North European Oil Royalty Trust

What they do

The Trust holds overriding royalty rights covering gas and oil production in concessions or leases in the Federal Republic of Germany, under contracts with German subsidiaries of ExxonMobil and the Royal Dutch/Shell Group. It conducts no active business operations; the Trustees monitor, verify, collect, hold, invest, and distribute royalty payments to unit owners. Royalties are received on sales of gas well gas, oil well gas, crude oil, condensate, and sulfur. Funds held before distribution are invested in an interest-bearing money market account.

Revenue drivers

• Mobil Agreement royalties — Covers gas sales from the western part of the Oldenburg concession; carries a 4% royalty rate and has traditionally produced the majority of the Trust's royalty income.
• OEG Agreement royalties — Covers gas sales from the entire Oldenburg concession at a 0.6667% royalty rate, significantly lower than the Mobil rate, so gas royalties under this agreement have been correspondingly lower.
• Natural gas royalties overall — Natural gas provided approximately 94% of total royalties in fiscal 2025, with the balance from sulfur and oil.
• Interest income — Interest earned on funds temporarily held in an interest-bearing money market account prior to quarterly distribution; $15,164 in the quarter ended July 31, 2026.

Recent performance

For the quarter ended July 31, 2026, the Trust reported gas, sulfur and oil royalties received of $2,641,909, up slightly from $2,617,231 a year earlier, plus interest income of $15,164 versus $25,220. Trust expenses were $182,713 in the 2026 quarter versus $183,344 in 2025, producing net income of $2,474,360, or $0.27 per unit, compared with $2,459,107, or $0.27 per unit. For the nine months ended July 31, 2026, royalties received were $7,237,569 versus $5,594,229 a year earlier, and net income was $6,471,190 versus $5,005,581. The Trust declared a third-quarter fiscal 2026 distribution of $0.26 per unit, equal to the third quarter of fiscal 2025 and above the $0.22 paid for the second quarter of fiscal 2026. The cumulative 12-month distribution is $1.01 per unit, 47.5% higher than the prior 12-month distribution of $0.52 per unit.

Strategy

The Trust has no active business strategy in the conventional sense: it is restricted by the Trust Agreement to collecting royalty income and distributing net funds to unit owners after covering current and anticipated expenses. Since August 26, 2016, the Mobil and OEG Agreements have used the German Border Import gas Price as the base for royalty gas pricing, with average quarterly GBIP totals increased by 1% and 3% under the respective agreements. Management states this change reduced the scope and cost of accounting examination, eliminated ongoing disputes with OEG and Mobil over sales to related parties, and reduced prior-year adjustments at year-end reconciliation. There are no capital resource requirements for capital expenditures or investments, as the Trust does not conduct extractive operations.

Risks

• Depleting assets — The Trust's assets are depleting assets, and if the operators do not perform additional maintenance or development projects, production may decline faster than expected and the assets will eventually cease producing in commercial quantities.
• Concentration in natural gas royalties — Natural gas accounted for approximately 94% of total royalties in fiscal 2025, so results are heavily exposed to gas volumes, gas prices and the GBIP-based pricing formula.
• Operator dependence — Royalty income depends on the performance and willingness of the German ExxonMobil and Royal Dutch/Shell subsidiaries to operate and pay under the Mobil and OEG agreements.
• Currency exposure — Royalties are paid in Euros and converted to U.S. dollars when transferred to the Trust, so a weaker Euro yields fewer U.S. dollars to unit owners.

Outlook

The Trust's MD&A states it has no means of ensuring continued income from the overriding royalty rights at their present level or otherwise, and that it holds depleting assets. The timing and size of any future maintenance or development projects on the underlying assets depend on market prices of oil and natural gas and on decisions by the operators. The Trust does not undertake any obligation to update forward-looking statements. No specific production, price or distribution guidance is provided beyond the quarterly distribution process.