Annual Report 2012
North
European
Oil
Royalty
Trust
ATTENTION:
PLEASE RETAIN
CRITICAL TAX INFORMATION ENCLOSED
The Annual Meeting of Unit Owners will be held on February 12, 2013,
at 10:30 A.M., in Rooms 3 and 4, Ninth Floor, at the University Club,
1 West 54th Street, New York City (northwest corner of 5th Avenue; entrance on 54th Street).
All unit owners are cordially invited to attend.
If you plan to attend the meeting, please note that The University Club has a dress code.
Gentlemen are required to wear a jacket and ladies are required to wear business attire.
The University Club does not make exceptions.
Table of Contents
Report to Unit Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-4
Ten Year History of Net Gas Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Net Proved Producing Gas Reserves (Est .) and
Volume of Net Gas Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Description of Trust Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-9
Management’s Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . 9-17
Critical Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Distributions and Trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-20
Comparison of Five Year Returns . . . . . . . . . . . . . . . . . . . . . . . . . 20-21
Dollar Royalties Western and Eastern Oldenburg . . . . . . . . . . . . . . . . 22
Report of Independent Registered Public Accounting Firm . . . . . . . . . 23
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24-27
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-30
Disclosure Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Internal Control Over Financial Reporting . . . . . . . . . . . . . . . . . . . 31-32
2012 Tax Letter (Removable) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33-36
IMPORTANT TAX INFORMATION
For your convenience, the information necessary to prepare
your 2012 tax return is included in the removable
“2012 tax letter” on Pages 33 through 36.
Please note that there will be no separate mailing of the tax letter.
1
NORTH EUROPEAN OIL ROYALTY TRUST
Report to Unit Owners:
FOURTH QUARTER 2012
Net income for the Trust for the fourth quarter of fiscal 2012 was $4,679,489, a decrease of
20 .23% from net income of $5,866,147 for the fourth quarter of fiscal 2011 . The decline in income
was the result of lower gas prices, reduced gas sales and lower average exchange rates under
both the higher royalty rate agreement covering western Oldenburg (the “Mobil Agreement”) and
the lower royalty rate agreement covering the entire Oldenburg concession (the “OEG Agreement”) .
Gas royalties under the OEG Agreement for the fourth quarter of fiscal 2012 were additionally
reduced by negative adjustments from the prior quarter and year totaling $567,669, as compared to
negative adjustments totaling $122,870 for the fourth quarter of fiscal 2011 . Finally, while there was
no maintenance conducted at the Grossenkneten desulfurization plant in the fourth quarter of fiscal
2011, during the fourth quarter of fiscal 2012 the plant was impacted by inspection and maintenance
activities for approximately five weeks . The relevant details for the final quarters of fiscal 2012 and
2011 for gas sales under the Mobil and OEG Agreements are shown in the table below .
Mobil Agreement:
Gas Sales (Bcf1)
Gas Prices (Ecents/kWh2)
Average Exchange Rate3
Gas Royalties
OEG Agreement:
Gas Sales (Bcf)
Gas Prices (Ecents/kWh)
Average Exchange Rate
Gas Royalties
Fourth Fiscal Qtr.
Ended 10/31/12
Fourth Fiscal Qtr.
Ended 10/31/11
Percentage
Change
9 .018
2 .3884
1 .2824
$3,274,349
25 .912
2 .6346
1 .2845
$855,191
10 .021
2 .5102
1 .3938
$3,786,264
28 .671
2 .7998
1 .3929
$1,803,626
- 10 .01%
- 4 .85%
- 7 .99%
- 13 .52%
- 9 .62%
- 5 .90%
- 7 .78%
- 52 .58%
1Billion cubic feet 2Euro cents per Kilowatt hour
3Based on average exchange rates of royalty transfers
2
NORTH EUROPEAN OIL ROYALTY TRUST
FISCAL 2012 REPORT
For fiscal 2012, the Trust’s gross royalty income decreased 5 .87% to $23,672,808 from
$25,148,523 in fiscal 2011 . The decrease in royalty income is due to declines in gas sales and
average exchange rates . The impact of these factors was reduced but not completely offset by the
increase in gas prices . Further details relating to the changes in gas sales, gas prices and average
exchange rates for fiscal 2012 and 2011 are presented on pages 12 through 14 .
The decrease in the amount of royalty income resulted in the lower distributions . The total
distribution for fiscal 2012 was $2 .46 per unit compared to $2 .63 per unit for fiscal 2011 . As in prior
years, the Trust receives adjustments from the operating companies based on their final calculations
of royalties payable during the previous calendar year . In the fourth quarter of fiscal 2012, the prior
year adjustment represented a negative impact of approximately $0 .0189 per unit . In the fourth fiscal
quarter of 2011, the Trust received only a nominal prior year adjustment .
The Trust’s German consultant meets periodically with representatives of the operating
companies to inquire about their planned and proposed drilling and geophysical work and
other general matters . The following represents a summary of the Trust’s German consultant’s
conversations with representatives of EMPG . The Trust is not able to confirm the accuracy of any
of these responses . In addition, the operating companies are not required to take any of the actions
outlined and, if they change their plans with respect to any such actions, they are not obligated to
inform the Trust .
Brettdorf Z-2b, a sour gas well, was the only well completed in 2011 but due to an
unstabilized low flow rate has not entered production . Visbek Z-8a, also a sour gas well,
completed drilling in December 2011 . The initial production began in early 2012 with
a stabilized low flow rate . Plans to improve the flow rate on both these wells are being
considered and may be conducted in early 2013 .
Of the five wells initially planned for 2012, two have entered production, two are in their
finals stages and one (Oythe Z-4, the seventh well in the Carboniferous Tight Gas Program)
has been postponed until 2014 . Goldenstedt Z-21 and Visbek Z-16a, both sour gas wells,
were successfully completed and have entered production . Goldenstedt Z-25 is another sour
gas well and as of mid-November had reached the top of the Zechstein formation . These
three wells are all infill wells, which means they are intended to access areas within a gas
field that are not tapped by existing wells and thus improve the gas recovery factor in the
Zechstein reservoir . The final well that began drilling in 2012 is Goldenstedt Z-15a . This
well is intended to serve two purposes . The primary purpose is to serve as an infill well and
improve the gas recovery factor in this area of the reservoir . This portion of the well was
designated as Goldenstedt Z-15a/3rd hole . As part of the drilling process, the depth of the
well was increased by an additional 1,000 meters from the bottom of the Zechstein formation
to penetrate the Carboniferous zone which lies beneath . This portion of the well was
designated as Goldenstedt Z-15a (K) and was intended to explore reservoir conditions in the
Carboniferous zone and delineate the gas bearing strata in this area . Test results are not yet
in for the Carboniferous zone but the well has been completed as a sour gas producer in the
3
NORTH EUROPEAN OIL ROYALTY TRUST
Zechstein formation and should enter production in the near future .
There are currently two wells scheduled to begin drilling in 2013, Hemmelte NW T-1
and Goldenstedt Z-34 . Regarding Goldenstedt Z-34, very little information is available other
than the fact it is intended to access the Zechstein zone in eastern Oldenburg with drilling
scheduled to start in July 2013 . Hemmelte NW T-1 is a wildcat well in western Oldenburg
intended to access the sweet gas Bunter formation . Construction of the well site is complete
but geological and technical planning is still underway . The start of drilling is scheduled for
November 2013 . Including Oythe Z-4, which was postponed from 2012, there are a total of six
wells, four Carboniferous and two Zechstein, still in the portfolio for the period beyond 2013 .
Based on the limited information available, Ralph E . Davis Associates, Inc ., the Trust’s
petroleum consultant (“Davis Associates”), has prepared and submitted their report on the cost
depletion percentage applicable to Trust unit owners for calendar 2012 . The 2012 cost depletion
percentage of 9 .9096% and related tax information is contained in the removable “2012 Tax Letter” on
Pages 33 through 36 of this report . You will note that we have made significant changes in the layout
of the tax letter in an attempt to simplify your tax calculations . The calculation of the cost depletion
percentage is based on Davis Associates’ estimate of remaining net proved producing reserves as
of October 1, 2012 . (The complete text of the report is available in the Trust’s 2012 Report on Form
10-K as exhibit 99 .1 .) The application of the Trust’s two royalty rates to gross remaining proved
producing gas reserves or to gross gas sales for both eastern and western Oldenburg yields the net
gas reserves or sales attributable to the Trust, as referenced in the charts on pages 5 and 6 . The
report indicates that net Trust gas reserves decreased 16 .18% to 19 .425 Bcf from 23 .174 Bcf on net
sales for 2012 of 2 .175 Bcf and a negative reserve adjustment of 1 .574 Bcf . As shown in the chart
on page 6, the efforts by the operating companies have not been successful in replacing current gas
sales with additions to proved producing reserves . Both gas sales and gas reserves have continued
to decline . It is hoped that the drilling program described to the Trust’s consultant in Germany for
2012 and detailed above will positively impact the future reserve picture .
