Gas-Related Investments due to regulatory limits and risk mitigation, which could increase transaction expenses and tracking error. Rising international demand for natural gas, including LNG exports to Europe, is expected to have a growing impact on U.S. natural gas prices and volatility, with some structural market changes from the Russia-Ukraine war potentially being permanent.

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 two expected 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 daily changes in the spot price of natural gas on a percentage basis, plus interest earned on UNL's collateral holdings, less UNL's expenses.
• USCF anticipates that interest rates may continue to stagnate over the near term from historical lows. It is anticipated that fees and expenses paid by UNL may be lower than interest earned by UNL. As such, USCF anticipates that UNL could possibly outperform its benchmark so long as interest earned is greater than the fees and expenses paid by UNL.
• USCF is not aware of any material risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect UNL, including its business strategy, results of operations, or financial condition.

Industry Context

StockSavvy.ai notes that UNL operates within the highly volatile natural gas commodity market, influenced by global supply-demand dynamics, geopolitical events like the Russia-Ukraine war, and domestic factors such as weather and production rig counts. The fund's strategy of tracking a 12-month average of futures contracts aims to mitigate some of the contango/backwardation effects seen in single-month contracts, a common challenge for commodity ETFs. The increasing demand for LNG and new export facilities are significant drivers for U.S. natural gas prices, potentially shifting the market from primarily domestic influences to a more globally integrated pricing structure. The fund's performance, while negative in NAV terms, demonstrated effective tracking and outperformance relative to its benchmark, suggesting sound operational management within a challenging commodity environment.

Comparison to Industry Standards

• The fund's tracking performance, with an average daily difference of 0.011% over 30 days and 0.002% since inception, indicates effective management in aligning with its benchmark.
• The management fee of 0.60% per annum is a key metric for comparison against other natural gas or commodity-focused exchange-traded products, though specific peer comparisons are not provided in the filing.
• The correlation data presented for natural gas against other energy commodities (crude oil, heating oil, gasoline) and broader asset classes (S&P 500, US Govt Bonds, FTSE World Index) provides context on diversification benefits, showing historically low correlation with equities and bonds over long periods.

Management Changes

Corporate Governance

Legal Proceedings

• Optimum Strategies Action: A class action against USO and USCF alleging securities law violations was dismissed with prejudice for federal claims on March 15, 2023; state law claims dismissed without prejudice. No appeal was filed.
• Settlement of SEC and CFTC Investigations: USCF and USO resolved investigations with the SEC and CFTC on November 8, 2021, resulting in cease-and-desist orders and civil monetary penalties totaling $2,500,000 for violations related to the 1933 Act and CEA.
• In re: United States Oil Fund, LP Securities Litigation: A consolidated class action against USCF, USO, and individuals alleging securities law violations had its motion to dismiss granted without prejudice on September 29, 2025. A motion to amend the complaint was filed on November 26, 2025, and is pending.
• Wang Class Action: A putative class action against USO, USCF, and individuals alleging federal securities claims was voluntarily dismissed on August 4, 2020.
• Mehan Action: A derivative action on behalf of USO against USCF and individuals alleging breach of fiduciary duties is stayed pending the disposition of motions to dismiss in the In re: United States Oil Fund, LP Securities Litigation.
• In re United States Oil Fund, LP Derivative Litigation: Consolidated derivative actions on behalf of USO against USCF and individuals alleging Exchange Act violations and common law claims are stayed pending the disposition of motions to dismiss in the In re: United States Oil Fund, LP Securities Litigation.
• RBC Capital Markets LLC (FCM) is involved in LIBOR litigation (settlements totaling $101M, $3.45M, $1.91M), a French estate tax fraud conviction against an affiliate (appealed), an SEC settlement for $45M regarding records preservation, a FINRA disciplinary action ($375K fine, $393K restitution), U.K. government bonds litigation (settlement pending court approval), and an SEC retirement plan investigation settlement ($2.6M disgorgement, $631K interest, $650K penalty).
• Marex Capital Markets, Inc. (FCM) was involved in a private litigation where a judge ruled in its favor for $1.76M plus fees, a JAMS Arbitration that was settled, a FINRA Arbitration where claims were dismissed, a Cook County Litigation that was settled, an Adversary Complaint that was stayed, and a private litigation in Illinois alleging software/trade secret misuse where six of eight counts were dismissed.
• ADM Investor Services, Inc. (FCM) was fined $650,000 by a Commodity Exchange Panel on January 28, 2020, for reporting and supervision failures. It was also fined $500,000 by the CFTC on September 29, 2022, for supervision failures. Additionally, it received fines totaling $450,000 from CBOT, COMEX, and CME Panels on September 19, 2023, for supervision failures related to improper trade transfers.

