SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended October 31, 1995 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
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(Exact name of registrant as specified in its charter)
Delaware 22-2084119
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(State of organization) (IRS Employer Identification Number)
Suite 19A, 43 West Front Street, Red Bank, N.J. 07701
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: 908-741-4008
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Units of Beneficial New York Stock Exchange
Interest
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 if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
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reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of January 2, 1996, 8,314,752 units of beneficial interest of
the Registrant were outstanding, and the aggregate market value
of outstanding units of beneficial interest of the Registrant,
which may be voted, held by non-affiliates of the Registrant was
approximately $105,209,429 on such date. (The Trustees and the
Managing Director are the only persons deemed to be affiliates of
the Registrant.)
Documents Incorporated by Reference
-----------------------------------
Items 10, 11, 12 and 13 of Part III have been partially or wholly
omitted from this report and the information required to be
contained therein is incorporated by reference from the
Registrant's definitive proxy statement, dated January 11, 1996,
for the annual meeting to be held on February 13, 1996.
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PART I
Item 1. Business.
(a) General Development of Business.
--------------------------------
Registrant (the "Trust") is a trust which, on behalf of the
owners of beneficial interest in the Trust (called the
"certificate holders" or "unit owners"), holds overriding royalty
rights covering gas and oil production in certain concessions or
leases in the Federal Republic of Germany. The rights are held
under contracts with local German exploration and development
subsidiaries of Mobil Corp., Exxon Corp., and Royal Dutch Group.
Under these contracts, the Trust receives various percentage
royalties on the proceeds of the sales of certain products from
the areas involved. At the present time, royalties are received
for sales of natural gas, casinghead gas, crude oil, distillate
and sulfur. See Item 2 for descriptions of certain of these
contracts.
The royalty rights were received by the Trust from North
European Oil Company (the "Company") upon dissolution of the
Company in September, 1975. The Company was organized in 1957 as
the successor to North European Oil Corporation (the
"Corporation"). The Trust is administered by trustees (the
"Trustees") under an Agreement of Trust dated September 10, 1975
and amended May 13, 1976 and February 10, 1981 (the "Trust
Agreement").
Neither the Trust nor the Trustees on behalf of the Trust
conduct any active business activities or operations. The sole
permitted function of the Trustees is to monitor, verify,
collect, hold, and distribute the royalty payments made to the
Trust. Under the Trust Agreement, the Trustees make quarterly
distributions of the net funds received by the Trust on behalf of
the unit owners. Funds temporarily held by the Trust are
invested in interest bearing bank deposits, certificates of
deposit, U.S. Treasury Bills or other government obligations.
There has been no significant change in the principal
operation or purpose of the Trust during the past fiscal year.
(b) Financial Information about Industry Segments.
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The Trust conducts no active business operations, and analysis
by industry segments is therefore not applicable to the Trust.
To the extent that royalty income received by the Trust is
attributable to sales of different products or to sales from
different production areas, the information is set forth in Item
2 of this Report and the Exhibit described in that Item 2.
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(c) Narrative Description of Business.
----------------------------------
Under the Trust Agreement, the Trust conducts no active
business operations and is restricted to collection of income
from royalty rights and distribution to unit owners of the net
income after payment of administrative and related expenses.
The overriding royalty rights held by the Trust are derived
from contracts and agreements originally entered into by German
subsidiaries of the predecessor Corporation during the early
l930's. Some of these royalty rights are based on leases which
have expired. The leases remain in effect as long as there is
continued production or the lessor does not cancel the lease.
Individual lessors will normally not seek termination of the
rights originally granted because the leases provide for royalty
payments to the lessors if sales of oil or gas result from
discoveries made on the leased land. Additionally, termination
by individual lessors would result in the escheat of mineral
rights to the State.
The remainder of the Trust's royalty rights are based on
government granted concessions which remain in effect as long as
there are continued production activities and/or exploration
efforts by the operating companies. It is generally anticipated
that the operating companies will continue production where it
remains economically profitable for them to do so.
Royalties are paid to the Trust on sales from production
under these leases and concessions by the operating companies on
a regular monthly or quarterly basis pursuant to the royalty
agreements. These royalties are paid in Deutsche marks and are
converted into U.S. dollars. The Trust has experienced no
difficulties converting marks to dollars, although its financial
results are impacted by varying currency exchange rates.
As the holder of overriding royalty rights, the Trust has no
legal ability, whether by contract or operation of law, to compel
production. Moreover, if an operator should determine to
terminate production in any concession or lease area and to
surrender the concession or lease, the royalty rights for that
area would thereby be terminated. Under certain royalty
agreements, the operators are required to advise the Trust of any
intention to surrender lease or concession rights. In recent
years, no such notices have been received and the management of
the Trust does not know of any such intention. The Trust itself
is precluded from undertaking any production activities and only
if it could locate an alternate operator for the same areas would
there be any possibility of continued royalty payments for such
an area following any such termination. The likelihood of
locating such an alternate operator is small because the current
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operating companies would be unlikely to surrender their rights
for areas where continued economic return from production is
reasonably anticipated.
