Annual Report 2016
North
European
Oil
Royalty
Trust
ATTENTION:
PLEASE RETAIN
CRITICAL TAX INFORMATION ENCLOSED
NORTH EUROPEAN OIL ROYALTY TRUST
The Annual Meeting of Unit Owners will be held on February 16, 2017, at 10:00 A.M.,
in Room A, Seventh 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.
Men are required to wear a jacket and women are required to wear business attire.
The University Club does not make exceptions.
Table of Contents
Report to Unit Owners ....................................................................................... 1-4
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
Gross Gas Sale Volumes ..................................................................................... 8
Description of Trust Assets ............................................................................ 9-10
Management’s Discussion and Analysis ...................................................... 11-18
Critical Accounting Policies .............................................................................. 19
Distributions and Trading .................................................................................. 20
Comparison of Five Year Returns ................................................................ 21-22
Dollar Royalties Western and Eastern Oldenburg ............................................. 23
Report of Independent Registered Public Accounting Firm .............................. 24
Financial Statements ..................................................................................... 25-28
Notes to Financial Statements ...................................................................... 29-31
Disclosure Controls and Procedures .................................................................. 33
Internal Control over Financial Reporting .................................................... 33-34
2016 Tax Letter (Removable) ....................................................................... 36-39
IMPORTANT TAX INFORMATION
For your convenience, the information necessary to prepare
your 2016 tax return is included in the removable
“2016 Tax Letter” on Pages 36 through 39.
Please note that there will be no separate mailing of the tax letter
NORTH EUROPEAN OIL ROYALTY TRUST
Report to Unit Owners:
FOURTH QUARTER 2016
Net income for the Trust for the fourth quarter of fiscal 2016 was $1,078,292, a decrease of
48.58% from net income of $2,096,955 for the fourth quarter of fiscal 2015. The Trust receives nearly
all of its royalties under two royalty agreements. The Mobil Agreement, the higher royalty rate
agreement, covers gas sales from the western half of the Oldenburg concession. The OEG Agreement,
the lower royalty rate agreement, covers gas sales from the entire Oldenburg concession. Gas royalties
under the Mobil Agreement for the fourth quarter of fiscal 2016 were reduced by negative adjustments
of $357,874, as compared to negative adjustments totaling $378,697 for the fourth quarter of fiscal
2015. Total royalties under the Mobil Agreement in the fourth quarter of fiscal 2015 were further
reduced by a negative adjustment of $213,103, correcting the overpayment of sulfur royalties in 2013
and 2014. There were no negative sulfur adjustments during the fourth quarter of fiscal 2016. Gas
royalties under the OEG Agreement for the fourth quarter of fiscal 2016 were reduced by a
combination of negative and positive adjustments totaling $147,857, as compared to negative
adjustments totaling $104,277 for the fourth quarter of fiscal 2015. Net income in the fourth quarter of
2016 was lower than the fourth quarter of 2015 due to lower gas prices and lower average exchange
rates. The relevant details for the fourth quarters of fiscal 2016 and 2015 for gas sales under the Mobil
and OEG Agreements are shown in the table below.
Factors Determining Gas Royalties Payable
3rd Calendar Quarter
Ended 9/30/2016
3rd Calendar Quarter
Ended 9/30/2015
Percentage
Change
Mobil Agreement:
Gas Sales (Bcf1)
Gas Prices2 (Ecents/Kwh3)
Average Exchange Rate4
Gas Royalties
OEG Agreement:
Gas Sales (Bcf)
Gas Prices (Ecents/Kwh)
Average Exchange Rate
Gas Royalties
6.688
1.3753
1.1047
$1,116,681
18.752
1.4025
1.1068
$ 406,887
5.829
2.1662
1.1301
$1,636,070
18.728
2.2187
1.1309
$ 714,479
+ 14.74%
- 36.51%
- 2.25%
- 31.75%
+ 0.13%
- 36.79%
- 2.13%
- 43.05%
1 Billion cubic feet
3 Euro cents per Kilowatt hour
2 Gas prices derived from May-July period
4 Based on average exchange rates of royalty transfers
1
NORTH EUROPEAN OIL ROYALTY TRUST
FISCAL 2016 REPORT
For fiscal 2016, the Trust’s gross royalty income decreased 43.82% to $6,960,961 from
$12,390,575 in fiscal 2015 continuing to reflect the disruption in the energy market and the uncertainty
of the world economy. The decrease in royalty income is due to declines in gas sales, gas prices and
average exchange rates under both royalty agreements. As in prior years, the Trust receives
information concerning adjustments from the operating companies based on their final calculations of
royalties payable during the previous periods as well as other required adjustments. During fiscal 2016,
the combination of positive and negative adjustments, including a net negative adjustment under the
Mobil sulfur royalty, reduced royalty income by $433,462, the equivalent of $0.0472 per unit. During
fiscal 2015, the combination of positive and negative adjustments, including a net negative adjustment
under the Mobil Sulfur Royalty, reduced total royalty income by $807,974, the equivalent of $0.0879
per unit. Further details relating to the changes in gas sales, gas prices and average exchange rates for
fiscal 2016 and 2015 are presented on pages 13 through 15.
The decrease in the amount of royalty income resulted in the lower distributions. The total
distribution for fiscal 2016 was $0.67 per unit compared to $1.27 per unit for fiscal 2015.
The Trust’s German consultant periodically contacts the 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 most recent information the Trust’s German
consultant received from representatives of the operating companies’ unified exploration and
production venture, ExxonMobil Production Deutschland GmbH (“EMPG”). The Trust is not able to
confirm the accuracy of any of the information supplied by the operating companies. 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.
After having suspended all drilling activities for 2015 and 2016 and with
the continuing difficulties caused by low energy prices worldwide,
EMPG has slowed the pace of its future drilling program. As recently as
last spring, EMPG’s drilling program provided for four wells to be
drilled in 2017 followed by one well and one work-over in 2018, two
wells in 2019 and one well in 2020. The new program calls for one well
and one work-over in 2017, three wells in 2018, two wells in 2019 and
one well in 2020. Despite the lifting of the moratorium on hydraulic
fracturing (“fracking”) as of July 8, 2016, there is no indication that
fracking will be used in the near future. Historically, fracking had been
used within the Oldenburg concession almost exclusively in wells
accessing the Carboniferous zone and EMPG has no Carboniferous wells
listed in the drilling program through 2020.
