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Financial report summary
?Risks
- Historical performance of USO and the Benchmark Oil Futures Contract is not indicative of future performance.
- The market price at which investors buy or sell shares may be significantly less or more than NAV.
- Daily percentage changes in USO’s NAV may not correlate with daily percentage changes in the price of the Benchmark Oil Futures Contract.
- Natural forces in the oil futures market known as “backwardation” and “contango” may increase USO’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 USO’s investments, including its ability to fully invest in the Benchmark Oil Futures Contract, which means that changes in the price of shares could substantially vary from the changes in the price of the Benchmark Oil Futures Contract.
- An investor’s tax liability may exceed the amount of distributions, if any, on its shares.
- An investor’s allocable share of taxable income or loss may differ from economic income or loss on the shares.
- Items of income, gain, deduction, loss and credit with respect to shares could be reallocated, for U.S. federal income tax purposes, and USO could be liable for U.S. federal income tax, if the IRS does not accept the assumptions and conventions applied by USO in allocating those items, with potential adverse consequences for an investor.
- USO could be treated as a corporation for U.S. federal income tax purposes, which may substantially reduce the value of the shares.
- USO is organized and operated as a limited partnership in accordance with the provisions of the LP Agreement and applicable state law, and therefore, USO has a more complex tax treatment than traditional mutual funds.
- If USO is required to withhold tax with respect to any non-U.S. shareholders, the cost of such withholding may be borne by all shareholders.
- The impact of changes in U.S. federal income tax laws on USO is uncertain.
- USO will be subject to credit risk with respect to counterparties to OTC contracts entered into by USO or held by special purpose or structured vehicles.
- Valuing OTC derivatives may be less certain than actively traded financial instruments.
- USO may temporarily limit the offering of Creation Baskets.
- Certain of USO’s investments could be illiquid, which could cause large losses to investors at any time or from time to time.
- Limited partners may have limited liability in certain circumstances, including potentially having liability for the return of wrongful distributions.
- USCF’s LLC Agreement provides limited authority to the Non-Management Directors, and any Director of USCF may be removed by USCF’s parent company, which is wholly owned by The Marygold Companies, Inc., a controlled public company where the majority of shares are owned by Nicholas D. Gerber along with certain of his other family members and certain other shareholders.
- There is a risk that USO will not earn trading gains sufficient to compensate for the fees and expenses that it must pay and as such USO may not earn any profit.
- USO is subject to extensive regulatory reporting and compliance.
- Regulatory changes or actions, including the implementation of new legislation is impossible to predict but may significantly and adversely affect USO.
- USO is not a registered investment company so shareholders do not have the protections of the 1940 Act.
- Trading in international markets could expose USO to credit and regulatory risk.
- USO and USCF may have conflicts of interest, which may permit them to favor their own interests to the detriment of shareholders.
- USO could terminate at any time and cause the liquidation and potential loss of an investor’s investment and could upset the overall maturity and timing of an investor’s investment portfolio.
- USO 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 USO’s NAV.
- The failure or bankruptcy of USO’s Custodian could result in a substantial loss of USO’s assets.
- Due to the increased use of technologies, intentional and unintentional cyber-attacks pose operational and information security risks.
- USO and USCF are subjects of class action, derivative and other litigation. In light of the inherent uncertainties involved in litigation matters, an adverse outcome in this litigation could materially adversely affect USO’s and USCF’s financial condition.
Management Discussion
- Results of Operations. On April 10, 2006, USO listed its shares on the AMEX under the ticker symbol “USO.” On that day, USO established its initial offering price at $67.39 per share and issued 200,000 shares to the initial Authorized Participant, KV Execution Services, LLC, in exchange for $13,479,000 in cash. As a result of the acquisition of the AMEX by NYSE Euronext, USO’s shares ceased trading on the AMEX and commenced trading on the NYSE Arca on November 25, 2008.
- As of December 31, 2023, USO had issued 4,809,200,000 shares, 23,423,603 of which were outstanding. On August 29, 2023, the SEC declared effective a registration statement filed by USO that registered an unlimited number of shares. As a result, USO has an unlimited number of shares that can be issued in the form of Creation Baskets. More shares may have been issued by USO than are outstanding due to the redemption of shares.
- On April 28, 2020, after the close of trading on the NYSE Arca, USO effected a 1-for-8 reverse share split and post-split shares of USO began trading on April 29, 2020. As a result of the reverse share split, every eight pre-split shares of USO were automatically exchanged for one post-split share. Immediately prior to the reverse split, there were 1,482,900,000 shares of USO issued and outstanding, representing a per share NAV of $2.04. Immediately after the effect of the reverse share split, the number of issued and outstanding shares of USO decreased to 185,362,500, not accounting for fractional shares, and the per share NAV increased to $16.35. In connection with the reverse share split, the CUSIP number for USO’s shares changed to 91232N207. USO’s ticker symbol, “USO,” remained the same. The accompanying unaudited financial statements have been adjusted to reflect the effect of the reverse share split on a retroactive basis.