The exploration for and the production of gas and oil is a
speculative business. The Trust has no means of insuring
continued income from its royalty rights at either their present
levels or otherwise. In addition, fluctuations in prices and
supplies of gas and oil and what effect these fluctuations might
have on royalty income to the Trust and on reserves net to the
Trust cannot be accurately projected. The Trustees have no
information with which to make any projections beyond information
on economic conditions which is generally available to the public
and thus are unwilling to make any such projections.
While Germany has laws relating to environmental protection,
the Trustees have no detailed information concerning the present
or possible effect of such laws on operations in areas where the
Trust holds royalty rights on production and sale of product
from those areas.
Seasonal demand factors affect the income from royalty
rights insofar as they relate to energy demands and increases or
decreases in prices, but, in the average they are not material to
the regular annual income received under the royalty rights.
The Trust, either itself or in cooperation with holders of
parallel royalty rights, arranges for periodic audits of the
books and records of the operating companies to verify
compliance with the computation provisions of the applicable
agreements. From time to time, these examinations disclose
computational errors or errors from inappropriate application of
existing agreements and appropriate adjustments are made.
(d) Financial Information about Foreign and Domestic
Operations and Export Sales.
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The Trust does not engage in any active business operations,
and its sources of income are the overriding royalty rights
covering gas, sulfur and oil production in certain areas in
Germany and interest on the funds temporarily invested by the
Trustees. In Item 2 there is a schedule (by geographic area and
by operating company) showing the royalty income received by the
Trust during the fiscal year ended October 31, 1995.
(e) Executive Officers of the Trust.
--------------------------------
The affairs of the Trust are managed by not more than five
individual Trustees who receive compensation determined under the
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Trust Agreement. One of the Trustees is designated as Managing
Trustee and receives additional compensation in such capacity.
The Managing Trustee, John H. Van Kirk, is responsible for
managerial oversight, while day to day matters are handled by the
Managing Director, John R. Van Kirk. John H. Van Kirk, who is 71
years old, has been Managing Trustee since the Trust's inception
in 1975. John R. Van Kirk, who is 43 years old, has held the
position of Managing Director of the Trust since November 1990.
John R. Van Kirk is the son of John H. Van Kirk, the Managing
Trustee.
The Managing Trustee, through a personal holding company,
provides office space and services to the Trust. In addition to
the Managing Trustee and the Managing Director, the Trust has one
employee in the United States. It also retains a part-time
consultant in Germany on a fixed yearly basis plus associated
expenses. Employee relations or labor contracts are not directly
material to the business or income of the Trust. The Trustees
have no specific information concerning employee relations of the
operating companies, but they believe them to be good.
Item 2. Properties.
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The properties of 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 Oil
A.G. ("Mobil"), the German operating subsidiary of Mobil Corp. or
by Oldenburgische Erdol Gesellschaft ("OEG"). The Oldenburg
concession (1,398,000 acres), covering virtually the entire
former State of Oldenburg, is the major source of royalty income
for the Trust. Within this concession Mobil and BEB Erdgas und
Erdol GmbH ("BEB"), a joint venture of Exxon Corp. and the Royal
Dutch Group, carry out all exploration, drilling, production and
sales activities.
Under one series 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 of natural gas, casinghead gas, crude oil and condensate.
The Trust also receives from Mobil 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 by Mobil of sulfur at a selling
price above an agreed upon base price. This base price is
adjusted annually by an inflation index. When the average
selling price falls below the adjusted base price, no royalties
are payable. No payments were received under this sulfur royalty
during fiscal 1995.
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Under another series of rights covering the entire Oldenburg
concession and pursuant to an agreement with OEG (the "OEG
Agreement"), the Trust receives royalties at the rate of 0.6667%
on gross receipts from sales of natural gas, casinghead gas,
crude oil, condensate and sulfur (removed during the processing
of sour gas) less 50% of an escalating cost base. This cost base
is recomputed annually based on indexes reflecting changes in
certain prices within Germany. This system will be revised in
2002 unless the escalating cost base diverges significantly from
the actual production costs, in which case the system will be
revised in 1999. In either case, the revised system will provide
that 50% of field handling, treatment and transport costs, as
reported for state governmental royalty purposes, will be
deducted from gross sales receipts prior to the royalty
calculation.
The Trust also holds through Mobil a 2% royalty interest in
oil and gas sales from acreage in Bavaria, and a 0.2117% royalty
under the net interest of the Bayerische Mineral Industries A.G.
("BMI"), a subsidiary of Mobil, in concessions in Bavaria. The
net interest of BMI ranges from 16-1/2 to 100% of the sales,
depending on geographic region or area. Due to the low level of
royalty income under this agreement, reserves from this area in
Bavaria will not be included in reserve calculations for this
report year.