Related Party Transactions

• UNL pays USCF a management fee of 0.60% per annum of average daily total net assets.
• USCF pays the fees of ALPS Distributors (Marketing Agent) and The Bank of New York Mellon (Administrator, Custodian, Transfer Agent).
• USCF or the Marketing Agent, or their affiliates, may make cash payments to certain broker-dealers for distribution-related services.
• UNL pays a licensing fee to the NYMEX equal to 0.015% on all net assets.
• UNL pays its pro rata share of directors and officers liability insurance and the fees and expenses of the independent directors of USCF.
• USCF's principals, officers, directors, or employees may trade futures and related contracts for their own account, creating potential conflicts of interest.
• USCF serves as the general partner or sponsor to other Related Public Funds, which may create conflicts of interest regarding trading decisions and position limits.

Stakeholder Impact

• Shareholders: Experienced a decline in NAV and total return in 2025. They are subject to tax liability without cash distributions and are dependent on USCF's management. They face market, correlation, and operational risks, with potential for losses if UNL terminates or if the market price deviates from NAV.
• USCF (General Partner): Benefits from management fees but bears the costs of the Marketing Agent and BNY Mellon. It is subject to ongoing litigation related to other funds it manages (USO), which could impact its financial condition.
• Authorized Participants: Facilitate the creation and redemption of shares, paying transaction fees. They may engage in arbitrage activities and are indemnified by USCF/UNL under certain circumstances.
• FCMs (RBC Capital, Marex Capital, Macquarie Futures, ADMIS): Earn commissions from UNL's trading activities. They are subject to extensive regulatory requirements and have been involved in various legal and disciplinary proceedings, which could affect their ability to provide services to UNL.
• Regulatory Bodies (SEC, CFTC, NFA, NYSE Arca): Oversee UNL's operations and compliance, ensuring adherence to federal commodities and securities laws. UNL is subject to their rules and potential sanctions for non-compliance.

Next Steps

• UNL will continue to pursue its investment objective of tracking the Benchmark Futures Contracts.
• USCF will continue to monitor and manage UNL's investments, including rolling positions monthly.
• USCF will continue to evaluate its cybersecurity risk profile annually.
• The motion for leave to file a proposed second consolidated amended complaint in the In re: United States Oil Fund, LP Securities Litigation remains pending before the Court.
• All proceedings in the Mehan Action and In re United States Oil Fund, LP Derivative Litigation are stayed pending disposition of the motion(s) to dismiss in In re: United States Oil Fund, LP Securities Litigation.
• RBC Bahamas has appealed its conviction to the French Supreme Court, staying the conviction and its effects, and RBC has sought longer-term relief from the Department of Labor regarding the QPAM exemption.
• The tax courts will determine the aggregate amount of allegedly unpaid inheritance taxes, penalties, and interest in a separate proceeding related to RBC Bahamas.
• The private litigation in the Northern District of Illinois (No. 1:23-cv-14192) remains pending, with parties exchanging in discovery after the court dismissed six of eight counts.

Key Dates

Recommendation

StockSavvy.ai recommends a 'hold' for UNL. While the fund demonstrated effective tracking of its benchmark and even outperformed it in 2025, the underlying asset's volatility led to a significant decline in NAV and a net loss for the year. The termination of the voluntary expense waiver could increase UNL's cost burden going forward. The ongoing legal proceedings against the general partner (USCF) and its related funds, though not directly against UNL, introduce an element of uncertainty. Investors should monitor the natural gas market dynamics, UNL's expense management, and the resolution of USCF's legal matters.

Keywords

Natural Gas Futures, Commodity Pool, UNL, USCF, SEC Filing, 10-K Report, Energy ETF, Henry Hub, Futures Contracts, Investment Performance, Market Volatility, Contango, Backwardation, Risk Management, Financial Reporting, NYSE Arca, Natural Gas Prices, Commodity Trading, Regulatory Compliance