UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 2021 or
[ ]
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
.
Commission File
Number 1-8245
NORTH EUROPEAN OIL
ROYALTY TRUST
(Exact Name of Registrant
as Specified in its Charter)
Delaware
22-2084119
State
or Other Jurisdiction of
I.R.S. Employer Identification No.
of Incorporation
or Organization
5 N. Lincoln Street, Keene, N.H.
03431
Address of Principal Executive Offices
Zip Code
(732) 741-4008
(Registrant's Telephone
Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the
Act:
Title of each
class
Trading Symbol(s) Name of each exchange on which
registered
Units
of Beneficial Interest NRT
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No ___
Indicate by check mark whether
the registrant has submitted electronically every Interactive Data File
required to be submitted pursuant to Rule 405 of Regulation S-T (Section
232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post
such files). Yes X No ___
Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, a smaller reporting company or an emerging growth
company. See the definitions of "large accelerated filer," "accelerated
filer," "smaller reporting company," and "emerging growth company" in
Rule 12b-2 of the Exchange Act.
|
Large accelerated filer
Accelerated filer
|
|
Non-accelerated filer
X
Smaller reporting company X
|
|
Emerging growth company
|
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the
extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of
the Exchange Act
Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes ___
No X
9,190,590 Units of Beneficial Interest Outstanding as
of January 31, 2021
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
STATEMENTS OF ASSETS, LIABILITIES
AND TRUST CORPUS (NOTE 1)
JANUARY 31, 2021 AND OCTOBER 31, 2020
(Unaudited)
|
|
2021
|
2020
|
|
ASSETS
|
|
|
|
Current assets --
Cash and cash equivalents
|
$577,616
|
$649,585
|
|
|
|
Producing gas and oil royalty rights,
net of amortization (Notes 1 and 2)
|
1
|
1
|
|
|
|
Total Assets
|
$577,617
|
$649,586
|
|
|
|
|
|
LIABILITIES AND TRUST CORPUS
|
|
|
|
Current liabilities -- Distributions
to be paid to unit owners,
paid February 2021 and November 2020
|
$367,624
|
$183,811
|
|
|
|
Trust corpus (Notes 1 and 2)
|
1
|
1
|
|
|
|
Undistributed earnings
|
209,992
|
465,774
|
|
|
|
Total Liabilities and
Trust Corpus
|
$577,617
|
$649,586
|
The accompanying notes are an integral part
of these financial statements.
STATEMENTS OF REVENUE COLLECTED
AND EXPENSES PAID (NOTE 1)
FOR THE THREE MONTHS ENDED JANUARY 31, 2021 AND 2020
(Unaudited)
|
|
2021
|
2020
|
|
Gas, sulfur and oil royalties received
|
$283,439
|
$1,025,965
|
|
Interest income
|
83
|
1,895
|
|
Trust Income
|
$283,522
|
$1,02,860
|
|
|
|
Non-related party expenses
|
(151,490)
|
(255,861)
|
|
Related party expenses (Note 3)
|
(20,190)
|
(24,262)
|
|
Trust Expenses
|
(171,680)
|
(280,123)
|
|
|
|
Net Income
|
$111,842
|
$747,737
|
|
|
|
Net income per unit
|
$0.01
|
$0.08
|
|
Distributions per unit paid or
to be paid to unit owners
|
$0.04
|
$0.08
|
The accompanying notes are an integral part
of these financial statements.
STATEMENTS OF UNDISTRIBUTED EARNINGS (NOTE 1)
FOR THE THREE MONTHS ENDED JANUARY 31, 2021 AND 2020
(Unaudited)
|
|
2021
|
2020
|
|
Balance, beginning of period
|
$465,774
|
$120,399
|
|
Net income
|
111,842
|
747,737
|
|
|
577,616
|
868,136
|
|
Less:
|
|
|
|
Current year distributions
paid or to be paid to unit owners
|
367,624
|
735,247
|
|
Balance, end of period
|
$209,992
|
$132,889
|
The accompanying notes are an integral part
of these financial statements.