In addition to the areas of Oldenburg and Bavaria, the Trust
also holds overriding royalties on 21 leases in other areas of
northwest Germany ranging in size from 185 to 25,000 acres and
totalling 73,214 acres. The rates of overriding royalties vary
from 1.83% to 6.75%. At the present time all but one of these 21
leases are in the non-producing category. Due to the low level
of income and the intermittent gas production from the single
producing lease, reserves from this lease will not be included in
reserve calculations for this report year.
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The following is a schedule of royalty income for the fiscal
year ended October 31, 1995 by geographic area and operating
company:
By Geographic Area:
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Area Royalty Income
---- --------------
Western Oldenburg $ 10,382,980
Eastern Oldenburg $ 1,978,153
Non-Oldenburg Areas $ 116,655
By Operating Company:
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Company Royalty Income
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Mobil Oil A.G. $ 9,075,834
OEG $ 3,399,839
Bayerische Mineral Industries A.G. $ 2,115
Exhibit 99 to this Report is a report dated December 21,
1995 which summarizes certain production data and the estimated
net proved producing reserves as of October 1, 1995, based on the
limited information available, for the Oldenburg area in which
the Trust now holds overriding royalty rights. That report (the
"Davis Report") was prepared by Ralph E. Davis Associates, Inc.,
3555 Timmons Lane, Suite 1105, Houston, Texas 77027 ("Davis
Associates"). Davis Associates is an independent petroleum and
natural gas consulting organization specialized in analyzing
hydrocarbon reserves. In order to permit timely filing of this
Report, the information has been prepared for the 12-month
period ending September 30, 1995, which is a date prior to the
end of the fiscal year of the Trust. The use of this earlier
date is consistent with the periods covered in prior Annual
Reports.
In connection with the information in the Davis Report, note
should be taken of the limited nature of the information
available to the Trust. Pursuant to the arrangements under which
the Trust holds royalty rights and due to the fact that the Trust
is not considered an operating company within Germany, it has no
access to the operating companies' proprietary information
concerning producing field reservoir data. The Trustees have
been advised that publication of such information is not required
under applicable law in Germany and that the royalty rights do
not give rise to the right to require or compel production of
such information. Past efforts to obtain such information
voluntarily have not been successful. The information made
available to the Trust by the operating companies does not
include any of the following: reserve estimates, capitalized
costs, production cost estimates, revenue projections, producing
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field reservoir data (including pressure data, permeability,
porosity and thickness of producing zone) or other similar
information. The limited nature of the information available to
the Trust makes impossible the calculation of the following:
proved undeveloped future net recoverable oil and gas by
appropriate geographic areas, total gross and net productive
wells, availability of oil and gas from the present reserve,
contract supply for one year or acreage concentration.
The Trust has the authority to audit the operating
companies' sales and production from the royalty areas. The
Trust also has access to published materials in Germany from
W.E.G. (a German organization equivalent to the American
Petroleum Institute or the American Gas Association). Given the
limited nature of the information available, the statistical
information reflected in the Davis Report is based upon
extrapolations and projections. While these are deemed
appropriate and suitable by Davis Associates and by the Trustees
themselves, they may vary from statistical projections which
could be made if reservoir production information normally
available for domestic producing companies were published or made
available. In the opinion of the Trustees, the nature of the
information available makes it inappropriate to make projections
or estimates of proved or probable reserves of any category or
class other than the estimated net proved producing reserves
described in the Davis Report.
Table I of the Davis Report is comprised of a schedule of
estimated net proved producing reserves of the Trust's royalty
properties, computed as of October 1, 1995 and a five year
schedule of gas, sulfur and oil sales for the 12 months ended
September 30, 1995, 1994, 1993, 1992 and 1991 computed from
quarterly sales reports of operating companies received by the
Trust during such periods.
Item 3. Legal Proceedings.
------------------
Management of the Trust has been advised of certain claims
or proceedings relating to disputed ownership of units of
beneficial interest where replacement certificates had previously
been issued for allegedly lost predecessor corporate
certificates. While the Trust or its transfer agent may be named
in some of these proceedings, coverage under unlimited, open
penalty indemnity bonds previously issued is in effect for these
disputed units. For that reason and upon advice of counsel,
management of the Trust believes that these pending litigations
will not have any material effect on the operation of the Trust
or the funds available for distribution to unit owners.
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As previously reported, on November 20, 1986, the Escheator
for the State of Delaware commenced an action in the Delaware
Court of Chancery. The proceeding, brought under the escheat
laws of Delaware, sought issuance to the Escheator of
certificates for units of beneficial interest which are issuable
in exchange for certain unexchanged shares of predecessor
corporate entities, as well as unpaid dividends and distributions
attributable thereto and interest thereon. On October 25, 1988,
the Court entered an Order granting the Trust's motion to dismiss
the Escheator's complaint to the extent that it asserted a claim
to a present entitlement under Delaware law to such property.