Respectfully submitted,
John R . Van Kirk
Managing Director
December 28, 2012
4
S
E
L
A
S
S
A
G
T
E
N
F
O
Y
R
O
T
S
I
H
R
A
E
Y
N
E
T
G
R
U
B
N
E
D
L
O
N
R
E
T
S
A
E
G
R
U
B
N
E
D
L
O
N
R
E
T
S
E
W
d
n
a
s
e
t
a
R
y
t
l
a
y
o
R
e
v
i
t
c
e
f
f
E
g
n
i
t
c
e
l
f
e
R
r
e
b
m
e
t
p
e
S
h
g
u
o
r
h
t
s
e
l
a
S
s
a
G
2
1
0
2
1
1
0
2
0
1
0
2
9
0
0
2
8
0
0
2
7
0
0
2
6
0
0
2
5
0
0
2
4
0
0
2
3
0
0
2
0123456
BILLION CUBIC FEET
NORTH EUROPEAN OIL ROYALTY TRUST
TEN YEAR HISTORY OF NET GAS SALES
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Reflecting Effective Royalty Rates and
Gas Sales through September
WESTERN OLDENBURG
EASTERN OLDENBURG
6
5
4
3
2
1
0
T
E
E
F
C
I
B
U
C
N
O
I
L
L
I
B
5
6
NORTH EUROPEAN OIL ROYALTY TRUST
45
40
35
30
25
20
15
10
5
0
T
E
E
F
C
I
B
U
C
N
O
I
L
L
I
B
NET PROVED PRODUCING GAS RESERVES (EST.)
AND VOLUME OF NET GAS SALES
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
As of October 1st
NET PROVED PRODUCING RESERVES (EST.)
ANNUAL NET SALES
NORTH EUROPEAN OIL ROYALTY TRUST
North European Oil Royalty Trust
Selected Financial Data (Cash Basis)
For Fiscal Years Ended October 31
2012
2011
2010
2009
2008
German gas, sulfur and oil royalties received
$23,672,808
$25,148,523
$19,645,331
$28,724,078 $34,645,159
Interest Income
Trust Expenses
Net Income
40,156
26,233
7,359
11,471
95,802
(1,103,003)
(978,849)
(932,425)
(1,036,321)
(1,075,823)
$22,609,961
$24,195,907
$18,720,265
$27,699,228
$33,665,138
Net income per unit
$ 2 .46
$ 2 .63
$ 2 .04
$ 3 .01
$ 3 .66
Distributions per unit paid
or to be paid to unit owners
$ 2 .46
$ 2 .63
$ 2 .04
$ 3 .01
$ 3 .66
Units outstanding end of period
9,190,590
9,190,590
9,190,590
9,190,590
9,190,590
7
NORTH EUROPEAN OIL ROYALTY TRUST
Description of Trust Assets
The properties of the Trust, which the Trust and Trustees hold pursuant to the Trust Agreement
on behalf of the unit owners, are overriding royalty rights on sales of gas, sulfur and oil under certain
concessions or leases in the Federal Republic of Germany . The actual leases or concessions are
held either by Mobil Erdgas-Erdol GmbH (“Mobil Erdgas”), a German operating subsidiary of Exxon
Mobil, or by Oldenburgische Erdolgesellschaft (“OEG”) . As a result of direct and indirect ownership,
Exxon Mobil owns two-thirds of OEG and the Royal Dutch/Shell Group owns one-third of OEG .
The Oldenburg concession (1,398,000 acres), covering virtually the entire former Grand Duchy of
Oldenburg and located in the federal state of Lower Saxony, provides nearly 100% of the royalties
received by the Trust . BEB Erdgas und Erdol GmbH (“BEB”), a joint venture in which Exxon Mobil
and the Royal Dutch/Shell Group each own 50%, administers the concession held by OEG . In 2002,
Mobil Erdgas and BEB formed Exxon Mobil Production Deutschland GmbH (“EMPG”) to carry out
all exploration, drilling and production activities . All sales activities are still handled by either Mobil
Erdgas or BEB .
Under the Mobil Agreement covering the western part of the Oldenburg concession
(approximately 662,000 acres), the Trust receives a royalty payment of 4% on gross receipts from
sales by Mobil Erdgas of gas well gas, oil well gas, crude oil and condensate . Under the Mobil
Agreement there is no deduction of costs prior to the calculation of royalties from gas well gas and
oil well gas, which together account for approximately 99% of all the royalties under said agreement .
Historically, the Trust has received significantly greater royalty payments under the Mobil Agreement
(as compared to the OEG Agreement described below) due to the higher royalty rate specified by that
agreement .
The Trust is also entitled under the Mobil Agreement to receive a 2% royalty on gross receipts
of sales of sulfur obtained as a by-product of sour gas produced from the western part of Oldenburg .
The payment of the sulfur royalty is conditioned upon sales of sulfur by Mobil Erdgas at a selling
price above an agreed upon base price . This base price is adjusted annually by an inflation index .
When the average selling price falls below the indexed base price, no royalties are payable . Up
until the second quarter of fiscal 2008, the Trust had not received any royalties from sulfur sales
under the Mobil Agreement for over 10 years because the selling price was below the indexed base
price . During fiscal 2009 and 2010, the average selling price for sulfur exceeded the indexed base
price on an intermittent basis and the Trust received two sulfur royalty payments . During fiscal 2011,
the Trust received five sulfur royalty payments representing one additional payment for fiscal 2010
and four payments attributable to each of the four quarters of fiscal 2011 . During fiscal 2012, the
Trust received four payments representing quarterly sulfur royalties . Sulfur royalties under the Mobil
Agreement totaled $825,369, $613,203 and $78,870 during fiscal 2012, 2011 and 2010, respectively .
Under another set of rights covering the entire Oldenburg concession and pursuant to the
agreement with OEG, the Trust receives royalties at the rate of 0 .6667% on gross receipts from sales
by BEB of gas well gas, oil well gas, crude oil, condensate and sulfur (removed during the processing
of sour gas) less a certain allowed deduction of costs (the “OEG Agreement”) . Under the OEG
Agreement, 50% of the field handling, treatment and transportation costs as reported for state royalty
purposes are deducted from the gross sales receipts prior to the calculation of the royalty to be paid
to the Trust .
8
NORTH EUROPEAN OIL ROYALTY TRUST
In addition to the Oldenburg area, the Trust also holds overriding royalties at various rates
on a number of leases of various sizes in other areas of northwest Germany . At the present time,
all but one of these leases are in the non-producing category . Due to the low level of income and
the intermittent gas production from the single producing lease, Grosses Meer, reserves from this
lease are not included in reserve calculations for this report year . In 2008, the German authorities
requested that the operating companies conduct a reservoir analysis of the Grosses Meer leasehold
area to determine whether the royalties were being properly allocated based on the locations of the
gas reserves . As a consequence, the payment of royalties to the Trust was suspended . Following
the completion of the reservoir analysis, a cumulative royalty payment of $61,548 was received by
the Trust in the third quarter of fiscal 2010 . This payment covered the years 2005 through 2009
and the first quarter of calendar 2010 . Since fiscal 2010, production and royalties from Grosses
Meer continued to be intermittent and minimal . Royalties from Grosses Meer were $3,813, $0, and
$61,676 during fiscal 2012, 2011 and 2010, respectively .
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Executive Summary
The Trust is a passive fixed investment trust which holds overriding royalty rights, receives
income under those rights from certain operating companies, pays its expenses and distributes
the remaining net funds to its unit owners . As mandated by the Trust Agreement, distributions of
income are made on a quarterly basis . These distributions, as determined by the Trustees, constitute
substantially all of the funds on hand after provision is made for Trust expenses then anticipated .
The Trust does not engage in any business or extractive operations of any kind in the areas
over which it holds royalty rights and is precluded from engaging in such activities by the Trust
Agreement . There are no requirements, therefore, for capital resources with which to make capital
expenditures or investments in order to continue the receipt of royalty revenues by the Trust .
The properties of the Trust are described above in “Description of Trust Assets .” Of particular
importance with respect to royalty income are the two royalty agreements, the Mobil Agreement and
the OEG Agreement . The Mobil Agreement covers gas sales from the western part of the Oldenburg
concession . Under the Mobil Agreement, the Trust has traditionally received the majority of its royalty
income due to the higher royalty rate of 4% . The OEG Agreement covers gas sales from the entire
Oldenburg concession but the royalty rate of 0 .6667% is significantly lower and gas royalties have
been correspondingly lower .
The operating companies pay monthly royalties to the Trust based on their sales of natural
gas, sulfur and oil . Of these three products, natural gas provides approximately 92% of the total
royalties . The amount of royalties paid to the Trust is primarily based on four factors: the amount of
gas sold, the price of that gas, the area from which the gas is sold and the exchange rate .
