BNO.NYSE ARCAUnited States Brent Oil Fund, Lp
8-K: United States Brent Oil Fund, LP: USCF Releases Audited Financial Statements for 2024 and 2023
Sentiment:
Audited Financial Statements
United States Brent Oil Fund, LP's general partner, USCF, discloses audited financial statements for 2024 and 2023, revealing details on assets, liabilities, and ongoing legal contingencies.
Worse than expectedThe company's total assets, investments at fair value, and members' equity all decreased from 2023 to 2024.
Summary
- United States Commodity Funds LLC (USCF), the general partner of United States Brent Oil Fund, LP (BNO), has released its audited statements of financial condition for December 31, 2024 and 2023.
- The report details USCF's assets, liabilities, and members' equity, prepared in accordance with U.S. GAAP.
- As of December 31, 2024, total assets were $7,128,612, compared to $8,686,371 in 2023.
- Current assets decreased from $8,107,107 in 2023 to $6,243,397 in 2024, primarily due to a decrease in investments at fair value.
- Investments at fair value decreased from $3,791,037 in 2023 to $2,332,471 in 2024.
- Total liabilities were $1,444,066 in 2024, compared to $2,468,984 in 2023.
- Members' equity was $5,278,930 in 2024, down from $6,217,387 in 2023.
- The company is involved in several legal proceedings, and it is currently unable to predict the timing or outcome, or reasonably estimate the possible losses.
- USCF voluntarily paid certain expenses normally borne by UNL to the extent such expenses exceed 0.15% of the respective funds average daily net assets, on an annualized basis, until May 1, 2024.
- The company made dividend distributions of $7,000,000 and $13,000,000 to its member USCF Investments during the years ended December 31, 2024 and 2023, respectively.
- Subsequent to year-end, on January 10, 2025, the Company approved a $500,000 dividend to USCF Investments and paid on January 16, 2025.
- On March 7, 2025, the Company approved and paid a $500,000 dividend to USCF Investments.
Sentiment
Score: 4
Explanation: The sentiment is neutral to slightly negative due to the decrease in assets and equity, ongoing legal issues, and the penalties paid to the SEC and CFTC. However, the company is still operating and management believes deferred tax assets are fully realizable.
Positives
- The company has deferred tax assets of $363,980 as of December 31, 2024, related to fund start-up costs and other accruals.
- Management believes it is more likely than not that the net deferred tax assets will be fully realizable.
- The company extended its office space lease in July 2024 through March 2028.
Negatives
- Total assets decreased by approximately $1.56 million from 2023 to 2024.
- Investments at fair value decreased by approximately $1.46 million from 2023 to 2024.
- Members' equity decreased by approximately $0.94 million from 2023 to 2024.
- The company is involved in several legal proceedings, and the potential losses are not reasonably estimable at this time.
- The company paid civil monetary penalties totaling $2,500,000 to the SEC and CFTC in 2021 related to settlements.
Risks
- The company is involved in several legal proceedings, and an adverse outcome could materially affect the company's financial condition, results of operations, and cash flows.
- The company's inability to predict the timing or outcome of legal proceedings represents a significant uncertainty.
- The company's dependence on management fees from the Funds exposes it to risks associated with the performance and net asset value of those Funds.
Future Outlook
The company is unable to predict the timing or outcome of ongoing legal proceedings, which could materially affect its financial condition.
Industry Context
USCF operates in the commodity pool industry, providing management services to publicly-traded funds focused on commodities like oil and natural gas. The financial performance of USCF is closely tied to the performance and net asset value of the funds it manages, making it susceptible to commodity market volatility and investor sentiment.
Comparison to Industry Standards
- It's difficult to directly compare USCF's financial performance to other commodity pool operators without knowing their specific business models and fund structures.
- However, similar companies in the asset management space, such as Invesco or BlackRock, would typically be evaluated based on assets under management (AUM), revenue growth, and profitability metrics.
- USCF's reliance on management fees as its primary revenue source is a common practice in the industry, but its profitability is also affected by operating expenses and legal contingencies.
- The legal challenges faced by USCF are not uncommon in the financial services industry, particularly for firms operating in highly regulated sectors.
Legal Proceedings
- The company is involved in several legal proceedings, including the Optimum Strategies Action, In re: United States Oil Fund, LP Securities Litigation, Wang Class Action, Mehan Action, and In re United States Oil Fund, LP Derivative Litigation.
- The company settled with the SEC and CFTC in 2021, paying civil monetary penalties totaling $2,500,000.
- The company is unable to predict the timing or outcome of, or reasonably estimate the possible losses or range of, possible losses resulting from these matters.
Related Party Transactions
- Management fees receivable, totaling $1,227,784 and $1,444,879 as of December 31, 2024 and 2023, respectively, were owed from the Funds, which are considered related parties.
- Waivers payable, totaling $0 and $168,223 as of December 31, 2024 and 2023, respectively, were owed to these related parties.