STATEMENTS OF CHANGES IN CASH
AND CASH EQUIVALENTS (NOTE 1)
FOR THE THREE MONTHS ENDED
JANUARY 31, 2021 AND 2020
(Unaudited)
|
2021
|
2020
|
|
Sources of Cash and Cash
Equivalents:
|
|
|
|
Gas, sulfur and oil royalties received
|
$283,439
|
$1,025,965
|
|
Interest income
|
83
|
1,895
|
|
|
283,522
|
1,027,860
|
|
Uses of Cash and Cash
Equivalents:
|
|
|
|
Payment of Trust expenses
|
171,680
|
280,123
|
|
Distributions paid
|
183,811
|
1,470,494
|
|
|
355,491
|
1,750.617
|
|
Net increase (decrease) in cash and
cash equivalents during the period
|
(71,969)
|
(722,757)
|
|
Cash and cash equivalents,
beginning of period
|
649,585
|
1,590,893
|
|
Cash and cash equivalents,
end of period
|
$577,616
|
$868,136
|
The accompanying notes are an integral part
of these financial statements.
NORTH EUROPEAN OIL
ROYALTY TRUST
NOTES TO FINANCIAL
STATEMENTS
(Unaudited)
(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.
The results of any interim
period are not necessarily indicative of the results to be expected for
the fiscal year. These financial statements should be read in
conjunction with the financial statements that were included in the
Trust's Annual Report on Form 10-K for the year ended October 31, 2020
(the "2020 Form 10-K"). The Statements of Assets, Liabilities and Trust
Corpus included herein contain information from the Trust's 2020 Form
10-K.
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
January 31, 2021, the uninsured amount held in the Trust's U.S. bank
accounts was $315,538. In addition, the Trust held Euros 9,951, the
equivalent of $12,078, in its German bank account at January 31, 2021.
Net income per unit -
Net income per unit is based
upon the number of units outstanding at the end of the period. As of both
January 31, 2021 and 2020, 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 Corporation 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, condensate and sulfur.
(3) Related party transactions:
John R. Van Kirk, the Managing
Director of the Trust, is reimbursed by the Trust for office expenses at
cost. For such office expenses, the Trust reimbursed the Managing Director
$2,215 and $0 in the first quarter of fiscal 2021 and 2020, 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 the first quarter of
fiscal 2021 and 2020, the Trust paid Cahill Gordon & Reindel LLP
$17,975 and $24,262 for legal services, 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 have authorized the Trust to make contributions
to the accounts of the employees, on a matching basis, of up to 3% of
cash compensation paid to each employee for the 2021 and 2020
calendar years.
Item 2. 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, 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 the ExxonMobil
Corporation ("ExxonMobil"), or by Oldenburgische Erdolgesellschaft
("OEG"). The Oldenburg concession is the primary area from which
the natural gas, sulfur and oil are extracted and currently
provides 100% of all the royalties received by the Trust. The
Oldenburg concession, at approximately 1,386,000 acres, covers
virtually the entire former Grand Duchy of Oldenburg and is located
in the German federal state of Lower Saxony.
In 2002, Mobil Erdgas and
BEB Erdgas und Erdol GmbH ("BEB"), a joint venture of ExxonMobil and
the Royal Dutch/Shell Group of Companies, formed a company, ExxonMobil
Production Deutschland GmbH ("EMPG"), to carry out all exploration,
drilling and production activities. All sales activities are still
handled by the operating companies, either Mobil Erdgas or BEB.
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 87% of the cumulative royalty income received in the
first quarter of fiscal 2021. 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 or about the 25th of
the months of January, April, July and October, the operating
companies determine the amount of royalties that were payable to
the Trust based on applicable sales during the relevant period.
This amount is paid out to the Trust in three monthly installments
as royalty payments (payable on or about the 15th of each month)
during its upcoming fiscal quarter. In addition, the operating
companies review the actual amount of royalties that were paid to
the Trust for that period and calculate the difference between the
amounts paid and the amounts payable. Any 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 September of each year,
the operating companies make the final determination of any
necessary underpayment or overpayment of royalties for the prior
calendar year. The Trust's independent accountants based in
Germany 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. 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. With full
operation of the plant, raw gas input capacity stands at approximately
400 million cubic feet. As needed, EMPG conducts maintenance on the
plant generally during the summer months when demand is lower. The
complete five-week shutdown of the plant continued for the first
thirteen days of the first quarter of fiscal 2021 and contributed to
the decline in gas sales.
Under one set of rights
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 (the "Mobil Agreement"). 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
accounted for 100% of the cumulative royalty income
received under this agreement in the first quarter of fiscal 2021.