During 2016, EMPG performed work-overs of five eastern wells and one
western well: Neerstedt Z-3, Doetlingen Z-12, Goldenstedt Z-13 and Z-
20, Hengstlage T-14 and Kneheim Z-3 (western). Workovers are
conducted on older wells that for various reasons have experienced a
drop in production due to a decline in pressure and can possibly benefit
from further developmental efforts. These reasons can include the
presence of formation debris, bacterial infestation and formation water
influx.
2
NORTH EUROPEAN OIL ROYALTY TRUST
The work-over scheduled for 2017 will be on Visbek Z-16a, a western
Zechstein well. Visbek Z-16a suffered a severe casing collapse six
months after it began production and was shut down in October 2013.
While originally it was planned to drill a new coiled tubing sidetrack, the
continuing low gas prices have made this choice uneconomical. Instead,
this work-over will involve an attempt to repair the original casing. The
new well listed for 2017 is Hemmelte NW T-1 which is planned to
develop a new area of the sweet gas Bunter zone in western Oldenburg.
This well was initially planned as a dual purpose well tapping both the
Bunter and the deeper Zechstein zones but, due to technical difficulties,
was scaled back. A second well to access the Zechstein zone at a later
date was initially mentioned but no further information has been
forthcoming.
The three new wells listed for 2018 are Brettorf Z-2b, Goldenstedt Z-12a
M1 and Goldenstedt Z-25a M1. All these wells are multilateral wells, are
located in eastern Oldenburg and are sour gas infill wells. Multilateral
wells take advantage of a single master well to draw from multiple
sidetracks. The primary advantage is the cost saving in using a single
borehole for more than one sidetrack.
The two new wells listed for 2019 are Doetlingen Z-3A and Jeddeloh
Z-1. Doetlingen Z-3A is intended to develop the Zechstein zone in
eastern Oldenburg. Jeddeloh Z-1 is the first well being drilled in the
Oldenburg concession with Vermilion as the lead developer. The well is
an exploration well tentatively located in the western portion of the area
designated as Oldenburg-Land, the southernmost area of the three areas
within the concession subject to Vermilion’s Farm-In Agreement.
Vermilion’s well is intended to develop the Rotliegend (Red Sandstone)
formation, a previously undeveloped productive zone within the
concession. Oldenburg-Land is a relatively undeveloped area of the
concession compared
southern area of Müensterland-
Cloppenburg-Vechta where the majority of the wells operated by EMPG
are located.
the
to
The single new well listed for 2020 is Alhorn Z-3, another sour gas well.
Alhorn Z-3 is intended to reopen the old Alhorn field, which had been
plugged and abandoned in 1997.
No firm dates have been announced for any of the wells described above.
Information on wells that are not named or are in preliminary planning
stages is not divulged by EMPG.
3
NORTH EUROPEAN OIL ROYALTY TRUST
Based on the limited information available, Ralph E. Davis Associates, LLC, 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 2016. The 2016 cost depletion
percentage of 10.2769% and related tax information is contained in the removable "2016 Tax Letter"
on Pages 36 through 39 of this report. The calculation of the cost depletion percentage is based on
Davis Associates’ estimate of remaining net proved producing reserves as of October 1, 2016. (The
complete text of the report is available in the Trust’s 2016 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 15.18% to 12.214 Bcf from 14.400 Bcf on net sales for 2016 of 1.392 Bcf and a
negative reserve adjustment of 0.794 Bcf. As shown in the chart on page 6, the absence of drilling by
the operating companies contributed to the failure to offset current gas sales with additions to proved
producing reserves.
Respectfully submitted,
John R. Van Kirk
Managing Director
December 30, 2016
4
5
5
4
3
2
1
0
T
E
E
F
C
I
B
U
C
N
O
I
L
L
I
B
NORTH EUROPEAN OIL ROYALTY TRUST
TEN YEAR HISTORY OF NET GAS SALE VOLUMES
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Adjusted for Effective Royalty Rates Applicable to Western and Eastern Oldenburg
WESTERN OLDENBURG
EASTERN OLDENBURG
NORTH EUROPEAN OIL ROYALTY TRUST
NET PROVED PRODUCING GAS RESERVES (EST.)
AND VOLUME OF NET GAS SALES
T
E
E
F
C
I
B
U
C
N
O
I
L
L
I
B
45
40
35
30
25
20
15
10
5
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
6
NET PROVED PRODUCING RESERVES (EST.)
ANNUAL NET SALES
As of October 1st
7
NORTH EUROPEAN OIL ROYALTY TRUST
North European Oil Royalty Trust
Selected Financial Data (Cash Basis)
For Fiscal Years Ended October 31
Gas, sulfur and oil royalties
received
2016
2015
2014
2013
2012
$ 6,960,961
$12,390,575
$18,927,005
$21,546,298
$23,672,808
Interest income
4,548
9,439
18,724
25,363
40,156
Trust expenses
( 824,368)
( 819,341)
( 901,150)
( 936,355)
( 1,103,003)
Net income
$ 6,141,141
$11,580,673
$18,044,579
$20,635,306
$22,609,961
Net income per unit
$ 0.67
$ 1.26
$ 1.96
$ 2.25
$ 2.46
Distributions per unit paid
or to be paid to unit owners
$ 0.67
$ 1.27
$ 1.95
$ 2.25
$ 2.46
Units outstanding end of period
9,190,590
9,190,590
9,190,590
9,190,590
9,190,590
NORTH EUROPEAN OIL ROYALTY TRUST
GROSS GAS SALE VOLUMES
T
E
E
F
C
I
B
U
C
N
O
I
L
L
I
B
180
160
140
120
100
80
60
40
20
0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
WESTERN OLDENBURG
EASTERN OLDENBURG
8
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
ExxonMobil, or by Oldenburgische Erdolgesellschaft ("OEG"). As a result of direct and indirect
ownership, ExxonMobil owns two-thirds of OEG and the Royal Dutch/Shell Group of Companies
owns one-third of OEG. The Oldenburg concession (1,386,000 acres), covering virtually the entire
former Grand Duchy of Oldenburg and located in the German federal state of Lower Saxony, provides
100% of the royalties received by the Trust. BEB Erdgas und Erdol GmbH (“BEB”), a joint venture in
which ExxonMobil and the Royal Dutch/Shell Group each own 50%, administers the concession held
by OEG. In 2002, Mobil Erdgas and BEB formed EMPG to carry out all exploration, drilling and
production activities. All sales activities are still handled by either Mobil Erdgas or BEB.