- The Company made dividend distributions of $7,000,000 and $13,000,000 to its member USCF Investments during the years ended December 31, 2024 and 2023, respectively.
Stakeholder Impact
- Shareholders of the Funds could be impacted by the legal proceedings and any potential adverse outcomes.
- The company's financial performance could affect its ability to provide services to the Funds and its stakeholders.
- Employees could be affected by any changes in the company's financial condition or operations.
Key Dates
| Date | Description |
|---|---|
| May 2005 | United States Commodity Funds LLC (USCF) was formed. |
| November 2006 | United States Natural Gas Fund, LP (UNG) Organized as a Delaware limited partnership. |
| April 2007 | United States Gasoline Fund, LP (UGA) Organized as a Delaware limited partnership. |
| June 2007 | United States 12 Month Oil Fund, LP (USL) Organized as a Delaware limited partnership and United States 12 Month Natural Gas Fund, LP (UNL) Organized as a Delaware limited partnership. |
| September 2009 | United States Brent Oil Fund, LP (BNO) Organized as a Delaware limited partnership. |
| April 2010 | United States Commodity Index Fund (USCI) A series of the USCIF Trust created. |
| November 2010 | United States Copper Index Fund (CPER) A series of the USCIF Trust created. |
| December 9, 2016 | USCF Investments was acquired by The Marygold Companies, Inc. |
| February 2020 | Statements in registration statements that became effective. |
| March 2020 | Statements in registration statements that became effective. |
| April 20, 2020 | Statements in registration statements that became effective. |
| April 24, 2020 to May 21, 2020 | USCF and USO violated Section 17(a)(3) of 1933 Act. |
| April 22, 2020 to June 12, 2020 | USCF violated Section 4o(1)(B) of the CEA and CFTC Regulation 4.41(a)(2). |
| June 19, 2020 | USCF, USO, John P. Love, and Stuart P. Crumbaugh were named as defendants in a putative class action filed by purported shareholder Robert Lucas (the Lucas Class Action). |
| July 10, 2020 | Purported shareholder Momo Wang filed a putative class action complaint, individually and on behalf of others similarly situated, against defendants USO, USCF, John P. Love, Stuart P. Crumbaugh, Nicholas D. Gerber, Andrew F Ngim, Robert L. Nguyen, Peter M. Robinson, Gordon L. Ellis, Malcolm R. Fobes, III, ABN Amro, BNP Paribas Securities Corp., Citadel Securities LLC, Citigroup Global Markets Inc., Credit Suisse Securities USA LLC, Deutsche Bank Securities Inc., Goldman Sachs & Company, JP Morgan Securities Inc., Merrill Lynch Professional Clearing Corp., Morgan Stanley & Company Inc., Nomura Securities International Inc., RBC Capital Markets LLC, SG Americas Securities LLC, UBS Securities LLC, and Virtu Financial BD LLC, in the U.S. District Court for the Northern District of California as Civil Action No. 3:20-cv-4596 (the Wang Class Action). |
| August 4, 2020 | The Wang Class Action was voluntarily dismissed. |
| August 10, 2020 | 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 (the Mehan Action). |
| August 17, 2020 | USCF, USO, and John Love received a Wells Notice from the staff of the SEC (the SEC Wells Notice). |
| August 19, 2020 | USCF, USO, and Mr. Love received a Wells Notice from the staff of the CFTC (the CFTC Wells Notice). |
| August 27, 2020 | 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 in the U.S. District Court for the Southern District of New York at Civil Action No. 1:20-cv-06974 (the Cantrell Action) and Civil Action No. 1:20-cv-06981 (the AML Action), respectively. |
| November 8, 2021 | USCF and USO announced a resolution with each of the SEC and the CFTC relating to matters set forth in certain Wells Notices issued by the staffs of each of the SEC and CFTC. |
| March 10, 2022 | The Marygold Companies, Inc. currently trades on the NYSE American effective. |
| April 6, 2022 | USO and USCF were named as defendants in an action filed by Optimum Strategies Fund I, LP, a purported investor in call option contracts on USO (the Optimum Strategies Action). |
| March 15, 2023 | The court granted the USO defendants motion to dismiss the complaint. |
| December 2023 | The FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). |
| May 1, 2024 | The management fee that UNL was contractually obligated to pay USCF was reduced from 0.75% per annum to 0.60% per annum. |
| July 2024 | The Company extended its office space lease through March 2028. |
| December 31, 2024 | Date of financial condition statements. |
| January 10, 2025 | The Company approved a $500,000 dividend to USCF Investments. |
| January 16, 2025 | The Company paid a $500,000 dividend to USCF Investments. |
| March 7, 2025 | The Company approved and paid a $500,000 dividend to USCF Investments. |
| March 21, 2025 | Date the statements of financial condition were issued or filed. |
| March 24, 2025 | Date of Report (Date of earliest event reported). |
| March 2028 | The Company extended its office space lease through. |
Keywords
financial statements, USCF, BNO, United States Brent Oil Fund, audited, commodity funds, legal proceedings
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