The Court permitted the Escheator to seek modification of the
Court's prior orders concerning the Trust to make the property
subject to escheat after the statutory period of dormancy. On
February 15, 1990, the Delaware Escheator made such a motion, but
no further proceedings had since taken place pursuant to that
motion. In July, 1991, the Delaware General Assembly adopted
amendments to the Delaware escheat laws which, if controlling,
would have resulted in the period of dormancy, with respect to
the property in issue, having already expired. While other
provisions of the law might have provided a basis for the Court
to again conclude that the period of dormancy had not commenced,
there could be no assurance that such an interpretation would
have prevailed, and the property might have been immediately
subject to escheat. Even if the Court concluded that the period
of dormancy had not yet begun, the Escheator could seek
modification of the Court's prior orders. In either case, funds
otherwise available for distribution to unit owners would have
been required for payments to the Escheator in amounts which
would have resulted in reduced or no funds being available for
some period of time for regular distribution payments. In
response to suggestions from counsel for the Escheator and in
order to avoid the attendant costs and uncertainty of further
litigation, the Trustees discussed the feasibility of settling
the pending litigation. On December 7, 1995, as a result of
these settlement discussions, attorneys for the Trust and the
Delaware Attorney General representing the Escheator filed a
joint petition in the Delaware Chancery Court seeking approval
for a settlement of the litigation on negotiated terms. The
settlement requires approval of the Court after opportunity for
public hearing. The Court has appointed a Solicitor ad litem to
represent the interests of the unlocated shareholders and set a
hearing date for February 26, 1996. See Exhibit 99.2 contained
in this report for the complete text of the Notice of Joint
Petition for Approval of Settlement of Pending Litigation.
As of December 7, 1995 there were a total of 875,946
authorized but unissued units reflecting the unexchanged shares
of the Trust's predecessor corporations. If the proposed
settlement is approved, 760,560 units out of this total will be
issued to the Escheator in three installments. Within thirty
(30) days after the Court's order approving the settlement
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becomes final and non-appealable, one-half of these units
(380,280) will be issued to the Escheator. Subject to reductions
for intervening claims, an additional 50% of the remaining units
will be issued in the year 2000 and the remainder in the year
2005. These units reflect the unexchanged shares of the
predecessor corporations to the Trust which are registered in the
names of unknown owners, unlocated owners with a Delaware or non-
U.S. address of record and brokerage firms or other nominees
with insufficient records to establish beneficial ownership.
As these units are issued, they will be entitled to regular
quarterly payment of distributions by the Trust.
Under the terms of the settlement, the Trust would not be
required to make payments of arrearages of Company dividends or
Trust distributions to the Escheator with respect to the units
issued. Claims received prior to the year 2005 from previously
unlocated owners would be paid jointly by the Escheator and the
Trust under a formula provided in the settlement, with claimant
owners entitled to receive both units and arrears payments.
Following the initial issuance and continuing until the second
issuance in the year 2000, the Trust and the Escheator would each
be responsible for 50% of any claim submitted. Following the
second issuance and continuing until the final issuance in the
year 2005, the Trust would be responsible for 25% of any claim
submitted and the Escheator would be responsible for 75%. At
all stages of this settlement following the initial issuance and
continuing until the final issuance in 2005, the Escheator's
liability will be limited to the total value of units and
distributions it has received. Any claims in excess of this
amount will be paid by the Trust. After the final issuance in
the year 2005, no further payments of arrearages of Company
dividends or Trust distributions would be required to be paid to
shareholders subject to this settlement and the contingent
liability for such possibility, described in Note 3 to Financial
Statements contained herein, would no longer be applicable.
To make it possible to address within this settlement all
unlocated shareholders, the Trust is seeking Court approval to
permit the Trust to enter into similar settlement procedures with
other states covering the authorized but unissued units that were
not subject to the litigation (115,386 units as of December 7,
1995). See the Current Reports on Form 8-K filed on November 26,
1986, November 1, 1988 and December 11, 1995 (including Exhibits
describing petition terms) and Note 3 to Financial Statements
contained herein.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
Inapplicable.
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PART II
Item 5. Market for the Registrant Trust's Units of Beneficial
Interest and Related Certificate Holder Matters.
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The Trust's units of beneficial interest ("Units") are
traded on the New York Stock Exchange (the "Exchange") under the
symbol NET. In addition, the Midwest Stock Exchange and the
Boston Exchange have granted unlisted trading privileges in the
Trust Units.
Under the Trust Agreement, the Trustees distribute to unit
owners, on a quarterly basis, the net royalty income after
deducting expenses.
The following table presents the high and low closing sales
prices for the quarterly periods ended in fiscal 1995 and 1994 as
reported by the Exchange as well as the cash distributions paid
to unit owners by quarter for the past two fiscal years.