Effective with the Trust’s third quarter of fiscal 2010, a new royalty payment schedule was
fully implemented . At approximately the 25th of the months of January, April, July and October, the
operating companies calculate the amount of gas sold during the previous calendar quarter and
determine the amount of royalties that were payable to the Trust based on those sales . This amount
9
NORTH EUROPEAN OIL ROYALTY TRUST
forms the basis for royalty payments for the Trust’s upcoming fiscal quarter and for any adjustment
for the prior calendar quarter . For example, on January 25th the operating companies calculate gas
sales and attributable royalties payable for the months of October through December . This amount
is divided into thirds and forms the monthly royalty payments (payable on the 15th of each month)
to the Trust for its fiscal quarter running from February through April . Continuing in this example,
at the same time that the operating companies determine the actual amount of royalties that were
payable for the months of October through December, they look at the actual amount of royalties
that were paid to the Trust during that same period and calculate the difference between what was
paid and what was payable . Additional amounts payable by the operating companies would be paid
immediately in January and any overpayment would be deducted from the February payment . The
operating companies continue their calculations through the calendar year . In September of each
year, the operating companies make the final determination of any necessary royalty adjustments for
the prior calendar year . The Trust’s German accountants review the royalty calculations on a biennial
basis .
There are two types of natural gas found within the Oldenburg concession, sweet gas and
sour gas . Sweet gas has little or no contaminants and needs no treatment before it can be sold . In
recent years sweet gas has assumed the role of swing producer . During periods of high demand
the production of sweet gas is increased as necessary . During the summer months, sweet gas
production is reduced due to a general decline in demand . Sour gas, in comparison, must be
processed at the Grossenkneten or the Norddeutsche Erdgas-Aufbereitungs GmbH (“NEAG”)
desulfurization plants before it can be sold . The desulfurization process removes hydrogen sulfide
and other contaminants . The hydrogen sulfide in gaseous form is converted to sulfur in a solid form
and sold separately . For efficiency purposes, Grossenkneten is operated at capacity on a continual
basis . Any excess production from the plant is stored in underground storage for higher demand
periods . As needed, the operators conduct maintenance on the plant, generally during the summer
months when demand is lower .
Under the Mobil and OEG Agreements, the gas is sold to various distributors under long term
contracts which delineate, among other provisions, the timing, manner, volume and price of the gas
sold . The pricing mechanisms contained in these contracts include a delay factor of three to six
months and use the price of light heating oil in Germany as one of the primary pricing components .
Since Germany must import a large percentage of its energy requirements, the U .S . dollar price of
oil on the international market has a significant impact on the price of light heating oil and a delayed
impact on the price of gas . Additionally, there are efforts underway to decouple the linkage between
oil prices and gas prices . Through 2010 based upon the royalty examination conducted by the
Trust’s accountants in Germany, the basic structure of the gas supply contracts had not changed
and such decoupling, as of that point, had not occurred . The Trust itself does not have access to
the specific sales contracts under which gas from the Oldenburg concession is sold . Working under
a confidentiality agreement with the operating companies, the Trust’s German accountants review
these contracts periodically on behalf of the Trust to verify the correctness of application of the
Agreement formulas for the computation of royalty payments . The Trust’s accountants in Germany
have concluded their examination of the operating companies for 2009 and 2010 and did not identify
any material errors in royalty amounts payable .
10
NORTH EUROPEAN OIL ROYALTY TRUST
For unit owners, changes in the dollar value of the Euro have both an immediate and long-term
impact . The immediate impact is from the exchange rate that is applied at the time the royalties, paid
to the Trust in Euros, are converted into U .S . dollars at the time of their transfer from Germany to the
United States . In relation to the dollar, a stronger Euro would yield more dollars and a weaker Euro
would yield less dollars . The long-term impact relates to the mechanism of gas pricing contained in
the gas sales contracts negotiated by the operating companies . These gas sales contracts often use
the price of German light heating oil as one of the primary pricing factors by which the price of gas is
determined . The price of German light heating oil, which is a refined product, is largely determined
by the price of the imported crude oil from which it was refined . Oil on the international market is
priced in dollars . However, when oil is imported into Germany it is purchased in Euros, and at this
point the dollar value of the Euro becomes relevant . A weaker Euro would buy less oil making that oil
and the subsequently refined light heating oil more expensive . A stronger Euro would buy more oil
making that oil and the subsequently refined light heating oil less expensive . Since changes in the
price of German light heating oil are subsequently reflected in the price of gas through the gas sales
contracts, the dollar/Euro relationship can make the prices of gas higher or lower . The changes in
gas prices that result from changes in the prices of German light heating oil are only reflected after a
built-in delay of three to six months as specified in the individual gas sales contracts .
Seasonal demand factors affect the income from the Trust’s royalty rights insofar as they relate
to energy demands and increases or decreases in prices, but on average they are generally not
material to the annual income received under the Trust’s royalty rights .
The Trust has no means of ensuring continued income from overriding royalty rights at their
present level or otherwise . The Trust’s current consultant in Germany provides general information
to the Trust on the German and European economies and energy markets . This information provides
a context in which to evaluate the actions of the operating companies . In his position as consultant,
he receives reports from the operating companies with respect to current and planned drilling and
exploration efforts . However, the unified exploration and production venture, EMPG, which provides
the reports to the Trust’s consultant, continues to limit the information flow to that which is required by
German law .
The low level of administrative expenses of the Trust limits the effect of inflation on costs .
Sustained price inflation would be reflected in sales prices, which with sales volumes form the basis
on which the royalties paid to the Trust are computed . The impact of inflation or deflation on energy
prices in Germany is delayed by the use in certain long-term gas sales contracts of a delay factor of
three to six months prior to the application of any changes in light heating oil prices to gas prices .
Results: Fiscal 2012 versus Fiscal 2011
For fiscal 2012, the Trust’s gross royalty income decreased 5 .87% to $23,672,808 from
$25,148,523 in fiscal 2011 . The decrease in royalty income is due to declines in gas sales and
average exchange rates . The impact of these factors was reduced but not completely offset by
the increase in gas prices . The decrease in the amount of royalty income resulted in the lower
distributions . The total distribution for fiscal 2012 was $2 .46 per unit compared to $2 .63 per unit for
fiscal 2011 . As in prior years, the Trust receives adjustments from the operating companies based
11
NORTH EUROPEAN OIL ROYALTY TRUST
on their final calculations of royalties payable during the previous calendar year . In the fourth quarter
of fiscal 2012 the prior year adjustment represented a negative impact of approximately $0 .0189 per
unit . In the fourth fiscal quarter of 2011 the Trust received only a nominal prior year adjustment .
Under the Mobil Agreement, gas sales declined 13 .62% to 37 .539 Bcf in fiscal 2012 from
43 .456 Bcf in fiscal 2011 . Since the Trust does not receive information about the decision making
process of the operating companies, it is impossible to determine to what extent, if any, which factors
may have impacted gas sales . According to the Trust’s consultant in Germany, it is possible that the
decline in gas production is due to the normal reduction in well pressure that is experienced over time
which has not been fully offset by the addition of new wells and production capacity .
Quarterly and Yearly Gas Sales under the Mobil Agreement in Billion cubic feet
Fiscal Quarter
2012 Gas Sales
2011 Gas Sales
Percentage Change
First
Second
Third
Fourth
Fiscal Year Total
9 .749
9 .632
9 .140
9 .018
37 .539
11 .707
11 .057
10 .671
10 .021
43 .456
-16 .73%
-12 .89%
-14 .35%
-10 .01%
-13 .62%
Average prices for gas sold under the Mobil Agreement increased 10 .61% to 2 .7015 Ecents/
kWh in fiscal 2012 from 2 .4424 Ecents/kWh in fiscal 2011 .
Average Gas Prices under the Mobil Agreement in Euro cents per Kilowatt hour
Fiscal Quarter
2012 Gas Prices
2011 Gas Prices
Percentage Change
First
Second
Third
Fourth
Fiscal Year Avg .
2 .8563
2 .8708
2 .6666
2 .3884
2 .7015
2 .3753
2 .5087
2 .3838
2 .5102
2 .4424
+20 .25%
+14 .43%
+11 .84%
- 4 .85%
+10 .61%
Converting gas prices into more familiar terms, using the average exchange rate, yielded a
price of $9 .97 per thousand cubic feet (“Mcf”), a 2 .68% decrease over fiscal 2011’s average price of
$9 .71/Mcf . For fiscal 2012, royalties paid under the Mobil Agreement were transferred at an average
Euro/dollar exchange rate of $1 .2854, a decrease of 7 .34% from the average Euro/dollar exchange
rate of $1 .3872 for fiscal 2011 .
12
NORTH EUROPEAN OIL ROYALTY TRUST
Average Euro Exchange Rate under the Mobil Agreement
Fiscal Quarter
2012 Average
Euro Exchange Rate
2011 Average
Euro Exchange Rate
Percentage Change
First
Second
Third
Fourth
Fiscal Year Avg .
1 .3017
1 .3024
1 .2530
1 .2824
1 .2854
1 .3431
1 .3962
1 .4091
1 .3938
1 .3872
- 2 .93%
- 6 .72%
-11 .08%
- 7 .99%
- 7 .34%
Excluding the effects of differences in prices and average exchange rates, the
combination of royalty rates on gas sold from western Oldenburg results in an effective royalty rate
approximately seven times higher than the royalty rate on gas sold from eastern Oldenburg . This
is of particular significance to the Trust since gas sold from western Oldenburg provides the bulk of
royalties paid to the Trust . For fiscal 2012, gas sales from western Oldenburg accounted for only
35 .26% of all gas sales . However, western Oldenburg gas royalties provided approximately 81 .56%
or $17,702,882 out of a total of $21,705,858 in overall Oldenburg gas royalties .