Vermilion Energy Inc. (“Vermilion”), a Canadian based international oil and gas producer,
entered into a Farm-In Agreement (the “Farm-In Agreement”) with Mobil Erdgas and BEB. The Farm-
In Agreement specifies that Vermilion has acquired an interest in various portions of a concession or
areas owned by Mobil Erdgas and BEB. Three of these licenses cover the three northernmost areas of
the Oldenburg concession. The Farm-In Agreement commits Vermilion to financial participation at a
50% level in 11 gross exploratory wells over the next five years. If Vermilion conducts any successful
drilling within the confines of the Oldenburg concession, sales of that gas or oil would be subject to the
relevant royalty contract. The Trust’s German consultant has confirmed for the Trust that Vermilion
will lead the development of its first well within the Oldenburg concession with a possible start time in
2019. The well is tentatively located in the western portion of the area designated Oldenburg-Land, the
southernmost area of the three areas within the concession subject to Vermilion’s Farm-In Agreement.
Vermilion’s well is intended to develop the Rotliegend (Red Sandstone) formation, a previously
undeveloped productive zone within the concession.
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 Sulfur 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 quarterly selling price falls below the indexed base price, no sulfur royalties
are paid by Mobil Erdgas. Sulfur royalties under the Mobil Agreement totaled ($51,576), $78,094 and
$375,614 during fiscal 2016, 2015 and 2014, respectively. The 2016 figure includes negative
adjustments from 2015, 2013, 2012 and 2011 of $36,336, $43,087, $186,045 and $56,225, which more
than offset sulfur royalties payable. The 2015 figure includes negative adjustments from 2014 and
2013 of $80,516 and $134,832, respectively. The operating companies had improperly allocated
eastern sulfur sales to the Mobil Agreement during 2015, 2014, 2013, 2012 and 2011 resulting in the
overpayment of sulfur royalties.
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NORTH EUROPEAN OIL ROYALTY TRUST
Under the OEG Agreement covering the entire Oldenburg concession, 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. Under the OEG Agreement, 50% of the field handling and treatment 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.
On August 26, 2016, the Trust executed amendments to its existing royalty agreements with
OEG and Mobil establishing a new base for the determination of gas prices upon which the Trust’s
royalties are determined. As a result, neither the contractual price nor the spot market price will be a
determining factor in the calculation of royalties payable to the Trust. As specified in the amendments,
the Trust’s new pricing procedure now matches the German State royalty calculation basis which is
codified in the pertinent German State Royalty Code (Niedersächsische Verordnung über die Feldes-
und die Förderabgabe). As this pricing procedure is currently configured, the state assessment base for
natural gas is the average German Border Import gas Price (the “GBIP”). In the royalty calculations
for the Trust, the GBIP for the period corresponding to the respective calendar quarter (adjusted by a
percentage factor) will be the price used in the relevant calculation of quarterly royalties payable. For
simplification purposes, we will use “GBIP” when referring to the current state assessment base.
The change to the GBIP is intended to be revenue neutral for the Trust. Additionally, this
change should reduce the scope and cost of the accounting examination, eliminate ongoing disputes
with OEG and Mobil regarding sales to related parties, and reduce prior year adjustments to the
normally scheduled year-end reconciliation. The new pricing basis will also eliminate certain costs
(transportation and plant gas storage) that were previously deductible prior to the royalty calculation
under the agreement with OEG.
Actual gas sales from the prior calendar quarter will be multiplied by the average GBIP for a
period starting two months earlier and will provide the basis for royalty payments to the Trust during
its fiscal quarter. The average GBIP for the corresponding period of actual sales is not available due to
the delay in its calculation. In the final calculation of royalties payable for calendar 2015, the average
GBIP under the Mobil and OEG Royalty Agreements was increased by 2% and 5%, respectively. For
calendar 2016 and forward, the average GBIP under the Mobil and OEG Royalty Agreements will be
increased by 1% and 3%, respectively. In March of the following calendar year, an average GBIP for
the prior calendar year (weighted on a monthly basis by the respective volume of imported gas) is
published. In September of the following calendar year, EMPG will make a final reconciliation based
upon the published yearly average GBIP increased by the respective percentage factor and the total
volume of gas sold under the royalty agreements during the prior calendar year.
The new basis for oil prices would be the published price from the State Authority for Mining,
Energy and Geology. There are no percentage adjustments factored into the oil royalty calculation.
There was no change in the previous methodology used with regard to the determination of royalties
attributable to sales of sulfur.
In addition to the Oldenburg area, the Trust also holds overriding royalties at various rates on a
number of currently non-producing leases of various sizes in other areas of Germany. One of these
leases, Grosses Meer, was formerly active but provided no royalties during fiscal 2016, 2015 and 2014.
10
NORTH EUROPEAN OIL ROYALTY TRUST
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 provided approximately 96% of the total royalties in
fiscal 2016. 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.
On 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. The pricing component to this
royalty calculation no longer conforms to the same period. Due to the delay in the availability of the
GBIP, the average GBIP for a three-month period ending two months prior to the end of the relevant
calendar quarter is used. The average GBIP is increased by a percentage factor depending upon which
royalty agreement forms the underlying basis for the royalty calculation. The respective royalty
amount is divided into thirds and forms the monthly royalty payments to the Trust (payable on the 15th
of each month) for the Trust’s upcoming fiscal quarter. At the same time that the operating companies
determine the actual amount of royalties that were payable for the prior calendar quarter, they look at
the actual amount of royalties that were paid to the Trust for that period and calculate the difference
between what was paid and what was payable. Additional amounts payable by the operating
companies would be paid immediately and any overpayment would be deducted from the payment for
the first month of the following fiscal quarter. In March of the following calendar year, an average
GBIP for the prior calendar year (weighted on a monthly basis by the respective volume of imported
gas) is published. In September of each year, the operating companies make the final determination of
any necessary royalty adjustments for the prior calendar year with a positive or negative adjustment
made accordingly. Currently, the Trust’s German accountants review the royalty calculations on a
biennial basis.