Fiscal Year 1995
Low High Distributions
Quarter Ended Sales Sales Per Unit
- ---------------- -------- -------- -------------
January 31, 1995 12 1/2 14 7/8 .31
April 30, 1995 12 3/8 14 5/8 .42
July 31, 1995 13 14 3/4 .35
October 31, 1995 12 5/8 13 5/8 .35
Fiscal Year 1994
Low High Distributions
Quarter Ended Sales Sales Per Unit
- ---------------- -------- -------- -------------
January 31, 1994 15 17 1/4 .27
April 30, 1994 15 1/4 16 7/8 .36
July 31, 1994 15 1/2 16 7/8 .16
October 31, 1994 12 7/8 16 .22
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The quarterly distributions to unit owners represent their
undivided interest in royalty payments from sales of gas, oil and
sulfur during the previous quarter. Each unit owner is entitled
to recover a portion of their investment in these royalty rights
through a cost depletion allowance. The percentage of cost
depletion allowance recommended by the Trust's independent
petroleum and natural gas consultants for calendar 1995 is
9.343%. Specific details relative to your interest in the
Trust's income and expenses are included on page 3 of the 1995
Annual Report under "Note to Unit Owners" and have been sent in a
separate letter to all unit owners registered at any time during
1995.
The Trust maintains no reserve to cover any payments which
might be required if the holders of shares of stock of the
predecessor Corporation or Company, who have not yet exchanged
those shares for Units, should surrender them for exchange. See
Item 7 and Note 3 to the Financial Statements in Item 8 of this
Report.
As of January 2, 1996, there were 2,124 Unit owners of
record, which figure does not include the owners of unexchanged
shares of stock in the Corporation or the Company (a total of 613
record holders). The owners of shares of stock in the
Corporation are entitled under Section 3.10 of the Trust
Agreement to receive Units upon presentation of those shares or
other evidences of ownership thereof. The owners of unexchanged
shares of stock in the Company, for whom a nominee of the Bank of
New York acts as agent under a shareholder agency agreement, are
entitled to receive Units upon presentation of those shares or
other evidences of ownership thereof.
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ITEM 6. Selected Financial Data
-----------------------
North European Oil Royalty Trust
Selected Financial Data (Cash Basis)
For Five Years Ended October 31, 1995
German gas, oil
and sulfur
royalties
received $12,477,788 $ 9,476,252 $10,718,289 $13,458,150 $13,026,234
=========== =========== =========== =========== ===========
Net Income on a
cash basis $11,941,675 $ 8,777,422 $10,248,982 $12,870,740 $12,517,318
=========== =========== =========== =========== ===========
Net Income per unit
on a cash
basis (a) $1.43 $1.06 $1.24 $1.55 $1.51
===== ===== ===== ===== =====
Units of beneficial
interest
outstanding at end
of year (a) 8,313,984 8,312,898 8,298,216 8,294,538 8,291,568
Cash distributions
paid or to be
paid:
Dividends and
distributions
per unit paid
to former
unlocated
shareholders $ .00 $ .05 $ .01 $ .01 $ .01
Distributions per
unit paid or to
be paid to
certificate
holders 1.43 1.01 1.22 1.55 1.49
----- ----- ----- ----- -----
$1.43 $1.06 $1.23 $1.56 $1.50
===== ===== ===== ===== =====
Total assets at
end of year $ 2,951,228 $ 1,848,274 $ 2,733,049 $3,000,624 $ 3,743,724
=========== =========== =========== ========== ===========
(a) Net income per unit on a cash basis was calculated based on the number of
units of beneficial interest outstanding at the end of the year.
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Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
-------------------------------------------------
General
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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. The
Trust is not involved in any business or extractive operations of
any kind in the areas over which it holds royalty rights and is
precluded from any such involvement 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 Trust does not conduct any active business operations
and has only limited need of funds for its own administrative
services. These funds are used to pay Trustees' fees (computed
under the Trust Agreement and based upon a percentage of
royalties received), the remuneration fixed by the Trustees for
the Managing Trustee and the Managing Director, professional fees
paid to consultants, legal advisors and auditors, transfer agent
fees, and secretarial and other general office expenses.
Another requirement for funds by the Trust relates to the
occasional necessity of making lump sum payments of arrearages of
dividends of a corporate predecessor and distributions previously
declared by the Trust. Such payments are required when owners
of shares of stock in predecessor corporate entities, who have
not previously presented their shares for conversion to units of
beneficial interest in the Trust, make such a presentation or
furnish properly documented affidavits of loss and obtain an
unlimited, open penalty bond. As indicated in Note 3 to the
Financial Statements, if presentation were made with respect to
all predecessor corporate shares which have not been previously
presented, a total of $26,368,222 would be required for arrearage
payments. Depending on the number of such shares presented or
claims filed, payment of such arrearages would likely require a
reduction or deferral of distributions which otherwise would be
made on presently outstanding units.
The Trust has no means of assuring continued income from
overriding royalty rights at their present level or otherwise.
Economic and political factors which are not foreseeable may have
an impact on Trust income. The effect of changing economic
conditions on the demand for energy throughout the world and
future prices of oil and gas cannot be accurately projected.
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The relatively small amounts required for administrative
expenses of the Trust limit the possible effect of inflation on
its financial prospects. Continued price inflation would be
reflected in sales prices, which, with sales volumes, form the
basis on which the royalties paid to the Trust are computed. In
addition, fluctuations in the mark/dollar exchange rate have an
impact on domestic energy prices within Germany and on the
amount of dollars received upon conversion. The impact of
inflation or deflation on energy prices in Germany is delayed by
the use in certain long-term gas sales contracts of a deferred
"trailing average" related to light fuel oil prices.