Under the OEG Agreement, gas sales decreased 10 .22% to 106 .457 Bcf in fiscal 2012 from
118 .577 Bcf in fiscal 2011 . Since the Trust does not receive information about the decision making
process of the operating companies, it is impossible to determine to what extent, if any, which factors
may have impacted gas sales . According to the Trust’s consultant in Germany, it is possible that the
decline in gas production is due to the normal reduction in well pressure that is experienced over
time which has not been fully offset by the addition of new wells and production capacity .
Quarterly and Yearly Gas Sales under the OEG Agreement in Billion cubic feet
Fiscal Quarter
2012 Gas Sales
2011 Gas Sales
Percentage Change
First
Second
Third
Fourth
Fiscal Year Total
28 .187
26 .104
26 .254
25 .912
106 .457
30 .213
30 .098
29 .595
28 .671
118 .577
- 6 .71%
-13 .27%
-11 .29%
- 9 .62%
-10 .22%
Average gas prices for gas sold under the OEG Agreement increased 5 .74% to 2 .7900
Ecents/kWh in fiscal 2012 from 2 .6386 Ecents/kWh in fiscal 2011 .
13
NORTH EUROPEAN OIL ROYALTY TRUST
Average Gas Prices under the OEG Agreement in Euro cents per Kilowatt hour
Fiscal Quarter
2012 Gas Prices
2011 Gas Prices
Percentage Change
First
Second
Third
Fourth
Fiscal Year Avg .
2 .9205
3 .0872
2 .5079
2 .6346
2 .7900
2 .5404
2 .6826
2 .5379
2 .7998
2 .6386
+14 .96%
+15 .08%
- 1 .18%
- 5 .90%
+ 5 .74%
Converting gas prices into more familiar terms, using the average exchange rate, yielded a
price of $10 .04/Mcf, a 1 .95% decrease over fiscal 2011’s average price of $10 .24/Mcf . For fiscal
2012, royalties paid under the OEG Agreement were transferred at an average Euro/dollar exchange
rate of $1 .2854, a decrease of 7 .49% from the average Euro/dollar exchange rate of $1 .3894 for
fiscal 2011 .
Average Euro Exchange Rate under the OEG Agreement
Fiscal Quarter
2012 Average
Euro Exchange Rate
2011 Average
Euro Exchange Rate
Percentage Change
First
Second
Third
Fourth
Fiscal Year Avg .
1 .3028
1 .3019
1 .2488
1 .2845
1 .2854
1 .3436
1 .3989
1 .4148
1 .3929
1 .3894
- 3 .04%
- 6 .93%
- 11 .73%
- 7 .78%
- 7 .49%
Reflecting a shift in May 2011 to royalty receipts being deposited in a Money Market account
versus being used to purchase T-Bills, interest income for fiscal 2012 increased 53 .07% to $40,156
as compared to $26,233 for fiscal 2011 . Trust expenses increased 12 .68% to $1,103,003 in fiscal
2012 from $978,849 in fiscal 2011 primarily due to the payment of final legal costs associated with
the litigation in Germany and the final billing with respect to the biennial royalty examination for 2009
and 2010 by the Trust’s German accountants .
Results: Fiscal 2011 versus Fiscal 2010
For fiscal 2011, the Trust’s gross royalty income increased 28 .01% to $25,148,523 from
$19,645,331 in fiscal 2010 . The increase in royalty income was primarily the result of increases
in gas prices under both royalty agreements . Increased gas sales under the OEG Agreement and
increases in the average Euro/dollar exchange rates also positively impacted royalty income . A
moderate decline in gas sales under the Mobil Agreement slightly offset these positive factors . The
total distribution for fiscal 2011 was $2 .63 per unit compared to $2 .04 per unit for fiscal 2010 . As
in prior years, the Trust receives adjustments from the operating companies based on their final
calculations of royalties payable during the previous calendar year . As an adjustment for the prior
calendar year, the Trust received the equivalent of $0 .0473 during fiscal 2010 . The prior year
adjustments for fiscal 2011 were negligible .
14
NORTH EUROPEAN OIL ROYALTY TRUST
Under the Mobil Agreement, gas sales declined 0 .24% to 43 .455 Billion cubic feet (“Bcf”)
in fiscal 2011 from 43 .561 Bcf in fiscal 2010 . The customary six week biennial shutdown of the
Grossenkneten desulfurization plant did not take place during fiscal 2011 but did take place during
fiscal 2010 . As a consequence, the decline in western gas sales during fiscal 2011 would likely have
been larger if the prior year’s gas sales had not been affected by the shutdown .
Quarterly and Yearly Gas Sales under the Mobil Agreement in Billion cubic feet
Fiscal Quarter
2011 Gas Sales
2010 Gas Sales
Percentage Change
First
Second
Third
Fourth
Fiscal Year Total
11 .707
11 .057
10 .671
10 .021
43 .455
11 .861
11 .331
11 .770
8 .599
43 .561
- 1 .30%
- 2 .42%
- 9 .34%
+16 .54%
- 0 .24%
Average prices for gas sold under the Mobil Agreement increased 27 .88% to 2 .4424 Ecents/
kWh in fiscal 2011 from 1 .9099 Ecents/kWh in fiscal 2010 . With the exception of a brief decline in
the third quarter of fiscal 2011, the price of gas sold under the Mobil Agreement has increased each
quarter since the first quarter of fiscal 2010 .
Average Gas Prices under the Mobil Agreement in Euro cents per Kilowatt hour
Fiscal Quarter
2011 Gas Prices
2010 Gas Prices
Percentage Change
First
Second
Third
Fourth
Fiscal Year Avg .
2 .3753
2 .5087
2 .3838
2 .5102
2 .4424
1 .6491
1 .9035
1 .9666
2 .2021
1 .9099
+44 .04%
+31 .79%
+21 .21%
+13 .99%
+27 .88%
Converting gas prices into more familiar terms, using the average exchange rate, yielded a
price of $9 .71 per Mcf, a 31 .75% increase over fiscal 2010’s average price of $7 .37/Mcf . For fiscal
2011, total royalties paid under the Mobil Agreement were transferred at an average Euro/dollar
exchange rate of $1 .3872, an increase of 3 .36% from the average Euro/dollar exchange rate of
$1 .3421 for fiscal 2010 .
Average Euro Exchange Rate under the Mobil Agreement
Fiscal Quarter
2011 Average
Euro Exchange Rate
2010 Average
Euro Exchange Rate
Percentage Change
First
Second
Third
Fourth
Fiscal Year Avg .
1 .3431
1 .3962
1 .4091
1 .3938
1 .3872
1 .4499
1 .3586
1 .2522
1 .3262
1 .3421
- 7 .37%
+ 2 .77%
+12 .53%
+ 5 .10%
+ 3 .36%
15
NORTH EUROPEAN OIL ROYALTY TRUST
Excluding the effects of differences in prices and average exchange rates, the combination of
royalty rates on gas sold from western Oldenburg results in an effective royalty rate approximately
seven times higher than the royalty rate on gas sold from eastern Oldenburg . This is of particular
significance to the Trust since gas sold from western Oldenburg provides the bulk of royalties paid to
the Trust . For fiscal 2011, gas sales from western Oldenburg accounted for only 36 .65% of all gas
sales . However, western Oldenburg gas royalties provided approximately 80 .69% or $19,318,494
out of a total of $23,941,457 in overall Oldenburg gas royalties .
Under the OEG Agreement, gas sales increased 4 .08% to 118 .577 Bcf in fiscal 2011 from
113 .924 Bcf in fiscal 2010 . The increase in gas sales was likely the result of ongoing drilling in
eastern Oldenburg and the lack of maintenance at the Grossenkneten desulfurization plant . The
customary six week biennial shutdown of the Grossenkneten desulfurization plant took place during
fiscal 2010 .
Quarterly and Yearly Gas Sales under the OEG Agreement in Billion cubic feet
Fiscal Quarter
2011 Gas Sales
2010 Gas Sales
Percentage Change
First
Second
Third
Fourth
Fiscal Year Total
30 .213
30 .098
29 .595
28 .671
118 .577
30 .616
30 .083
30 .131
23 .094
113 .924
- 1 .32%
+ 0 .05%
- 1 .78%
+24 .15%
+ 4 .08%
Average gas prices for gas sold under the OEG Agreement increased 25 .67% to 2 .6386
Ecents/kWh in fiscal 2011 from 2 .0996 Ecents/kWh in fiscal 2010 . With the exception of a brief
decline in the third quarter of fiscal 2011, the price of gas sold under the OEG Agreement has
increased each quarter since the first quarter of fiscal 2010 .
Average Gas Prices under the OEG Agreement in Euro cents per Kilowatt hour
Fiscal Quarter
2011 Gas Prices
2010 Gas Prices
Percentage Change
First
Second
Third
Fourth
Fiscal Year Avg .