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NORTH EUROPEAN OIL ROYALTY TRUST
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. Sour gas, in
comparison, must be processed at the Grossenkneten desulfurization plant 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. As needed, EMPG, the operator
of the Grossenkneten desulfurization plant, conducts maintenance on the plant, generally during the
summer months when demand is lower. Historically, sour gas production capacity during the period of
maintenance work has been reduced by approximately one-third. There was no maintenance conducted
during 2016. Maintenance was conducted from August 31, 2015 through October 13, 2015. The
operating companies have informed the Trust that, to promote greater efficiency and cost effectiveness,
the production capacity of Grossenkneten will be reduced beginning in 2017.
Under the Mobil and OEG Agreements, the gas is sold in one of three ways: (1) directly on the
spot market; (2) between Mobil Erdgas and BEB (intra-company sales); or (3) directly to various
distributors under contracts (which delineate, among other provisions, the timing, manner, volume and
price of the gas sold). While the operating companies will continue to sell gas in one of these three
ways, the impact of the respective pricing involved is no longer applicable to the Trust because, under
the amended royalty agreements, the price point, which is used as part of the basis for the royalty
calculations, is now the average GBIP.
The Trust’s accountants in Germany have completed their examination of the operating
companies for 2013 and 2014 and all relevant adjustments have been made to Trust royalties. Their
next examination for the 2015-2016 period will be performed under the amended royalty agreements
and will likely commence in November 2017.
For unit owners, changes in the dollar value of the Euro have an immediate impact. This impact
occurs at the time the royalties, which are paid to the Trust in Euros, are converted into U.S. dollars at
the applicable exchange rate and transferred 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.
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 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. The Trust's consultant receives
reports from EMPG with respect to current and planned drilling and exploration efforts. However,
EMPG and the operating companies continue 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. Sales prices along with sales volumes form
the basis on which the royalties paid to the Trust are computed.
12
NORTH EUROPEAN OIL ROYALTY TRUST
Results: Fiscal 2016 versus Fiscal 2015
For fiscal 2016, the Trust’s gross royalty income decreased 43.82% to $6,960,961 from
$12,390,575 in fiscal 2015 continuing to reflect the disruption in the energy market and the uncertainty
of the world economy. The decrease in royalty income is due to declines in gas sales, gas prices and
average exchange rates under both royalty agreements. The decrease in the amount of royalty income
resulted in the lower distributions. The total distribution for fiscal 2016 was $0.67 per unit compared to
$1.27 per unit for fiscal 2015. As in prior years, the Trust receives adjustments from the operating
companies based on their final calculations of royalties payable during the previous periods. During
fiscal 2016, the combination of positive and negative adjustments reduced royalty income by
$381,886, the equivalent of $0.0416 per unit. Due to the incorrect inclusion in prior years of eastern
sulfur sales in the royalty calculation under the Mobil Sulfur Agreement, the combination of current
year sulfur royalties and the negative adjustment from prior years resulted in a net negative adjustment
for fiscal 2016 of $51,576, the equivalent of $0.0056 per unit. During fiscal 2015, the combination of
positive and negative adjustments reduced royalty income by $592,626, the equivalent of $0.0645 per
unit. Due to the incorrect inclusion in prior years of eastern sulfur sales in the royalty calculation under
the Mobil Sulfur Agreement, the combination of current year sulfur royalties and the negative
adjustment from prior years resulted in a net negative adjustment for fiscal 2015 of $215,348, the
equivalent of $0.0234 per unit.
Gas sales under the Mobil Agreement declined 12.83% to 25.043 Billion cubic feet ("Bcf") in
fiscal 2016 from 28.729 Bcf in fiscal 2015. Gas sales in the first three quarters of fiscal 2016 showed a
decline from the prior year’s equivalent quarters. However, gas sales in the fourth quarter of fiscal
2016 were higher than the prior year’s equivalent quarter. At least some of the increase in fourth
quarter gas sales may be explained by the partial shutdown of the Grossenkneten desulfurization plant
for a six-week period during the fourth quarter of fiscal 2015. 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. However, according to
the Trust's consultant in Germany, it is likely that some portion of the decline in gas production is due
to the normal reduction in well pressure that is experienced over time. The suspension of all drilling
activities during the 2015-2016 period likely has also impacted gas sales.
Quarterly and Yearly Gas Sales under the Mobil Agreement in Billion cubic feet
Fiscal Quarter
First
Second
Third
Fourth
Fiscal Year Total
2016 Gas Sales
6.604
6.834
4.917
6.688
25.043
2015 Gas Sales
7.876
7.642
7.382
5.829
28.729
Percentage Change
- 16.15%
- 10.57%
- 33.39%
+ 14.74%
- 12.83%
13
NORTH EUROPEAN OIL ROYALTY TRUST
Average prices for gas sold under the Mobil Agreement decreased 28.39% to 1.5870
€cents/kWh in fiscal 2016 from 2.2162 €cents/kWh in fiscal 2015.
Average Gas Prices under the Mobil Agreement in Euro cents per Kilowatt Hour
Fiscal Quarter
First
Second
Third
Fourth
Fiscal Year Avg.
2016 Gas Prices
1.8649
1.5622
1.5363
1.3753
1.5870
2015 Gas Prices
2.3538
2.3212
2.0017
2.1662
2.2162
Percentage Change
- 20.77%
- 32.70%
- 23.25%
- 36.51%
- 28.39%
Converting gas prices into more familiar terms, using the average exchange rate, yielded a price
of $5.04 per thousand cubic feet ("Mcf"), a 30.19% decrease from fiscal 2015’s average price of
$7.22/Mcf. For fiscal 2016, royalties paid under the Mobil Agreement were converted and transferred
at an average Euro/dollar exchange rate of $1.1083, a decrease of 2.12% from the average Euro/dollar
exchange rate of $1.1323 for fiscal 2015.