Fiscal 1995 versus Fiscal 1994
- ------------------------------
For fiscal 1995 the Trust's royalty income of $12,477,788
was 31.6% higher than the previous year. A combination of
increased sales from the higher royalty area of western Oldenburg
and a strong Deutsche mark yielded the increased royalties. In
contrast to the prior year, when the partial shutdown of the
Grossenkneten desulfurization plant significantly affected the
amount of royalties received in the third and fourth quarters, no
such unusual or extended interruption of production occurred
during fiscal 1995. Since last year's partial shutdown affected
production of saleable gas from the higher royalty western
portion of Oldenburg to a greater degree, in 1995 the increase in
production and sales was slanted toward gas from the west. Total
gas sales of 76.8 billion cubic feet from the higher royalty
western area increased by 15.45% while gas sales of 183.8 billion
cubic feet for all of Oldenburg only increased by 2.4%. In
addition, the continued strength of the Deutsche mark throughout
the year contributed to the amount of dollars received by the
Trust upon the transfer of funds from Germany. For the year, the
average value of the Deutsche mark increased from 60.3 cents to
69.2 cents, an improvement of 14.6%. While gas prices, which
averaged 1.46 Pfennigs per Kwh, declined somewhat from the prior
year (1.65% and 3.9% for western and overall Oldenburg
respectively), the negative effect of that decline was easily
offset by the increases in sales and exchange rates.
There have been no payments under the Mobil sulfur royalty,
since the most recent sulfur price of DM 91 per metric ton is
well below the threshold for the resumption of royalty payments.
The world sulfur situation looks to deteriorate further as a
result of world wide over supply and continued increases in the
removal of sulfur from petroleum products for environmental
compliance.
Trust expenses of $612,682 showed a decrease of nearly 18%,
reflecting a reduction in legal expenses as well as the absence
of audit expenses in the off year of the biennial audit cycle of
the operating companies in Germany. The increase in interest
-17-
income to $76,569 reflects both the increase of funds available
for investment as well as somewhat higher rates available through
the exclusive use of Treasury bills for short term investments.
During fiscal 1995 and 1994 respectively, an additional
1,086 and 14,682 Trust units were issued and $31,701 and $412,306
were paid to former unlocated shareholders of North European Oil
Corporation and North European Oil Company who presented shares
for exchange or filed properly documented affidavits of loss and
obtained an unlimited, open penalty indemnity bond.
Fiscal 1994 versus Fiscal 1993
- ------------------------------
For fiscal 1994 the Trust's total royalty income of
$9,476,252 was 11.6% lowerthan the previous year. There are four
primary factors that affect the level of royalties: the amount of
gas sales, the gas prices, the geographic source of sales and the
exchange rates. This year, as in last year, a fifth factor of
business interruption was added. The year commenced on a strong
note with both the first and second quarters showing increases in
all factors except for exchange rates when compared to the prior
year's quarter. During the third and fourth quarters all the
factors affecting royalties reversed themselves. Where
previously the amount of gas sales, gas prices and geographic
source of sales showed increases, they now showed declines. The
previous declines in exchange rates now showed increases. The
basis for this reversal was the fifth factor of business
interruption, which involved an extended shutdown at the
Grossenkneten desulfurization plant from April 25 to July 25,
1994. During this shutdown, production was reduced to
between one third and two thirds of normal levels. The rationale
behind the shutdown was three fold: conduct normal annual
maintenance, install additional tail gas clean up units to
address lingering environmental concerns and overhaul and update
control system for the entire plant. The effects of this
shutdown on the Trust's royalty stream and subsequent
distributions were significant. The first six months of fiscal
1994 showed distributions of 63 cents per unit compared to 57
cents per unit for fiscal 1993, an increase of 10.5%. The final
six months of fiscal 1994 showed distributions of 38 cents
per unit compared to 65 cents per unit for fiscal 1993, a
decrease of 41.5%. In average for the year the four factors
affecting royalties showed decreases or were unchanged.
Under the higher royalty agreement with Mobil covering sales of
gas from western Oldenburg, sales declined by 11.85%, prices and
exchange rates were unchanged. Because the combined royalty rate
in effect on these sales is seven times greater than the royalty
in effect on sales from eastern Oldenburg, any decline in sales
from the west has an exaggerated effect on Trust royalties.
Under the lower royalty agreement covering the entire Oldenburg
-18-
area, sales declined by 3.6%, gas prices by 3.1% and the exchange
rate by 1.5%.
Despite the improvement in sulfur prices from $24.00 in the
first quarter to $63.00 per metric ton in the fourth quarter, the
threshold level for the resumption of royalties under the
agreement with Mobil has not been reached. Until the
overabundance of sulfur on the world market is reduced, the Trust
will receive only minor amounts of royalties from sulfur.
Trust expenses showed an increase of nearly 45% reflecting
increased legal expenses relating to escheat matters. Interest
income increased slightly, despite the reduced amount of funds
available, because of the gradually increasing interest rates in
effect.