2 .5404
2 .6826
2 .5379
2 .7998
2 .6386
1 .9151
2 .0857
2 .1186
2 .3395
2 .0996
+32 .65%
+28 .62%
+19 .79%
+19 .68%
+25 .67%
Converting gas prices into more familiar terms, using the average exchange rate, yielded a
price of $10 .24/Mcf, a 29 .95% increase over fiscal 2010’s average price of $7 .88/Mcf . For fiscal
2011, total royalties paid under the OEG Agreement were transferred at an average Euro/dollar
exchange rate of $1 .3894, an increase of 3 .08% from the average Euro/dollar exchange rate of
$1 .3479 for fiscal 2010 .
16
NORTH EUROPEAN OIL ROYALTY TRUST
Average Euro Exchange Rate under the OEG Agreement
Fiscal Quarter
2011 Average
Euro Exchange Rate
2010 Average
Euro Exchange Rate
Percentage Change
First
Second
Third
Fourth
Fiscal Year Avg .
1 .3436
1 .3989
1 .4148
1 .3929
1 .3894
1 .4405
1 .3403
1 .2596
1 .3305
1 .3479
- 6 .73%
+ 4 .37%
+12 .32%
+ 4 .69%
+ 3 .08%
Reflecting both the increase in funds available for short-term investment and the shift to a
money market account from T-bills and CD’s, interest income for fiscal 2011 increased to $26,233
from $7,359 for fiscal 2010 . Trust expenses increased 4 .98% to $978,849 in fiscal 2011 from
$932,425 in fiscal 2010, primarily due to higher Trustees’ fees, which are determined according to
the provisions of the Trust Agreement .
Critical Accounting Policies
The financial statements, appearing subsequently in this Report, present financial statement
balances and financial results on a modified cash basis of accounting, which is a comprehensive
basis of accounting other than accounting principles generally accepted in the United States (“GAAP
basis”) . Cash basis accounting is an accepted accounting method for royalty trusts such as the
Trust . GAAP basis financial statements disclose income as earned and expenses as incurred,
without regard to receipts or payments . The use of GAAP would require the Trust to accrue for
expected royalty payments . This is exceedingly difficult since the Trust has very limited information
on such payments until they are received and cannot accurately project such amounts . The Trust’s
cash basis financial statements disclose revenue when cash is received and expenses when cash is
paid . The one modification of the cash basis of accounting is that the Trust accrues for distributions
to be paid to unit owners (those distributions approved by the Trustees for the Trust) . The Trust’s
distributable income represents royalty income received by the Trust during the period plus interest
income less any expenses incurred by the Trust, all on a cash basis . In the opinion of the Trustees,
the use of the modified cash basis provides a more meaningful presentation to unit owners of the
results of operations of the Trust and presents to the unit owners a more accurate calculation of
income and expenses for tax reporting purposes .
___________________________________________________________
17
NORTH EUROPEAN OIL ROYALTY TRUST
This Annual Report may contain forward-looking statements intended to qualify for the safe
harbor from liability established by the Private Securities Litigation Reform Act of 1995 . Such
statements address future expectations and events or conditions concerning the Trust . Many of
these statements are based on information provided to the Trust by the operating companies or by
consultants using public information sources . These statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those anticipated in any forward-
looking statements . These include:
•
•
•
•
risks and uncertainties concerning levels of gas production and gas sale prices, general
economic conditions and currency exchange rates;
the ability or willingness of the operating companies to perform under their contractual
obligations with the Trust;
ongoing litigation and other potential disputes with the operating companies and the
resolution thereof; and
the risk factors set forth above under Item 1A of the Trust’s Annual Report on Form 10-K
for the fiscal year ended October 31, 2012 (the “Trust’s Form 10-K”) .
All such factors are difficult to predict, contain uncertainties that may materially affect actual
results, and are generally beyond the control of the Trust . New factors emerge from time to time and
it is not possible for the Trust to predict all such factors or to assess the impact of each such factor
on the Trust . Any forward-looking statement speaks only as of the date on which such statement is
made, and the Trust does not undertake any obligation to update any forward-looking statement to
reflect events or circumstances after the date on which such statement is made .
18
NORTH EUROPEAN OIL ROYALTY TRUST
Distributions and Trading
The Trust’s units of beneficial interest are listed for trading on the New York Stock Exchange
under the symbol NRT . Under the Trust Agreement, the Trustees distribute to unit owners, on a
quarterly basis, the net royalty income after deducting expenses and reserving limited funds for
anticipated administrative expenses . As of November 30, 2012, there were 946 unit owners of
record .
The following table presents the high and low closing prices for the quarterly periods ended in
fiscal 2012 and 2011 as reported by the NYSE as well as the cash distributions paid to unit owners
by quarter for the past two fiscal years .
Quarter Ended
January 31, 2012
April 30, 2012
July 31, 2012
October 31, 2012
Quarter Ended
January 31, 2011
April 30, 2011
July 31, 2011
October 31, 2011
Fiscal Year 2012
High
Low
Closing Price
Closing Price
$30 .31
$31 .97
$27 .25
$27 .96
$33 .66
$33 .19
$33 .66
$31 .65
Fiscal Year 2011
Low
High
Closing Price
Closing Price
$28 .35
$29 .46
$30 .49
$29 .35
$31 .00
$31 .76
$34 .15
$34 .00
Distribution
per Unit
$0 .66
$0 .68
$0 .61
$0 .51
Distribution
per Unit
$0 .55
$0 .73
$0 .71
$0 .64
The quarterly distributions to unit owners represent their undivided interest in royalty
payments from sales of gas, sulfur and oil during the previous quarter . Each unit owner is entitled to
recover a portion of his or her investment in these royalty rights through a cost depletion percentage .
The calculation of this cost depletion percentage is set forth in detail in Attachment B to the Cost
Depletion Report attached as Exhibit 99 .1 to the Trust’s Form 10-K .
The Cost Depletion Report has been prepared by Davis Associates using the limited
information described in Item 2 of the Trust’s Form 10-K to which reference is made . The Trustees
believe that the calculations and assumptions used in the Cost Depletion Report are reasonable
according to the facts and circumstances of available information . The cost depletion percentage
recommended by the Trust’s independent petroleum and natural gas consultants for calendar
2012 is 9 .9096% . Specific details relative to the Trust’s income and expenses and cost depletion
percentage as they apply to the calculation of taxable income for the 2012 calendar year are
19
NORTH EUROPEAN OIL ROYALTY TRUST
included on special removable pages (33-36) in this report under “2012 Tax Letter .” Additionally, the
tax reporting information for 2012 is available on the Trust’s website, www .neort .com, in the section
marked Tax Letters contained within the Tax Information section .
The Trust does not maintain any compensation plans under which units are authorized for
issuance . The Trust did not make any repurchases of Trust units during fiscal 2012, 2011 and
2010 and has never made such repurchases .
Comparison of Five Year Returns
The graph set forth on the next page compares, for the last five years, the cumulative return
on Trust Units, the securities in a peer group index, and the S&P 500 Composite Index . Because no
published peer group index exists and the Trust has been unable to locate any royalty trusts publicly
traded in the U .S . with reserves and sales in Europe, the Trustees have developed a peer group
consisting of the following three domestic oil royalty trusts: Mesa Royalty Trust, Sabine Royalty Trust
and San Juan Basin Royalty Trust (the “Royalty Peer Group”) . The composition of the Royalty Peer
Group has been the same since the Trust’s proxy statement for its 1993 Annual Meeting of Unit
Owners .
While these three domestic oil royalty trusts appear to be the most comparable for
comparison purposes, there are a number of differences between North European Oil Royalty
Trust and the Royalty Peer Group . As previously mentioned, the reserves and sales attributed to
the royalty trusts comprising the Royalty Peer Group are located in the United States, while the
reserves and sales attributed to North European Oil Royalty Trust are located in Germany . There
are fundamental differences between the energy markets in the United States and Germany that
affect commodity pricing and as a result severely restrict the usefulness of any comparison of their
cumulative returns .
In determining the cumulative return on investment, it has been assumed that on
October 31, 2007, an equal dollar amount was invested in the Trust Units, in the securities of the
trusts of the Royalty Peer Group, and in the S&P 500 Composite Index . The comparisons assume
in all cases the reinvestment of all dividends or distributions on the respective payment dates . The
cumulative returns shown for the Trust and the Royalty Peer Group do not reflect any differences
between the tax treatment of Trust distributions, due to permitted cost depletion, and dividends on
securities in the S&P 500 Composite Index .
20
NORTH EUROPEAN OIL ROYALTY TRUST
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among North European Oil Royalty Trust, the S&P 500 Index, and a Peer Group
$160
$140
$120
$100
$80
$60
$40
$20
$0
10/07
10/08
10/09
10/10
10/11
10/12
North European Oil Royalty Trust
S&P 500
Peer Group
*$100 invested on 10/31/07 in stock or index, including reinvestment of dividends.
Fiscal year ending October 31.
Copyright© 2012 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.