Average Euro Exchange Rate under the Mobil Agreement
Fiscal Quarter
First
Second
Third
Fourth
Fiscal Year Avg.
2016 Average
Euro Exchange Rate
1.0881
1.1173
1.1185
1.1047
1.1083
2015 Average
Euro Exchange Rate
1.2127
1.0754
1.1113
1.1301
1.1323
Percentage Change
- 10.27%
+ 3.90%
+ 0.65%
- 2.25%
- 2.12%
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 2016, the volume of gas sold from western Oldenburg accounted for only 32.43%
of the volume of all gas sales. However, western Oldenburg gas royalties provided approximately
81.05% or $5,408,745 out of a total of $6,673,084 in overall Oldenburg gas royalties.
14
NORTH EUROPEAN OIL ROYALTY TRUST
Gas sales under the OEG Agreement decreased 12.21% to 77.213 Bcf in fiscal 2016 from
87.952 Bcf in fiscal 2015. At least some portion of the decline in overall gas sales is likely a result of
EMPG’s decision to suspend all drilling activities during 2015-2016. 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. However, according to
the Trust's consultant in Germany, it is likely that some portion of the decline in gas production is due
to the normal reduction in well pressure that is experienced over time.
Quarterly and Yearly Gas Sales under the OEG Agreement in Billion cubic feet
Fiscal Quarter
First
Second
Third
Fourth
Fiscal Year Total
2016 Gas Sales
20.507
20.434
17.520
18.752
77.213
2015 Gas Sales
23.497
23.137
22.590
18.728
87.952
Percentage Change
- 12.73%
- 11.68%
- 22.44%
+ 0.13%
- 12.21%
Average gas prices for gas sold under the OEG Agreement decreased 29.10% to 1.6264
€cents/kWh in fiscal 2016 from 2.2939 €cents/kWh in fiscal 2015.
Average Gas Prices under the OEG Agreement in Euro cents per Kilowatt Hour
Fiscal Quarter
First
Second
Third
Fourth
Fiscal Year Avg.
2016 Gas Prices
1.9803
1.5282
1.5667
1.4025
1.6264
2015 Gas Prices
2.4808
2.4128
2.0401
2.2187
2.2939
Percentage Change
- 20.17%
- 36.66%
- 23.20%
- 36.79%
- 29.10%
Converting gas prices into more familiar terms, using the average exchange rate, yielded a price
of $5.04/Mcf, a 30.86% decrease from fiscal 2015’s average price of $7.29/Mcf. For fiscal 2016,
royalties paid under the OEG Agreement were converted and transferred at an average Euro/dollar
exchange rate of $1.1053, a decrease of 2.11% from the average Euro/dollar exchange rate of $1.1291
for fiscal 2015.
Average Euro Exchange Rate under the OEG Agreement
Fiscal Quarter
First
Second
Third
Fourth
Fiscal Year Avg.
2016 Average
Euro Exchange Rate
1.0874
1.1171
1.1159
1.1068
1.1053
2015 Average
Euro Exchange Rate
1.1973
1.0830
1.1159
1.1309
1.1291
Percentage Change
- 9.18%
+ 3.15%
- 0.00%
- 2.13%
- 2.11%
Interest income for fiscal 2016 decreased 51.82% to $4,548 as compared to $9,439 for fiscal
2015 reflecting the reduction in royalty receipts. Trust expenses increased 0.61% to $824,367 in fiscal
2016 from $819,341 in fiscal 2015 due to higher legal expenses, both domestic and German, and
higher German accounting expenses relating to the amendments to the Mobil and OEG Royalty
Agreements.
15
NORTH EUROPEAN OIL ROYALTY TRUST
Results: Fiscal 2015 versus Fiscal 2014
For fiscal 2015, the Trust’s gross royalty income decreased 34.53% to $12,390,575 from
$18,927,005 in fiscal 2014 continuing to reflect the disruption in the energy market and the uncertainty
of the world economy. The decrease in royalty income is due to declines in gas sales, gas prices and
average exchange rates under both royalty agreements. The decrease in the amount of royalty income
resulted in the lower distributions. The total distribution for fiscal 2015 was $1.27 per unit compared to
$1.95 per unit for fiscal 2014. As in prior years, the Trust receives adjustments from the operating
companies based on their final calculations of royalties payable during the previous periods. During
fiscal 2015 the combination of positive and negative adjustments reduced royalty income by $592,626,
the equivalent of $0.0645 per unit. Due to the incorrect allocation in prior years of eastern sulfur sales
to royalty calculations under the Mobil Sulfur Agreement, the combination of current year sulfur
royalties and the negative adjustment from prior years resulted in a net negative adjustment for fiscal
2015 of $215,348, the equivalent of $0.0234 per unit. During fiscal 2014, the negative adjustments
decreased royalty income by $52,676, the equivalent of $0.0057 per unit.
Gas sales under the Mobil Agreement declined 7.84% to 28.729 Bcf in fiscal 2015 from 31.172
Bcf in fiscal 2014. A significant portion of this decline occurred during the fourth fiscal quarter and
was likely caused by the partial shutdown of the Grossenkneten desulfurization plant for a six-week
period. 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. However, according to the Trust's consultant in Germany, it is likely that some
portion of the decline in gas production is due to the normal reduction in well pressure that is
experienced over time.
Quarterly and Yearly Gas Sales under the Mobil Agreement in Billion cubic feet
Fiscal Quarter
First
Second
Third
Fourth
Fiscal Year Total
2015 Gas Sales
7.876
7.642
7.382
5.829
28.729
2014 Gas Sales
8.108
7.651
7.738
7.675
31.172
Percentage Change
- 2.86%
- 0.12%
- 4.60%
- 24.05%
- 7.84%
Average prices for gas sold under the Mobil Agreement decreased 10.99% to 2.2162
€cents/kWh in fiscal 2015 from 2.4899 €cents/kWh in fiscal 2014.
Average Gas Prices under the Mobil Agreement in Euro cents per Kilowatt Hour
Fiscal Quarter
First
Second
Third
Fourth
Fiscal Year Avg.