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. In the first quarter of
fiscal 2021, the Trust received $65,267 in sulfur royalties under this
agreement. Due to a correction by Mobil, sulfur royalties for both
the first and fourth quarters of calendar 2020 were paid to the Trust
during the first quarter of fiscal 2021. In the first quarter of
fiscal 2020, the Trust received $39,273 in sulfur royalties under
this agreement.
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 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
Mobil and OEG Agreements were amended establishing a new base for
the determination of gas prices upon which the Trust's royalties
are calculated. This new base is set as the state assessment base
for natural gas used by the operating companies in their calculation
of royalties payable to the State of Lower Saxony. This change
reflects a shift from the use of gas ex-field prices ("contractual
prices") to the prices calculated for the German Border Import gas
Price ("GBIP"). The average GBIP used under the Mobil and OEG
Royalty Agreements has been and will continue to be increased by 1%
and 3%, respectively, for the royalty calculations.
The change to the GBIP
was intended to be revenue neutral for the Trust in comparison to
the previous pricing methodology. Additionally, this change was
intended to 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 pricing basis has eliminated certain costs (transportation and
plant gas storage) that were previously deductible prior to the
royalty calculation under the OEG Agreement.
For unit owners, changes
in the currency exchange rate between the U.S. Dollar and 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 promptly
transferred from Germany to the Trust's bank account in the United
States. In relation to the U.S. Dollar, a stronger Euro would
yield more U.S. Dollars and a weaker Euro would yield less U.S.
Dollars.
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 effective as of January 1, 2016. The Farm-In Agreement
does not impact the Trust's royalty interests. The Trust has been
advised by its consultant in Germany that, based on the consultant's
conversations with EMPG employees and other sources, Vermilion has
acquired an interest in various portions of a concession or areas
owned by Mobil Erdgas and BEB pursuant to the Farm-In Agreement. As
of the date of this report, no drilling or development work within the
Oldenburg concession has been done by Vermilion, and the Trust is
unaware of any potential extension of the Farm-In Agreement beyond
2020.
The Trust continues to
engage a consultant in Germany, who provides general information to
the Trust on the German and European economies and energy markets.
The 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, and the Trust is not able to
confirm the accuracy of any of the information supplied by EMPG or
the operating companies. EMPG has notified the Trust's consultant that,
due to the continuing low gas prices, Ahlhorn Z-3, originally scheduled
to commence drilling in 2020, has been postponed until gas prices
recover. For the time being, EMPG has not scheduled any new gas well
drilling through 2021.
Results: First Quarter of Fiscal 2021 versus
First Quarter of Fiscal 2020
Total royalty income received
during the first quarter of fiscal 2021 was derived from sales of gas,
sulfur and oil from the Trust's overriding royalty areas in Germany during
the fourth calendar quarter of 2020. The distribution of $0.04 per unit
was paid on February 24, 2021 to owners of record as of February 12, 2021.
Comparisons of total royalty income and net income for the first quarter
of fiscal 2021 and 2020 are shown below.
|
|
1st Fiscal Quarter
Ended 1/31/2021
|
1st Fiscal Quarter
Ended 1/31/2020
|
Percentage Change
|
|
Total Royalty Income
|
$283,439
|
$1,025,965
|
-72.37%
|
|
Net Income
|
$111,842
|
$747,737
|
-85.04%
|
|
Distribution per Unit
|
$0.04
|
$0.08
|
-50.00%
|
The economic disruption
associated with COVID-19 continued to impact the Trust's total royalty
income received during the first quarter of fiscal 2021. The decrease
in total royalty income between the first quarter of fiscal 2021 and
the first quarter of fiscal 2020 resulted from the lower gas sales and
lower gas prices under both the Mobil and OEG Agreements. Of these two
factors, the impact of the lower gas sales was the more significant.
Total royalty income includes
positive and negative adjustments that the operators made during the
quarter based upon their corrected royalty calculations for the prior
period, as well as Mobil sulfur royalties. In the
first quarter of fiscal 2021, total royalties were reduced by negative
adjustments of $538,651 and were increased by Mobil sulfur royalties of
$65,267 (a correction of $35,070 for the first quarter of calendar 2020
and $30,197 for the fourth quarter of calendar 2020). By comparison, in
the first quarter of fiscal 2020 total royalties were reduced by negative
adjustments of $388,634 and were increased by Mobil sulfur royalties of
$39,273.