During fiscal 1994 and 1993, respectively, an additional
14,682 and 3,687 Trust Units were issued and $412,306 and $97,121
were paid to former unlocated shareholders of North European Oil
Corporation and North European Oil Company who presented shares
for exchange or filed properly documented affidavits of loss and
obtained an unlimited, open penalty indemnity bond.
-19-
Item 8. Financial Statements and Supplementary Data
--------------------------------------------
NORTH EUROPEAN OIL ROYALTY TRUST
--------------------------------
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
------------------------------------------
Page Number
-----------
Report of Independent Public Accountants F-1
Financial Statements:
Statements of Assets, Liabilities and
Trust Corpus as of October 31, 1995 and 1994 F-2
Statements of Income and Expenses on a Cash Basis
for the Years Ended October 31, 1995, 1994 and 1993 F-3
Statements of Undistributed Earnings
for the Years Ended October 31, 1995, 1994 and 1993 F-4
Statements of Changes in Cash and Cash Equivalents
for the Years Ended October 31, 1995, 1994 and 1993 F-5
Notes to Financial Statements F-7 - F-10
Schedules are omitted because they are not applicable or not
required or because the required information is included in the
financial statements or notes thereto.
-20-
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To North European Oil Royalty Trust:
We have audited the accompanying statements of assets,
liabilities and trust corpus of North European Oil Royalty Trust
as of October 31, 1995 and 1994 and the related statements of
income and expenses on a cash basis, undistributed earnings and
changes in cash and cash equivalents for each of the three years
in the period ended October 31, 1995. 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 generally accepted
accounting standards. 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.
The accounts of the Trust are maintained on the cash basis of
accounting under which income is not recorded until collected
instead of when earned, and expenses are recorded when paid
instead of when incurred. Thus, the accompanying financial
statements are not intended to present financial position and
results of operations in conformity with generally accepted
accounting principles which requires the use of the accrual basis
of accounting (see Note 1).
In our opinion, the financial statements referred to above
present fairly, in all material respects, the assets, liabilities
and trust corpus of North European Oil Royalty Trust as of
October 31, 1995 and 1994, and its income and expenses,
undistributed earnings and changes in cash and cash equivalents
for each of the three years in the period ended October 31, 1995,
all on the cash basis of accounting.
As discussed in Note 3, the Trust has a contingent liability
relating to unclaimed units and distributions. No reserves are
established or reflected in the fanancial statements for the
possibility that funds would be required to satisfy such claims.
/s/ Arthur Andersen LLP
Roseland, New Jersey
November 8, 1995 F-1
-21-
NORTH EUROPEAN OIL ROYALTY TRUST
--------------------------------
STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS (NOTE 1)
-----------------------------------------------------------
OCTOBER 31, 1995 AND 1994
-------------------------
ASSETS 1995 1994
------ ------------ ------------
Current Assets --
Cash and cash equivalents (Note 1) $2,951,227 $1,848,273
Producing gas and oil
royalty rights (Note 1) 1 1
------------ ------------
$2,951,228 $1,848,274
============ ============
LIABILITIES AND TRUST CORPUS
----------------------------
Current liabilities --
Cash distributions payable
to unit owners, paid
November 1995 and 1994 $2,909,894 $1.828,838
Contingent liability (Note 3)
Trust corpus (Notes 1 and 2) 1 1
Undistributed earnings (Note 1) 41,333 19,435
------------ ------------
$2,951,228 $1,848,274
============ ============
The accompanying notes to financial statements
are an integral part of these statements.
F-2
-22-
NORTH EUROPEAN OIL ROYALTY TRUST
--------------------------------
STATEMENTS OF INCOME AND EXPENSES ON A CASH BASIS (NOTE 1)
----------------------------------------------------------
FOR THE YEARS ENDED OCTOBER 31, 1995, 1994 AND 1993
---------------------------------------------------
1995 1994 1993
------------ ------------ ------------
German gas, oil and
sulfur royalties
received $12,477,788 $ 9,476,252 $10,718,289
Interest income 76,569 45,798 44,768
Trust expenses ( 612,682) ( 744,628) ( 514,075)
------------ ------------ ------------
Net income on
a cash basis $11,941,675 $ 8,777,422 $10,248,982
============ ============ ============
Net income per unit
on a cash basis $1.43 $1.06 $1.24
======= ======= =======
Cash distributions paid
or to be paid:
Dividends and
distributions per
unit paid or to be
paid to former unlocated
shareholders (Note 3) $ .00 $ .05 $ .01
Distributions per unit
paid or to be paid to
unit owners (Note 4) 1.43 1.01 1.22
------- ------- -------
$1.43 $1.06 $1.23
======= ======= =======
The accompanying notes to financial statements
are an integral part of these statements.