2015 Gas Prices
2.3538
2.3212
2.0017
2.1662
2.2162
2014 Gas Prices
2.7458
2.6635
2.3661
2.1709
2.4899
Percentage Change
- 14.28%
- 12.85%
- 15.40%
- 0.22%
- 10.99%
16
NORTH EUROPEAN OIL ROYALTY TRUST
Converting gas prices into more familiar terms, using the average exchange rate, yielded a price
of $7.22/Mcf, a 25.18% decrease from fiscal 2014’s average price of $9.65/Mcf. For fiscal 2015,
royalties paid under the Mobil Agreement were converted and transferred at an average Euro/dollar
exchange rate of $1.1323, a decrease of 16.12% from the average Euro/dollar exchange rate of $1.3499
for fiscal 2014.
Average Euro Exchange Rate under the Mobil Agreement
Fiscal Quarter
First
Second
Third
Fourth
Fiscal Year Avg.
2015 Average
Euro Exchange Rate
1.2127
1.0754
1.1113
1.1301
1.1323
2014 Average
Euro Exchange Rate
1.3597
1.3776
1.3577
1.2944
1.3499
Percentage Change
- 10.81%
- 21.94%
- 18.15%
- 12.69%
- 16.12%
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 2015, the volume of gas sold from western Oldenburg accounted for only 32.66%
of the volume of all gas sales. However, western Oldenburg gas royalties provided approximately
79.32% or $9,289,836 out of a total of $11,711,215 in overall Oldenburg gas royalties.
Gas sales under the OEG Agreement decreased 9.47% to 87.952 Bcf in fiscal 2015 from 97.155
Bcf in fiscal 2014. A significant portion of this decline occurred during the fourth fiscal quarter and
was likely caused by the partial shutdown of the Grossenkneten desulfurization plant for a six-week
period. 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. However, according to the Trust's consultant in Germany, it is likely that some
portion of the decline in gas production is due to the normal reduction in well pressure that is
experienced over time.
Quarterly and Yearly Gas Sales under the OEG Agreement in Billion cubic feet
Fiscal Quarter
First
Second
Third
Fourth
Fiscal Year Total
2015 Gas Sales
23.497
23.137
22.590
18.728
87.952
2014 Gas Sales
25.467
24.355
24.194
23.139
97.155
Percentage Change
- 7.74%
- 5.00%
- 6.63%
- 19.06%
- 9.47%
17
NORTH EUROPEAN OIL ROYALTY TRUST
Average gas prices for gas sold under the OEG Agreement decreased 10.47% to 2.2939
€cents/kWh in fiscal 2015 from 2.5622 €cents/kWh in fiscal 2014.
Average Gas Prices under the OEG Agreement in Euro cents per Kilowatt Hour
Fiscal Quarter
First
Second
Third
Fourth
Fiscal Year Avg.
2015 Gas Prices
2.4808
2.4128
2.0401
2.2187
2.2939
2014 Gas Prices
2.7962
2.7096
2.4367
2.2803
2.5622
Percentage Change
- 11.28%
- 10.95%
- 16.28%
- 2.70%
- 10.47%
Converting gas prices into more familiar terms, using the average exchange rate, yielded a price
of $7.29/Mcf, a 24.85% decrease from fiscal 2014’s average price of $9.70/Mcf. For fiscal 2015,
royalties paid under the OEG Agreement were converted and transferred at an average Euro/dollar
exchange rate of $1.1291, a decrease of 16.41% from the average Euro/dollar exchange rate of $1.3507
for fiscal 2014.
Average Euro Exchange Rate under the OEG Agreement
Fiscal Quarter
First
Second
Third
Fourth
Fiscal Year Avg.
2015 Average
Euro Exchange Rate
1.1973
1.0830
1.1159
1.1309
1.1291
2014 Average
Euro Exchange Rate
1.3604
1.3774
1.3577
1.2891
1.3507
Percentage Change
- 11.99%
- 21.37%
- 17.81%
- 12.27%
- 16.41%
Interest income for fiscal 2015 decreased 49.59% to $9,439 as compared to $18,724 for fiscal
2014 reflecting the reduction in royalty receipts. Trust expenses decreased 9.08% to $819,341 in fiscal
2015 from $901,150 in fiscal 2014 primarily due to the absence of accounting costs associated with the
biennial examination of the royalty calculations by the German operating companies and the reduction
in Trustees fees as specified according to the provisions of the Trust Agreement.
18
NORTH EUROPEAN OIL ROYALTY TRUST
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.
___________________________________________________________
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;
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, 2016 (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.
19
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, 2016, there were 700 unit owners of record.
The following table presents the high and low closing prices for the quarterly periods ended in
fiscal 2016 and 2015 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, 2016
April 30, 2016
July 31, 2016
October 31, 2016
Quarter Ended
January 31, 2015
April 30, 2015
July 31, 2015
October 31, 2015
Fiscal Year 2016
Low
Closing Price
High
Closing Price
Distribution
per Unit
$ 5.89
$ 7.53
$ 8.15
$ 6.99
$ 9.99
$ 9.68
$ 9.75
$ 8.79
Fiscal Year 2015
$0.16
$0.24
$0.15
$0.12
Low
Closing Price
High
Closing Price
Distribution
per Unit
$11.80
$11.66
$ 8.73
$ 9.29
$18.88
$14.71
$14.14
$11.46
$0.35
$0.33
$0.36
$0.23
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 2016 is
10.2769%. 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 2016 calendar year are included on special
removable pages in this 2016 Annual Report. Additionally, the tax reporting information for 2016 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 2016, 2015 and 2014 and
has never made such repurchases.
20
NORTH EUROPEAN OIL ROYALTY TRUST
Comparison of Five Year Returns
The graph set forth below 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,
2011, 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.
21
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
$200
$180
$160
$140
$120
$100
$80
$60
$40
$20
$0
10/31/2011
10/31/2012
10/31/2013
10/31/2014
10/31/2015
10/31/2016
North European Oil Royalty Trust
S&P 500
Peer Group
2
2
*$100 invested on 10/31/11 in stock or index, including reinvestment of dividends.
Fiscal year ending October 31.