2
1
2
2
35
30
25
20
15
10
5
0
S
R
A
L
L
O
D
N
O
I
L
L
I
M
NORTH EUROPEAN OIL ROYALTY TRUST
DOLLAR ROYALTIES
WESTERN AND EASTERN OLDENBURG
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Dollar Royalties by Fiscal Year
WESTERN OLDENBURG
EASTERN OLDENBURG
NORTH EUROPEAN OIL ROYALTY TRUST
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees and Unit Owners of
North European Oil Royalty Trust
We have audited the accompanying statements of assets, liabilities and trust corpus of North
European Oil Royalty Trust (the “Trust”) as of October 31, 2012 and 2011, and the related
statements of revenue collected and expenses paid, undistributed earnings, and changes in cash
and cash equivalents for each of the years in the three-year period ended October 31, 2012 . The
Trust’s management is responsible for these financial statements . Our responsibility is to express an
opinion on these financial statements based on our audits .
We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States) . Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material
misstatement . An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements . An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial
statement presentation . We believe that our audits provide a reasonable basis for our opinion .
As described in Note 1, these financial statements have been prepared on the modified cash basis
of accounting, which is a comprehensive basis of accounting other than U .S . generally accepted
accounting principles .
In our opinion, the financial statements referred to above present fairly, in all material respects, the
assets, liabilities and trust corpus of the Trust as of October 31, 2012 and 2011, its revenue collected
and expenses paid, its undistributed earnings, and changes in its cash and cash equivalents for
each of the years in the three-year period ended October 31, 2012, on the basis of accounting
described in Note 1 .
We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the Trust’s internal control over financial reporting as of
October 31, 2012, based on criteria established in Internal Control—Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated
December 28, 2012 expressed an unqualified opinion .
/s/ WeiserMazars LLP
New York, NY
December 28, 2012
23
2
4
NORTH EUROPEAN OIL ROYALTY TRUST
STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS (NOTE 1)
OCTOBER 31, 2012 AND 2011
CURRENT ASSETS:
Cash and cash equivalents
Producing gas and oil royalty rights,
net of amortization (Notes 1 and 2)
Total Assets
CURRENT LIABILITIES:
Distributions to be paid to unit owners,
paid November 2012 and 2011
TRUST CORPUS (Notes 1 and 2)
UNDISTRIBUTED EARNINGS
Total Liabilities and Trust Corpus
ASSETS
2012
2011
$ 4,778,199
$ 5,971,866
1
1
$ 4,778,200
$ 5,971,867
LIABILITIES AND TRUST CORPUS
2012
2011
$ 4,687,200
$ 5,881,977
1
1
90,999
89,889
$ 4,778,200
$ 5,971,867
The accompanying notes are
an integral part of these financial statements .
NORTH EUROPEAN OIL ROYALTY TRUST
STATEMENTS OF REVENUE COLLECTED AND EXPENSES PAID (NOTE 1)
FOR THE FISCAL YEARS ENDED OCTOBER 31, 2012, 2011, AND 2010
German gas, sulfur and oil royalties received
Interest income
$ 23,672,808
40,156
$ 25,148,523
26,233
$ 19,645,331
7,359
Trust Income
23,712,964
25,174,756
19,652,690
2012
2011
2010
Non-related party expenses
Related party expenses
(982,700)
(120,303)
(872,233)
(106,616)
(810,681)
(121,744)
Trust Expenses
Net Income
Net income per unit
Distributions per unit paid or to be paid
to unit owners
(1,103,003)
(978,849)
(932,425)
$ 22,609,961
$ 24,195,907
$ 18,720,265
$ 2 .46
$ 2 .46
$ 2 .63
$ 2 .63
$ 2 .04
$ 2 .04
The accompanying notes are
an integral part of these financial statements .
2
5
2
6
NORTH EUROPEAN OIL ROYALTY TRUST
STATEMENTS OF UNDISTRIBUTED EARNINGS (NOTE 1)
FOR THE FISCAL YEARS ENDED OCTOBER 31, 2012, 2011 AND 2010
2012
2011
2010
BALANCE, beginning of year
$ 89,889
$ 65,234
$ 93,773
NET INCOME
LESS:
Current year distributions paid
or to be paid to unit owners
BALANCE, end of year
22,609,961
22,699,850
24,195,907
24,261,141
18,720,265
18,814,038
22,608,851
24,171,252
18,748,804
$ 90,999
$ 89,889
$ 65,234
The accompanying notes are
an integral part of these financial statements .
NORTH EUROPEAN OIL ROYALTY TRUST
STATEMENTS OF CHANGES IN CASH AND CASH EQUIVALENTS (NOTE 1)
FOR THE FISCAL YEARS ENDED OCTOBER 31, 2012, 2011 AND 2010
SOURCES OF CASH AND CASH EQUIVALENTS:
2012
2011
2010
German gas, sulfur and oil
royalties received
Interest income
USES OF CASH AND CASH EQUIVALENTS:
Payment of Trust Expenses
Distributions paid
$ 23,672,808
40,156
23,712,964
$ 25,148,523
$ 19,645,331
26,233
7,359
25,174,756
19,652,690
1,103,003
978,849
932,425
23,803,628
24,906,631
23,436,006
17,094,497
24,414,855
18,026,922
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS, during the year
(1,193,667)
759,901
1,625,768
CASH AND CASH EQUIVALENTS,
beginning of year
CASH AND CASH EQUIVALENTS,
end of year
5,971,866
5,211,965
3,586,197
$ 4,778,199
$ 5,971,866
$ 5,211,965
2
7
The accompanying notes are
an integral part of these financial statements .
NORTH EUROPEAN OIL ROYALTY TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2012, 2011, AND 2010
(1) Summary of significant accounting policies:
Basis of accounting -
The accompanying financial statements of North European Oil Royalty Trust (the “Trust”)
are prepared in accordance with the rules and regulations of the SEC . Financial statement
balances and financial results are presented on a modified cash basis of accounting, which is a
comprehensive basis of accounting other than accounting principles generally accepted in the
United States (“GAAP basis”) . On a modified cash basis, revenue is earned when cash is received
and expenses are incurred when cash is paid . GAAP basis financial statements disclose revenue
as earned and expenses as incurred, without regard to receipts or payments . The modified cash
basis of accounting is utilized to permit the accrual for distributions to be paid to unit owners (those
distributions approved by the Trustees for the Trust) . The Trust’s distributable income represents
royalty income received by the Trust during the period plus interest income less any expenses
incurred by the Trust, all on a cash basis . In the opinion of the Trustees, the use of the modified
cash basis of accounting provides a more meaningful presentation to unit owners of the results of
operations of the Trust .
Producing gas and oil royalty rights -
The rights to certain gas and oil royalties in Germany were transferred to the Trust at their net
book value by North European Oil Company (the “Company”) (see Note 2) . The net book value of
the royalty rights has been reduced to one dollar ($1) in view of the fact that the remaining net book
value of royalty rights is de minimis relative to annual royalties received and distributed by the Trust
and does not bear any meaningful relationship to the fair value of such rights or the actual amount of
proved producing reserves .
Federal and state income taxes -
The Trust, as a grantor trust, is exempt from federal income taxes under a private letter ruling
issued by the Internal Revenue Service . The Trust has no state income tax obligations .
Cash and cash equivalents -
Included in cash and cash equivalents are amounts deposited in bank accounts, money
market accounts and amounts invested in certificates of deposit and U . S . Treasury bills with original
maturities of approximately three months or less from the date of purchase . The investment options
available to the Trust are limited in accordance with specific provisions of the Trust Agreement .
As of October 31, 2012, the uninsured amounts held in the Trust’s U .S . bank accounts were
approximately $4,078,000 . In addition, approximately $6,448 was held in the Trust’s German
account at October 31, 2012 .
Net income per unit -
Net income per unit is based upon the number of units outstanding at the end of the
period . As of October 31, 2012, 2011 and 2010, there were 9,190,590 units of beneficial interest
outstanding .
28
NORTH EUROPEAN OIL ROYALTY TRUST
New accounting pronouncements –
The Trust is not aware of any recently issued, but not yet effective, accounting standards
that would be expected to have a significant impact on the Trust’s financial position or results of
operations .
Reclassifications -
Certain amounts in the financial statements of a prior period have been reclassified to
conform with the current period presentation for comparative purposes .
(2) Formation of the Trust:
The Trust was formed on September 10, 1975 . As of September 30, 1975, the Company
was liquidated and the remaining assets and liabilities of the Company, including its royalty rights,
were transferred to the Trust . The Trust, on behalf of the owners of beneficial interest in the Trust,
holds overriding royalty rights covering gas and oil production in certain concessions or leases in the
Federal Republic of Germany . These rights are held under contracts with local German exploration
and development subsidiaries of Exxon Mobil Corp . and the Royal Dutch/Shell Group . Under these
contracts, the Trust receives various percentage royalties on the proceeds of the sales of certain
products from the areas involved . At the present time, royalties are received for sales of gas well
gas, oil well gas, crude oil, distillate and sulfur .
(3) Related party transactions:
John R . Van Kirk, the Managing Director of the Trust, provides office space and services to
the Trust at cost . For such office space and services, the Trust reimbursed the Managing Director
$27,095, $29,039 and $24,067 in fiscal 2012, 2011 and 2010, respectively .
