MV Oil Trust (NYSE:MVO) shares moved up $1.87, or 9.35%, to $21.87 in their first day of trading, after IPOing at $21.50. The 7.5 million unit offering was priced at $20, which was the mid-point of the expected $19 to $21 range. The company engages in the acquisition of oil and natural gas properties located in the Mid-Continent region in the States of Kansas and Colorado.

What do you need to know about this investment? Here's a summary of important factors found within the company's S-1 filing with the SEC:

Strong Oil Pricing Fundamentals.    Substantially all of the production from the underlying properties consists of crude oil. Crude oil prices have increased substantially during the last several years, primarily due to increased demand for crude oil on a worldwide basis without a corresponding increase in crude oil production. In addition, geopolitical instability and military conflicts in certain significant oil producing nations have led to supply interruptions and increased uncertainty regarding the levels of future supplies of crude oil. MV Partners has entered into hedge contracts with respect to a large portion of its total estimated oil production from the underlying properties during 2006 through 2010 which hedge contracts are intended to provide returns to unitholders and reduce the fluctuations in cash distributions to unitholders resulting from fluctuations in crude oil prices. As these hedge contracts cease to exist thereafter, unitholders' exposure to fluctuations in commodity prices, particularly fluctuations in crude oil prices, will increase. Under the terms of the conveyance, MV Partners will be prohibited from entering into hedging arrangements covering the oil and natural gas production from the underlying properties following the completion of this offering.

Long-Lived Oil-Producing Properties.    Oil-producing properties in the Mid-Continent region have historically had stable production profiles and generally had long-lived production, often with total economic lives in excess of 100 years. Since MV Partners acquired the underlying properties in 1998 and 1999, proved reserves attributable to the underlying properties have remained relatively stable, ranging from approximately 24.3 MMBoe as of December 31, 1999, to approximately 18.7 MMBoe as of June 30, 2006. Based on the reserve report, production from the underlying properties is expected to decline at an average annual rate of approximately 3.5% over the next 20 years assuming no additional development drilling or other capital expenditures are made after 2010 on the underlying properties.

Substantial Proved Developed Producing Reserves.    Proved developed producing reserves are the most valuable and lowest risk category of reserves because production has already commenced and the reserves do not require significant future development costs. Proved developed producing reserves attributable to the underlying properties represent approximately 88% of the discounted present value of estimated future net revenues from the underlying properties.

Ongoing Development Activities.    MV Partners has identified multiple locations on the underlying properties where it intends to drill new infill wells and recomplete existing wells into new horizons in the future. See "—Planned Development and Workover Program" for a summary of MV Partners' development plans. These locations are currently classified as proved undeveloped reserves on the reserve report. If these wells are successfully completed, the additional production from these wells could help reduce the natural decline in production from the underlying properties. Any additional revenue received by MV Partners from this additional production could have the effect of increasing future distributions to the trust unitholders. In addition, because many of these wells are drilled to a shallow depth or involve the use of existing wellbores, the cost of drilling these wells is generally less than the cost of a typical development well.

Operational Control.    The right to operate an oil and natural gas lease is important because the operator can control the timing and amount of discretionary expenditures for operational and development activities. MV Partners is designated as the operator of approximately 96% of the underlying properties, based on the discounted present value of estimated future net revenues. Vess Oil and Murfin Drilling, each of which is an affiliate of MV Partners, operate, on a contract basis, the underlying properties for which MV Partners is designated as the operator.

Aligned Interests of Sponsor.    Following the closing of this offering, MV Partners and its members will be entitled to receive 48% of the net proceeds attributable to the sale of oil, natural gas and natural gas liquids produced from the underlying properties, assuming no exercise of the underwriters' option to purchase additional trust units. This 48% interest will consist of (1) the 20% of the net proceeds from the sale of production of oil, natural gas and natural gas liquids attributable to the underlying properties that is retained by MV Partners after transferring to the trust the net profits interest and (2) the ownership by the members of MV Partners of approximately 35% of the trust units following the closing of this offering, assuming no exercise of the underwriters' option to purchase additional trust units.

Downside Oil Price Protection During the First Five Years of the Trust.    The gross proceeds will be based on the market prices realized for oil, natural gas and natural gas liquids produced from the underlying properties net of all payments made by MV Partners to hedge contract counterparties upon monthly settlements of the hedge contracts that relate to a portion of the anticipated oil production attributable to the underlying properties. In addition, the trust will be entitled to receive 80% of all amounts payable to MV Partners from hedge contract counterparties upon monthly settlements of the hedge contracts. For the years 2006, 2007 and 2008, MV Partners has entered into swap contracts and costless collars at prices ranging from $56 to $68 per barrel of oil that hedge approximately 82% to 86% of expected production from the proved developed producing reserves attributable to the underlying properties in the reserve report. For the years 2009 and 2010, MV Partners has entered into swap contracts at prices ranging from $63 to $71 per barrel of oil that hedge approximately 80% of expected production from the proved developed producing reserves attributable to underlying properties in the reserve report. These hedge contracts should reduce the commodity price-related risks inherent in holding interests in oil, a commodity that has historically been characterized by significant price volatility, during the term of the hedge contracts.

Diversified Well Locations.    The proved reserves attributable to the underlying properties are allocated among approximately 985 producing wells located in 20 counties in Kansas and Colorado. As a result, the loss of production from any one well or group of wells is not likely to have a material adverse effect on the net proceeds from the sale of production that are allocable to the trust.

While there are many pros and cons to this investment, there is clearly a lot of interest as investors rush into the stock. Oil prices have increased substantially during the past few years; however, OPEC has recently failed to protect the $50 price level. Regardless, this is definitely a stock to keep an eye on over the next few months.