2
3
NORTH EUROPEAN OIL ROYALTY TRUST
DOLLAR ROYALTIES
WESTERN AND EASTERN OLDENBURG
S
R
A
L
L
O
D
N
O
I
L
L
I
M
35
30
25
20
15
10
5
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Dollar Royalties by Fiscal Year
WESTERN OLDENBURG
EASTERN OLDENBURG
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and the 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, 2016 and 2015, 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, 2016. These financial statements are the
responsibility of the Trust’s management. 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, 2016 and 2015, 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, 2016, 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, 2016,
based on criteria established in Internal Control—Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated
December 29, 2016 expressed an unqualified opinion.
WeiserMazars LLP
New York, NY
December 29, 2016
24
2
5
STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS (NOTE 1)
OCTOBER 31, 2016 AND 2015
NORTH EUROPEAN OIL ROYALTY TRUST
ASSETS
Current assets — Cash and cash equivalents
Producing gas and oil royalty rights,
net of amortization (Notes 1 and 2)
Total Assets
LIABILITIES AND TRUST CORPUS
2016
2015
$ 1,165,347
$ 2,192,865
1
1
$ 1,165,348
$ 2,192,866
2016
2015
Current liabilities — Distributions to be paid to unit owners,
paid November 2016 and 2015
$ 1,102,871
$ 2,113,835
Trust corpus (Notes 1 and 2)
Undistributed earnings
Total Liabilities and Trust Corpus
62,476
79,030
$ 1,165,348
$ 2,192,866
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, 2016, 2015, AND 2014
2016
2015
2014
Gas, sulfur and oil royalties received
$ 6,960,961
$ 12,390,575
$ 18,927,005
Interest income
Trust Income
Non-related party expenses
Related party expenses (Note 3)
4,548
6,965,509
(715,404)
(108,964)
9,439
18.724
12,400,014
18,945,729
(732,209)
(87,132)
(819,004)
(82,146)
Trust Expenses
(824,368)
(819,341)
(901,150)
Net Income
Net income per unit
Distributions per unit paid or to be paid to unit
owners
$ 6,141,141
$ 11,580,673
$ 18,044,549
$ 0.67
$ 0.67
$ 1.26
$ 1.27
$ 1.96
$ 1.95
2
6
The accompanying notes are an integral part of these financial statements.
2
7
NORTH EUROPEAN OIL ROYALTY TRUST
STATEMENTS OF UNDISTRIBUTED EARNINGS (NOTE 1)
FOR THE FISCAL YEARS ENDED OCTOBER 31, 2016, 2015 AND 2014
Balance, beginning of year
Net income
Less:
Current year distributions paid or
to be paid to unit owners
Balance, end of year
2016
2015
2014
$ 79,030
6,141,141
6,220,171
$ 170,406
11,580,673
11,751,079
$ 47,477
18,044,579
18,092,056
6,157,695
$ 62,476
11,672,049
17,921,650
$ 79,030
$ 170,406
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, 2016, 2015 AND 2014
2016
2015
2014
Sources of Cash and Cash Equivalents:
Gas, sulfur and oil royalties received
$ 6,960,961
$ 12,390,575
$ 18,927,005
Interest income
4,548
6,965,509
9,439
12,400,014
18,724
18,945,729
Uses of Cash and Cash Equivalents:
Payment of Trust expenses
824,368
819,341
901,150
Distributions paid
7,168,659
7,993,027
13,142,544
13,961,885
19,208,333
20,109,483
Net increase (decrease) in cash
and cash equivalents during the year
(1,027,518)
(1,561,871)
(1,163,754)
Cash and cash equivalents, beginning of year
2,192,865
3,754,736
4,918,490
Cash and cash equivalents,
end of year
$ 1,165,347
$ 2,192,865
$ 3,754,736
2
8
The accompanying notes are an integral part of these financial statements.
NORTH EUROPEAN OIL ROYALTY TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2016, 2015, AND 2014
(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”). In the opinion of management, all adjustments that are considered necessary for a fair
presentation of these financial statements, including adjustments of a normal, recurring nature, have
been included.
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 -
Cash and cash equivalents are defined as amounts deposited in bank accounts and amounts
invested in certificates of deposit and U. S. Treasury bills with original maturities generally of 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, 2016, the uninsured
amounts held in the Trust’s U.S. bank accounts were $906,704. In addition, the Trust held €9,875, the
equivalent of $10,820, in its German bank account at October 31, 2016.
29
NORTH EUROPEAN OIL ROYALTY TRUST
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, 2016, 2015 and 2014, there were 9,190,590 units of beneficial interest outstanding.
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.
(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 ExxonMobil Corp. and the Royal Dutch/Shell Group of Companies.
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 $28,559,
$25,729 and $24,634 in fiscal 2016, 2015 and 2014, 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. For legal services, the Trust paid Cahill Gordon &
Reindel LLP $80,405, $61,403 and $57,512 in fiscal 2016, 2015 and 2014, 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 2016, 2015 and 2014 calendar
years.
30
NORTH EUROPEAN OIL ROYALTY TRUST
(5) Quarterly results (unaudited):
The tables below summarize the quarterly results and distributions of the Trust for the fiscal years
ended October 31, 2016 and 2015:
Fiscal 2016 by Quarter and Year
First
Second
Third
Fourth
Year
Royalties received
$1,832,471
$2,333,670
$1,561,026
$1,233,794
$6,960,961
Net income
$1,573,687
$2,100,364
$1,388,796
$1,078,294
$6,141,141
Net income per unit
$0.17
$0.23
$0.15
$0.12
$0.67
Distributions paid
or to be paid
Distributions per unit
paid or to be paid
to unit owners
$1,470,494
$2,205,742
$1,378,588
$1,102,871
$6,157,695
$0.16
$0.24
$0.15
$0.12
$0.67
Fiscal 2015 by Quarter and Year
First
Second
Third
Fourth
Year
Royalties received
$3,442,713
$3,238,135
$3,459,645
$2,250,082
$12,390,575
Net income
$3,096,916
$3,074,495
$3,312,307
$2,096,955
$11,580,673
Net income per unit
$0.34
$0.33
$0.36
$0.23
$1.26
$3,216,706
$3,032,895
$3,308,613
$2,113,835
$11,672,049
$0.35
$0.33
$0.36
$0.23
$1.27
Distributions paid
or to be paid
Distributions per unit
paid or to be paid
to unit owners
31
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, 2016. Based on that evaluation, the Managing Director concluded that the Trust’s
disclosure controls and procedures were effective as of October 31, 2016.