Lawrence A . Kobrin, a Trustee of the Trust, is a Senior Counsel at Cahill Gordon & Reindel
LLP, which serves as counsel to the Trust . Mr . Kobrin is no longer a partner with Cahill Gordon &
Reindel LLP . For legal services, the Trust paid Cahill Gordon & Reindel LLP $93,208, $77,577, and
$97,677 in fiscal 2012, 2011 and 2010, respectively .
(4) Employee benefit plan:
The Trust has established a savings incentive match plan for employees (SIMPLE IRA) that
is available to both employees of the Trust, one of whom is the Managing Director . The Trustees
authorized the making of contributions by the Trust to the accounts of employees, on a matching
basis, of up to 3% of cash compensation paid to each such employee for the 2012, 2011 and 2010
calendar years .
(5) Legal matters:
The Trust is not a party to any pending legal proceedings . The previous litigation commenced
by the Trust in Germany against the operating companies (See 2011 Annual Report on Form
10-K) was concluded after an adverse district court ruling in May 2012, from which the Trust, after
consultation with its local counsel, determined not to appeal .
29
NORTH EUROPEAN OIL ROYALTY TRUST
(6) Quarterly results (unaudited):
The tables below summarize the quarterly results and distributions of the Trust for the fiscal
years ended October 31, 2012 and 2011:
Fiscal 2012 by Quarter and Year
Fourth
Second
Third
First
Year
Royalties received
$6,538,261
$6,441,635
$5,846,833
$4,846,079
$23,672,808
Net income
$6,079,264
$6,262,114
$5,589,094
$4,679,489
$22,609,961
Net income per unit
$0 .66
$0 .68
$0 .61
$0 .51
$2 .46
Distributions paid
or to be paid
Distributions per unit
paid or to be paid
to unit owners
$6,065,789
$6,249,601
$5,606,261
$4,687,200
$22,608,851
$0 .66
$0 .68
$0 .61
$0 .51
$2 .46
Fiscal 2011 by Quarter and Year
Fourth
Second
Third
First
Year
Royalties received
$5,396,283
$6,965,508
$6,744,676 $6,042,056
$25,148,523
Net income
$5,084,139
$6,678,994 $6,566,627 $5,866,147
$24,195,907
Net income per unit
$0 .55
$0 .73
$0 .71
$0 .64
$2 .63
Distributions paid
or to be paid
Distributions per unit
paid or to be paid
to unit owners
$5,054,825
$6,709,131
$6,525,319 $5,881,977
$24,171,252
$0 .55
$0 .73
$0 .71
$0 .64
$2 .63
30
NORTH EUROPEAN OIL ROYALTY TRUST
NORTH EUROPEAN OIL ROYALTY TRUST
Disclosure Controls and Procedures
The Trust maintains disclosure controls and procedures that are designed to ensure that
information required to be disclosed by the Trust is recorded, processed, summarized, accumulated
and communicated to its management, which consists of the Managing Director, to allow timely
decisions regarding required disclosure, and reported within the time periods specified in the Securities
and Exchange Commission’s rules and forms . The Managing Director has performed an evaluation
of the effectiveness of the design and operation of the Trust’s disclosure controls and procedures as
of October 31, 2012 . Based on that evaluation, the Managing Director concluded that the Trust’s
disclosure controls and procedures were effective as of October 31, 2012 .
Internal Control over Financial Reporting
Part A. Management’s Report on Internal Control over Financial Reporting
The Trust’s management is responsible for establishing and maintaining adequate internal
control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) for the
Trust . There are inherent limitations in the effectiveness of any internal control, including the
possibility of human error and the circumvention or overriding of controls . Accordingly, even
effective internal controls can provide only reasonable assurance with respect to financial statement
preparation . Further, because of changes in conditions, the effectiveness of internal control may
vary over time . Management has evaluated the Trust’s internal control over financial reporting as of
October 31, 2012 . This assessment was based on criteria for effective internal control over financial
reporting described in the standards promulgated by the Public Company Accounting Oversight
Board and in the Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission . Based on this evaluation, management concluded
that the Trust’s internal control over financial reporting was effective as of October 31, 2012 .
Management’s assessment of the effectiveness of our internal control over financial reporting as of
October 31, 2012 has been audited by WeiserMazars LLP, the Trust’s independent auditor, as stated
in their report which follows .
Part B. Attestation Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm on
Internal Control over Financial Reporting
To the Trustees and Unit Owners
of North European Oil Royalty Trust
We have audited North European Oil Royalty Trust’s (the “Trust”) internal control over financial
reporting as of October 31, 2012, based on criteria established in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) . The Trust’s management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal control over financial
reporting included in the accompanying Management’s Report on Internal Control over Financial
31
NORTH EUROPEAN OIL ROYALTY TRUST
Reporting . Our responsibility is to express an opinion on the Trust’s internal control over financial
reporting based on our audit .
We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States) . Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects . Our audit of internal control over financial reporting included
obtaining an understanding of internal control over financial reporting, assessing the risk that
a material weakness exists, and testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk . Our audit also included performing such other
procedures as we considered necessary in the circumstances . We believe that our audit provides a
reasonable basis for our opinion .
The Trust’s internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles . The
Trust’s internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the Trust; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the Trust are being made only
in accordance with authorizations of management and the Trustees of the Trust; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the Trust’s assets that could have a material effect on the financial statements .
Because of its inherent limitations, internal control over financial reporting may not prevent
or detect misstatements . Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate .
In our opinion, the Trust maintained, in all material respects, effective internal control over
financial reporting as of October 31, 2012, based on criteria established in Internal Control—
Integrated Framework issued by the COSO .
We have also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the statements of assets, liabilities and trust corpus as of
October 31, 2012 and 2011, and the related statements of revenue collected and expenses paid,
undistributed earnings, and changes in cash and cash equivalents for each of the years in the
three-year period ended October 31, 2012 of the Trust and our report dated December 28, 2012
expressed an unqualified opinion thereon .
/s/ WeiserMazars LLP
New York, NY
December 28, 2012
32
NORTH EUROPEAN OIL ROYALTY TRUST
NORTH EUROPEAN OIL ROYALTY TRUST
P .O . Box 456
Red Bank, New Jersey 07701
(732) 741-4008
IMPORTANT – 2012 TAX LETTER
RETAIN THIS LETTER FOR PREPARATION OF YOUR
2012 INCOME TAX RETURNS
To the Current and Former Unit Owners of
North European Oil Royalty Trust:
January 2, 2013
The appearance of the tax letter has changed in an attempt to make it easier for you to
calculate your taxable income . There are now three parts to the tax letter . PART ONE applies
to all unit owners . PART TWO applies to unit owners who have held their units for the entire
year . PART THREE applies to unit owners who have held their units for only a portion of the
year .
The following is provided to assist current and former unit owners of North European
Oil Royalty Trust (the “Trust”) to prepare their personal income tax returns for the tax year
ended December 31, 2012 . This letter serves to assist Owners, and their tax professionals,
in determining the accurate and true income from the Trust for income tax reporting purpose .
Further, this letter is for informational purposes and neither the Trust nor Trust employees intend,
nor may it be construed, for this letter to serve as either legal or tax advice . It is recommended
that you seek the advice of your trusted tax professional or attorney should you require further
guidance .
E
R
E
H
T
U
O
R
A
E
T
PART ONE - ALL UNIT OWNERS
To determine your proportional and, therefore, reportable, share of Trust income you
must first know how many Trust units you owned during 2012, the periods during which you
owned the units, and the cost or tax basis of the units . The information contained in this letter
is applicable to those unit owners who held their units for either the entire year or only a portion
of the year . Please note that Trust distributions are not dividends and should not be included on
your income tax return as dividend income .
The Trust is considered a “grantor trust” for federal income tax purposes and each unit
owner is deemed a “grantor” of the Trust . As such, unit owners realize income, in proportion to
the owned units, when royalty income is paid to the Trust . Further, unit owners may deduct,
from income, a proportional share of Trust expenses . Because realization of proportional Trust
income and expenses is a time sensitive inquiry, you should not use the amount of quarterly
Trust distributions received for income tax reporting purposes . Additionally, you should disregard
the amounts listed on any 2012 Form 1099-Misc you receive from your broker or other nominee .
The listed amounts are incomplete because they do not include your proportional share of Trust
expenses and/or the cost depletion allowance .
Income and expenses should be reported on Federal Income Tax Form 1040, Schedule
E . Royalty income is generally considered portfolio income under the passive loss rules
enacted by the Tax Reform Act of 1986 . Under Part I, Income or Loss from Rental Real Estate
and Royalties, on Line 1a enter property description as “oil and gas overriding royalty rights,
33
NORTH EUROPEAN OIL ROYALTY TRUST
Germany through North European Oil Royalty Trust .” The type of property is royalties . On Federal
Income Tax Form 1040, Schedule E, royalty income should be entered on Line 4 and expenses should
be entered on Line 19 as “miscellaneous Trust expenses .”
A unit owner may be entitled to cost depletion for tax reporting purposes . At the outset, in the
first year of ownership, the unit owner’s cost or tax basis for the units is the basis for computing cost
depletion . In each subsequent year, the basis for computing cost depletion is that original cost less the
cumulative amount of depletion previously taken .
