UGA.NYSE ARCAUnited States Gasoline Fund, Lp
8-K: United States Gasoline Fund, LP Reports Audited Financial Statements for 2024 and 2023
Sentiment:
Annual Results
United States Gasoline Fund, LP's general partner, United States Commodity Funds LLC, releases audited financial statements showing its financial position as of December 31, 2024 and 2023, while also addressing ongoing legal proceedings and regulatory inquiries.
Worse than expectedThe company's total assets decreased from $8,686,371 in 2023 to $7,128,612 in 2024.Members equity decreased from $6,217,387 in 2023 to $5,278,930 in 2024.
Summary
- United States Commodity Funds LLC (USCF), the general partner of United States Gasoline Fund, LP (UGA), has released its audited statements of financial condition as of December 31, 2024 and 2023.
- The audit was conducted by BPM LLP, who have served as the company's auditor since 2015.
- USCF provides management services to eight publicly-traded funds, including the United States Oil Fund, LP (USO), United States Natural Gas Fund, LP (UNG), and United States Gasoline Fund, LP (UGA).
- As of December 31, 2024, USCF's total assets were $7,128,612, compared to $8,686,371 in 2023.
- The company's current assets decreased from $8,107,107 in 2023 to $6,243,397 in 2024.
- Members equity decreased from $6,217,387 in 2023 to $5,278,930 in 2024.
- The company is involved in various legal proceedings and regulatory inquiries, the outcomes of which are uncertain and could materially affect its financial condition.
- Management fees receivable from related parties (the Funds) were $1,227,784 in 2024 and $1,444,879 in 2023.
- 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: 5
Explanation: The sentiment is neutral. While the audit opinion is positive, the decrease in assets and equity, coupled with ongoing legal uncertainties, balances out the positive aspects.
Positives
- The auditor, BPM LLP, believes that the financial statements present fairly the financial position of the company as of December 31, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America.
- The company extended its office space lease in July 2024 through March 2028.
Negatives
- USCF's total assets decreased from $8,686,371 in 2023 to $7,128,612 in 2024.
- Members equity decreased from $6,217,387 in 2023 to $5,278,930 in 2024.
- The company is party to various legal proceedings and regulatory inquiries, and is currently unable to predict the timing or outcome of, or reasonably estimate the losses or range of possible losses resulting from these matters.
- The company has recorded a net tax payable of $630,771 consisting of a $1,123,902 federal tax payable and a $493,131 state tax receivable, as of December 31, 2024.
Risks
- The company is involved in several legal proceedings, including the Optimum Strategies Action and In re: United States Oil Fund, LP Securities Litigation, the outcomes of which are uncertain.
- Adverse outcomes in these legal matters 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 risk.
- The company is subject to income taxes in the U.S. federal jurisdiction and various state jurisdictions, and tax regulations within each jurisdiction are subject to interpretation and require significant judgment to apply.
Future Outlook
The company is unable to predict the timing or outcome of ongoing legal proceedings and regulatory inquiries, and it is reasonably possible that the estimate of potential losses will change in the near term.
Management Comments
- Management believes it is more likely than not that the net deferred tax assets will be fully realizable.
- Management closely monitors receivables and records an allowance for credit losses for any balances that are determined to be uncollectible.
- As of December 31, 2024 and 2023, the Company considered all remaining accounts receivable to be fully collectible.
Industry Context
USCF operates in the commodity pool industry, providing management services to publicly-traded funds focused on commodities such as oil, natural gas, and copper. The performance of these funds and the associated management fees are directly linked to commodity market conditions and investor demand for commodity-based investment products. The legal and regulatory challenges faced by USCF are not uncommon in the financial services industry, particularly for firms managing commodity pools.
Comparison to Industry Standards
- Comparing USCF's financial performance to similar commodity pool operators is challenging without detailed industry benchmarks.
- However, publicly traded asset managers like BlackRock or Invesco offer some context.
- These larger firms typically have more diversified revenue streams and greater scale, which can lead to more stable financial results.
- USCF's reliance on management fees from commodity-linked funds makes it more susceptible to market volatility compared to diversified asset managers.
- The legal and regulatory issues faced by USCF are similar to those encountered by other firms in the financial industry, particularly those dealing with complex investment products.
- For example, other commodity pool operators have faced scrutiny from the SEC and CFTC regarding disclosures and compliance with regulations.
- The specific details of the legal proceedings involving USCF would need to be compared to similar cases to assess the potential impact on the company's financial condition.
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 November 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 from the Funds (related parties) were $1,227,784 in 2024 and $1,444,879 in 2023.
- Expense waivers payable to related parties were $0 in 2024 and $168,223 in 2023.
- 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
- The ongoing legal proceedings and regulatory inquiries could impact shareholders, particularly if adverse outcomes occur.
- The company's financial performance affects its ability to provide services to the Funds and generate returns for investors.
- The company's employees are potentially affected by the legal and regulatory challenges and the overall financial health of the company.
Next Steps
- The company intends to vigorously contest the claims in ongoing legal proceedings.
- The company will continue to monitor and evaluate its tax positions.
- The company will continue to operate USCF as an independent wholly-owned subsidiary of USCF Investments.
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. |
| June 2007 | 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 | Effective date of registration statements challenged in the Optimum Strategies Action. |
| February 25, 2020 | Effective date of registration statements challenged in the Lucas Class Action. |
| March 2020 | Effective date of registration statements challenged in the Optimum Strategies Action. |
| March 19, 2020 | Date of registration statement challenged in the Wang Class Action. |
| March 23, 2020 | Effective date of registration statements challenged in the Lucas Class Action. |
| April 20, 2020 | Effective date of registration statements challenged in the Optimum Strategies Action. |
| April 24, 2020 to May 21, 2020 | Period during which the SEC alleges USCF and USO violated Section 17(a)(3) of the 1933 Act. |
| April 22, 2020 to June 12, 2020 | Period during which the CFTC alleges USCF violated Section 4o(1)(B) of the CEA and CFTC Regulation 4.41(a)(2). |
| June 19, 2020 | Lucas Class Action filed. |
| July 10, 2020 | Wang Class Action filed. |
| August 4, 2020 | Wang Class Action voluntarily dismissed. |
| August 10, 2020 | Mehan Action filed. |
| August 17, 2020 | USCF, USO, and John Love received a Wells Notice from the staff of the SEC. |
| August 19, 2020 | USCF, USO, and John Love received a Wells Notice from the staff of the CFTC. |
| August 27, 2020 | Cantrell and AML Actions filed. |
| November 8, 2021 | USCF and USO announced a resolution with each of the SEC and the CFTC. |
| March 10, 2022 | The Parent currently trades on the NYSE American effective. |
| April 6, 2022 | USO and USCF were named as defendants in the Optimum Strategies Action. |
| March 15, 2023 | The court granted the USO defendants motion to dismiss the complaint in the Optimum Strategies Action. |
| May 1, 2024 | Effective date of the reduction in management fee for UNL and termination of the voluntary fee waiver. |
| July 2024 | The Company extended its office space lease through March 2028. |
| December 31, 2024 | Date of the audited statements of financial condition. |
| 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 | End date of the extended office space lease. |
Keywords
financial statements, audited, USCF, United States Commodity Funds LLC, UGA, United States Gasoline Fund, LP, legal proceedings, regulatory inquiries, commodity pool, management fees, assets, liabilities, members equity
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