The table below is intended to
illustrate trends based on actual gas sales in each quarter. Gas
royalties shown in the table below are determined based on the actual
physical gas sales that occurred during the fourth calendar quarter of
2020 and the average German Border Import gas Price for the period of
August through October 2020. No adjustments for prior periods are
reflected in the gas royalties.
Quarterly Gas Data Providing Basis for Fiscal
Quarter Royalties
|
Mobil Agreement
|
4th Calendar
Quarter Ended
12/30/2020
|
4th Calendar
Quarter Ended
12/31/2019
|
Percentage
Change
|
Gas Sales (Bcf)
1
|
3.222
|
4.884
|
-34.03%
|
Gas Prices2
(Ecents/Kwh)3
|
1.1935
|
1.3550
|
-11.92%
|
Average Exchange Rate4
|
1.2116
|
1.1105
|
+9.10%
|
|
Gas Royalties
|
$532,128
|
$843,908
|
-36.94%
|
Gas Prices ($/Mcf)5
|
$4.13
|
$4.32
|
-4.40%
|
|
|
|
OEG Agreement
|
|
Gas Sales (Bcf)
|
11.622
|
16.026
|
-27.48%
|
|
Gas Prices (Ecents/Kwh)
|
1.2171
|
1.3818
|
-11.92%
|
|
Average Exchange Rate
|
1.2123
|
1.1115
|
+9.07%
|
|
Gas Royalties
|
$193,266
|
$332,242
|
-41.83%
|
|
Gas Prices ($/Mcf)
|
$4.10
|
$4.28
|
-4.21%
|
|
|
Footnotes
|
|
1. Billion cubic
feet
|
|
2. Gas prices
derived from August-October period
|
|
3. Euro cents per
kilowatt hour
|
|
4. Based on average
Euro/dollar exchange rates of cumulative royalty transfers
|
|
5. Dollars per
thousand cubic feet
|
|
|
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 the first quarter of fiscal 2021, gas sales from
western Oldenburg accounted for only 27.73% of all gas sales from the
Oldenburg concession. However, royalties on these gas sales provided
approximately 80.73% or $585,235 out of a total of $724,913 in Oldenburg
royalties attributable to gas.
Trust expenses for the first
quarter of fiscal 2021 decreased 38.71%, or $108,443, to $171,680 from
$280,123 for the first quarter of fiscal 2020. The decrease in expenses
reflects the lower insurance costs, reduced Trustee fees as specified by
the Trust Agreement, lower meeting expenses resulting from the change to
virtual meetings, and the shift in the timing of the payment relating to
the biennial examination of the royalty statements by the Trust's German
accountants.
The current Statements
of Assets, Liabilities and Trust Corpus of the Trust at
January 31, 2021, compared to that at fiscal year-end (October 31,
2020), shows a decrease in assets due to lower royalty receipts
during the first quarter of fiscal 2021.
This report on Form 10-Q 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 effect of the novel coronavirus
identified as "COVID-19" on our financial results.
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.
Item 3. Quantitative and Qualitative Disclosures
About Market Risk.
The Trust is a smaller
reporting company as defined by Rule 12b-2 of the Securities Exchange
Act of 1934, as amended, and are not required to provide the information
required under this item.
Item 4. 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
January 31, 2021 based on the criteria for effective internal
control over financial reporting described in the standards
promulgated by the Public Company Accounting Oversight Board and
the Internal Control-Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
Based on that evaluation, the Managing Director concluded that the
Trust's disclosure controls and procedures were effective as of
January 31, 2021.
There have been no changes in
the Trust's internal control over financial reporting identified in
connection with the evaluation described above that occurred during the
first quarter of fiscal 2021 that have materially affected or are
reasonably likely to materially affect the Trust's internal control
over financial reporting. We are continually monitoring and assessing
the COVID-19 situation on our internal controls to minimize the impact
on their design and operating effectiveness.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
The Trust is not a party
to any pending legal proceedings.
Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosure.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
Exhibit 31.
Certification of Chief Executive Officer and Chief Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.
Certification of Chief Executive Officer and Chief
Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
SIGNATURE
Pursuant to the
requirements of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NORTH EUROPEAN OIL ROYALTY
TRUST
(Registrant)
/s/
John R. Van Kirk
John R. Van Kirk
Managing Director
February 25, 2021
North European Oil Royalty (NYSE:NRT)
Historical Stock Chart
From Mar 2024 to Apr 2024
North European Oil Royalty (NYSE:NRT)
Historical Stock Chart
From Apr 2023 to Apr 2024