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, 2016.
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 (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Based on this evaluation, management concluded that the Trust’s
internal control over financial reporting was effective as of October 31, 2016. Management’s
assessment of the effectiveness of our internal control over financial reporting as of October 31, 2016
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
To the Board of 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, 2016, based on criteria established in Internal Control—Integrated
Framework (2013) 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 Reporting. Our responsibility is to express an opinion on the Trust’s internal control over
financial reporting based on our audit.
33
NORTH EUROPEAN OIL ROYALTY TRUST
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.
A 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. A 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 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, 2016, based on criteria established in Internal Control—Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (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, 2016 and
2015, 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,
2016 and our report dated December 29, 2016 expressed an unqualified opinion thereon.
WeiserMazars LLP
New York, NY
December 29, 2016
34
NORTH EUROPEAN OIL ROYALTY TRUST
North European Oil Royalty Trust
P.O. Box 456
Red Bank, New Jersey 07701
(732) 741-4008
IMPORTANT – 2016 TAX LETTER
RETAIN THIS LETTER FOR PREPARATION OF YOUR
2016 INCOME TAX RETURNS
January 3, 2017
To the Current and Former Unit Owners of
North European Oil Royalty Trust:
E
R
E
H
T
U
O
R
A
E
T
There are 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, 2016. 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.
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 2016, 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 2016
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, Germany through North
European Oil Royalty Trust."
36
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." Some tax preparation computer programs ask for a tax identification number. North
European Oil Royalty Trust's tax identification number is 22-2084119.
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, LLC, 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, LLC has recommended an
annual cost depletion percentage of 10.2769% for the 2016 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 2016 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 $0.7431. 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 $0.0950. 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 .102769. 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.
37
NORTH EUROPEAN OIL ROYALTY TRUST
ROYALTY INCOME PER UNIT FOR THE 2016 TAX YEAR
January
February
March
April
$0.0735
$0.1487
$0.0752
$0.2339
$0.1604
$0.0852
$0.3274
$0.2539
$0.1787
$0.0935
First month during
which units
were owned:
January
February
March
April
May
June
July
August
September
October
November
December
Last month during which units were owned:
August
May
June
July
$0.3551
$0.2816
$0.2064
$0.1212
$0.0277
$0.4265
$0.3530
$0.2778
$0.1926
$0.0991
$0.0714
$0.4972
$0.4237
$0.3485
$0.2633
$0.1698
$0.1421
$0.0707
$0.5020
$0.4285
$0.3533
$0.2681
$0.1746
$0.1469
$0.0755
$0.0048
September
October
November December
$0.5536
$0.4801
$0.4049
$0.3197
$0.2262
$0.1985
$0.1271
$0.0564
$0.0516
$0.6314
$0.5579
$0.4827
$0.3975
$0.3040
$0.2763
$0.2049
$0.1342
$0.1294
$0.0778
$0.6872
$0.6137
$0.5385
$0.4533
$0.3598
$0.3321
$0.2607
$0.1900
$0.1852
$0.1336
$0.0558
$0.7431
$0.6696
$0.5944
$0.5092
$0.4157
$0.3880
$0.3166
$0.2459
$0.2411
$0.1895
$0.1117
$0.0559
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.
ROYALTY EXPENSES PER UNIT FOR THE 2016 TAX YEAR
January
February
March
April
$0.0120
$0.0275
$0.0155
$0.0323
$0.0203
$0.0048
$0.0375
$0.0255
$0.0100
$0.0052
First month during
which units
were owned:
January
February
March
April
May
June
July
August
September
October
November
December
Last month during which units were owned:
August
May
June
July
$0.0476
$0.0356
$0.0201
$0.0153
$0.0101
$0.0563
$0.0443
$0.0233
$0.0185
$0.0133
$0.0032
$0.0570
$0.0338
$0.0288
$0.0240
$0.0188
$0.0087
$0.0055
$0.0641
$0.0521
$0.0366
$0.0318
$0.0266
$0.0165
$0.0133
$0.0078
September
October
November December
$0.0680
$0.0560
$0.0405
$0.0357
$0.0305
$0.0204
$0.0172
$0.0117
$0.0039
$0.0733
$0.0613
$0.0458
$0.0410
$0.0358
$0.0257
$0.0225
$0.0170
$0.0092
$0.0053
$0.0811
$0.0691
$0.0536
$0.0488
$0.0436
$0.0335
$0.0303
$0.0248
$0.0170
$0.0131
$0.0078
$0.0950
$0.0830
$0.0675
$0.0627
$0.0575
$0.0474
$0.0442
$0.0387
$0.0309
$0.0270
$0.0217
$0.0139
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 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."
3
8
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 $0.7431. The resulting figure is then multiplied by .102769 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
39
NORTH EUROPEAN OIL ROYALTY TRUST
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
Managing Director
John R. Van Kirk
Office of the
Managing Director
PO Box 456
43 West Front Street
Suite 19A
Red Bank, N.J. 07701
Tel: (732) 741-4008
Fax: (732) 741-3140
E-Mail: neort@neort.com
Website: www.neort.com
Petroleum and Natural
Gas Consultants
Ralph E. Davis Associates, LLC
711 Louisiana Street
Suite 3100
Houston, Texas 77002
Counsel
Cahill Gordon & Reindel
80 Pine Street
New York, N.Y. 10005
Auditors
WeiserMazars LLP
135 West 50th Street
New York, N.Y. 10020
Transfer Agent
American Stock Transfer &
Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
Tel: (800) 937-5449
(718) 921-8200 ext. 4801
E-Mail: info@amstock.com
Website: www.amstock.com
A copy of the Trust’s Form 10-K Annual Report for fiscal 2016 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 2016 10-K, other pertinent filings and documents are available at the Trust’s
website, www.neort.com