The Trust retains Ralph E . Davis Associates, Inc ., of Houston, Texas, a petroleum engineering
company, to calculate the cost depletion percentage each year . The cost depletion percentage is
calculated based upon computations of proved producing reserves estimated in accordance with
accepted engineering analytical principles . Ralph E . Davis Associates, Inc . has recommended an annual
cost depletion percentage of 9 .9096% for the 2012 calendar year .
The IRS periodically changes the format for Schedule E (including the line numbers and
descriptions), and may do so even after the date of this letter, so please make certain you follow the
Form 1040 Schedule E directions carefully and enter the information on the correct lines .
The Trust’s royalty income represents income from Germany . Although Germany does not tax the
royalty income received by the Trust, this information should be considered if you have available foreign
tax credits from other sources .
The Trust will submit this letter and the listing of unit owners during 2012 to the Internal Revenue
Service . This list will contain names, addresses and tax ID or Social Security Numbers . You may wish
to attach a copy of this letter to your tax returns .
This letter does not constitute legal or tax advice. Neither the Trust nor its employees may
offer tax or legal advice relevant to your unique situation. The Trust recommends that you direct
any questions to your tax advisor or attorney.
PART TWO - OWNERSHIP OF UNITS FOR THE ENTIRE YEAR
A. If you owned all your units for the entire year, you would calculate your royalty income
by multiplying the number of units you owned by $2.4581. On Federal Income Tax Form 1040,
Schedule E, royalty income should be entered on Line 4 .
B. If you owned all your units for the entire year, you would calculate your expenses
by multiplying the number of units you owned by $0.1048. On Federal Income Tax Form 1040,
Schedule E, expenses should be entered on Line 19 as “miscellaneous Trust expenses .”
C. If you owned all your units for the entire year, you would calculate your cost depletion
deduction by multiplying your cost basis or adjusted cost basis by .099096. On the Federal
Income Tax Form 1040, Schedule E, your cost depletion deduction should be entered on Line 18 .
PART THREE - OWNERSHIP OF UNITS FOR A PARTIAL YEAR
If you owned your units for only a portion of the year, you should use the charts and instructions on
the following pages to determine your royalty income, royalty expenses and cost depletion deduction .
34
NORTH EUROPEAN OIL ROYALTY TRUST
ROYALTY INCOME PER UNIT FOR THE 2012 TAX YEAR
Last month during which units were owned:
January
February
March
April
May
June
July
August
September October November December
$0 .2819
$0 .5109
$0 .2290
$0 .7392
$0 .4573
$0 .2283
$0 .9828
$0 .7009
$0 .4719
$0 .2436
$1 .1922
$0 .9103
$0 .6813
$0 .4530
$0 .2094
$1 .4097
$1 .1278
$0 .8988
$0 .6705
$0 .4269
$0 .2175
$1 .6190
$1 .3371
$1 .1081
$0 .8798
$0 .6362
$0 .4268
$0 .2093
$1 .7478
$1 .4659
$1 .2369
$1 .0086
$0 .7650
$0 .5556
$0 .3381
$0 .1288
$1 .9453
$1 .6634
$1 .4344
$1 .2061
$0 .9625
$0 .7531
$0 .5356
$0 .3263
$0 .1975
$2 .1462
$1 .8643
$1 .6353
$1 .4070
$1 .1634
$0 .9540
$0 .7365
$0 .5272
$0 .3984
$0 .2009
$2 .2760
$1 .9941
$1 .7651
$1 .5368
$1 .2932
$1 .0838
$0 .8663
$0 .6570
$0 .5282
$0 .3307
$0 .1298
$2 .4581
$2 .1762
$1 .9472
$1 .7189
$1 .4753
$1 .2659
$1 .0484
$0 .8391
$0 .7103
$0 .5128
$0 .3119
$0 .1821
First month during
which units
were owned:
January
February
March
April
May
June
July
August
September
October
November
December
A. To determine your royalty income per unit for your period of ownership, place your finger on the chart above on the first month in the left hand column during which you owned
your units and slide your finger to the right until you reach the column showing the last month during which you owned your units. This figure should be multiplied by the
number of units you owned during that period to calculate your royalty income . On Federal Income Tax Form 1040, Schedule E, royalty income should be entered on Line 4 .
First month during
which units
were owned:
January
February
March
April
May
June
July
August
September
October
November
December
ROYALTY EXPENSES PER UNIT FOR THE 2012 TAX YEAR
Last month during which units were owned:
January
February
March
April
May
June
July
August
September October November December
$0 .0188
$0 .0284
$0 .0096
$0 .0337
$0 .0149
$0 .0053
$0 .0383
$0 .0195
$0 .0099
$0 .0046
$0 .0496
$0 .0308
$0 .0212
$0 .0159
$0 .0113
$0 .0611
$0 .0423
$0 .0327
$0 .0274
$0 .0228
$0 .0115
$0 .0663
$0 .0475
$0 .0379
$0 .0326
$0 .0280
$0 .0167
$0 .0052
$0 .0757
$0 .0569
$0 .0473
$0 .0420
$0 .0374
$0 .0261
$0 .0146
$0 .0094
$0 .0800
$0 .0612
$0 .0516
$0 .0463
$0 .0417
$0 .0304
$0 .0189
$0 .0137
$0 .0043
$0 .0844
$0 .0656
$0 .0560
$0 .0507
$0 .0461
$0 .0348
$0 .0233
$0 .0181
$0 .0087
$0 .0044
$0 .0925
$0 .0737
$0 .0641
$0 .0588
$0 .0542
$0 .0429
$0 .0314
$0 .0262
$0 .0168
$0 .0125
$0 .0081
$0 .1048
$0 .0860
$0 .0764
$0 .0711
$0 .0665
$0 .0552
$0 .0437
$0 .0385
$0 .0291
$0 .0248
$0 .0204
$0 .0123
B. To determine your royalty expenses per unit for your period of ownership, place your finger on the chart above on the first month in the left hand column during which you
3
5
owned your units and slide your finger to the right until you reach the column showing the last month during which you owned your units. This figure should be multiplied by
the number of units you owned during that period to calculate your expenses . On Federal Income Tax Form 1040, Schedule E, expenses should be entered on Line 19 as
“miscellaneous Trust expenses .”
NORTH EUROPEAN OIL ROYALTY TRUST
C . If you owned your units for only a portion of the year you must prorate the depletion percentage
to reflect your period of ownership . In the same way that you calculated your royalty income per
unit, place your finger on the Royalty Income Per Unit Chart on the first month in the left hand
column during which you owned your units and slide your finger to the right until you reach the
column showing the last month during which you owned your units . This figure should be divided
by $2 .4581 . The resulting figure is then multiplied by .099096 to yield the prorated depletion
percentage . Multiply this prorated depletion percentage by your cost basis or adjusted cost basis
to calculate your cost depletion deduction . Your cost depletion deduction should be entered on
Line 18 on the Federal Income Tax Form 1040, Schedule E .
This letter does not constitute legal or tax advice. Neither the Trust nor its employees
may offer tax or legal advice relevant to your unique situation. If you dispose of some or all
of your Trust units, you should consult your tax advisor as to the tax consequence of that
disposition. The Trust recommends that you direct any questions to your tax advisor or
attorney.
Most sincerely yours,
John R . Van Kirk
Managing Director
36
North European Oil Royalty Trust P .O . Box 456, Red Bank, NJ 07701
NORTH EUROPEAN OIL ROYALTY TRUST
Managing Director
John R . Van Kirk
Office of the
Managing Director
Suite 19A
43 West Front Street
Red Bank, N .J . 07701
Tel: (732) 741-4008
Fax: (732) 741-3140
E-Mail: neort@neort .com
Website: www .neort .com
Counsel
Cahill Gordon & Reindel LLP
80 Pine Street
New York, N .Y . 10005
Auditors
WeiserMazars LLP
135 West 50th Street
New York, N .Y . 10020
Petroleum and Natural
Gas Consultants
Ralph E . Davis Associates, Inc .
1717 St . James Place
Suite 460
Houston, Texas 77056
Transfer Agent
Registrar and Transfer Co .
10 Commerce Drive
Cranford, N .J . 07016
Tel: (800) 368-5948
(908) 497-2300
Website: www .rtco .com
Trustees
Robert P . Adelman
Managing Trustee,
Director or Trustee
of various
profit and non-profit
companies
Samuel M . Eisenstat
Audit Comm . Chairman,
Attorney; CEO,
Abjac Energy Corp .
Lawrence A . Kobrin
Clerk to the Trustees,
Senior Counsel,
Cahill Gordon &
Reindel LLP
Willard B . Taylor
Of Counsel, Sullivan and
Cromwell LLP
Rosalie J . Wolf
Managing Partner,
Botanica Capital
Partners LLC
A copy of the Trust’s Form 10-K Annual Report for fiscal 2012 as filed with the Securities and Exchange Commission
will be sent upon written request to John R . Van Kirk, Managing Director, P .O . Box 456, Red Bank, New Jersey 07701 . In
addition to the 2012 10-K, other pertinent filings and documents are available at the Trust’s website, www.neort.com