In November 2007, it was reported that Oberst would work on a solo record with Jake Bellows, and that he would form a band with M. Ward[1] and perform two shows in late December 2007 in Minneapolis, Minnesota.

[3] (Oberst and M. Ward would, however, later form the group Monsters of Folk, which also includes Mike Mogis of Bright Eyes and Jim James of My Morning Jacket.)

[4] In early 2008, Oberst and his band traveled to Tepoztlán, Morelos, Mexico and spent two months living and recording their debut album there.

In October 2008 the band released the Gentlemen's Pact EP (again, billed as a solo effort from Oberst), which was available in limited quantities and sold only at shows.

Upon completing their touring schedule in late November 2008, the Mystic Valley Band spent time at Sonic Ranch Studios in Tornillo, Texas.