F-3
-23-
NORTH EUROPEAN OIL ROYALTY TRUST
--------------------------------
STATEMENTS OF UNDISTRIBUTED EARNINGS (NOTE 1)
---------------------------------------------
FOR THE YEARS ENDED OCTOBER 31, 1995, 1994 AND 1993
---------------------------------------------------
1995 1994 1993
------------ ------------ ------------
Balance,
beginning of year $ 19,435 $ 43,897 $ 14,589
Net income on
a cash basis 11,941,675 8,777,422 10,248,982
------------ ------------ ------------
11,961,110 8,821,319 10,263,571
------------ ------------ ------------
Less:
Dividends and
distributions paid
to former unlocated
shareholders (Note 3) 30,781 412,306 97,847
Current year
distributions paid
or to be paid to unit
owners (Note 4) 11,888,996 8,389,578 10,121,827
------------ ------------ ------------
11,919,777 8,801,884 10,219,674
------------ ------------ ------------
Balance, end of year $ 41,333 $ 19,435 $ 43,897
============ ============ ============
The accompanying notes to financial statements
are an integral part of these statements.
F-4
-24-
NORTH EUROPEAN OIL ROYALTY TRUST
--------------------------------
STATEMENTS OF CHANGES IN CASH AND CASH EQUIVALENTS (NOTE 1)
-----------------------------------------------------------
FOR THE YEARS ENDED OCTOBER 31, 1995, 1994 AND 1993
---------------------------------------------------
1995 1994 1993
------------ ------------ ------------
Sources of cash and
cash equivalents:
German gas, oil
and sulfur
royalties received $12,477,788 $ 9,476,252 $10,718,289
Interest income 76,569 45,798 44,768
------------ ------------ ------------
12,554,357 9,522,050 10,763,057
Uses of cash and
cash equivalents:
Payment of Trust
expenses 612,682 744,628 514,075
Distributions and
dividends paid
(Note 3) 10,838,721 9,662,197 10,516,557
------------ ------------ ------------
11,451,403 10,406,825 11,030,632
------------ ------------ ------------
Net increase (decrease)
in cash and cash
equivalents
during the year 1,102,954 ( 884,775) ( 267,575)
Cash and cash
equivalents,
beginning of year 1,848,273 2,733,048 3,000,623
------------ ------------ ------------
Cash and cash
equivalents,
end of year $ 2,951,227 $ 1,848,273 $ 2,733,048
============ ============ ============
The accompanying notes to financial statements
are an integral part of these statements.
F-5
-25-
NORTH EUROPEAN OIL ROYALTY TRUST
--------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
OCTOBER 31, 1995, 1994 AND 1993
-------------------------------
(1) Summary of significant
accounting policies:
----------------------
Basis of accounting -
---------------------
The accounts of North European Oil Royalty Trust (the
"Trust") are maintained on a cash basis except for
distributions to be paid to unit owners (those
distributions approved by the Trustees for the Trust). In
the opinion of the Trustees, the use of the cash basis
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 any 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 and
state income taxes under a private letter ruling issued by
the Internal Revenue Service.
Cash and cash equivalents-
--------------------------
Included in cash and cash equivalents are amounts deposited
in bank accounts and amounts invested in certificates of
deposit and U. S. Treasury bills with maturities of three
months or less.
F-6
-26-
Net income per unit on the cash basis-
--------------------------------------
Net income per unit on the cash basis is based upon the
number of units outstanding at the end of the period (see
Note 3). As of October 31, 1995, 1994 and 1993, there were
8,313,984, 8,312,898 and 8,298,216 units of beneficial
interest outstanding, respectively.
(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.
(3) Contingent liability:
---------------------
The Trust serves as fiduciary for certain unlocated or
unknown shareholders of North European Oil Corporation (the
"Corporation") and of North European Oil Company,
corporate predecessors of the Trust. From the liquidation
of the Company to October 31, 1994, 717,836 Trust units
were issued in exchange for Corporate or Company shares and
dividends of $352,959 and distributions of $4,130,993 were
paid to former unlocated Corporation and Company
shareholders. For the year ended October 31, 1995, 1,086
units were issued in exchanges and dividends of $271 and
distributions of $31,430 were paid to former unlocated
Corporation and Company shareholders.
As of October 31, 1995, 876,606 units remain that could be
issued to unlocated or unknown Corporation and Company
shareholders and $487,894 in dividends and $25,880,328 in
distributions would be payable if all such shares were
exchanged. The amount of attributable distributions will
increase as further distributions of the Trust are made and
it is possible that claims by such unlocated shareholders
would require substantial payments to a level where reduced
or no funds would be available for some period of time for
regular distribution payments. On the basis of their
experience with such claims, the Trustees believe that it
is unlikely that payments for such claimants would be
required in substantial amounts in any one period of time.
On November 20, 1986, the Escheator for the State of Delaware
commenced an action in the Delaware Court of Chancery
seeking issuance, under Delaware escheat statutes, of
F-7
-27-
certificates for units of beneficial interest which are
issuable in exchange for certain unexchanged Corporate or
Company shares as well as unpaid dividends and
distributions. Following partial resolution of the suit in
1988, discussions for possible settlement of the proceeding
were suggested by representatives for the Escheator. On
December 7, 1995, as a result of these discussions,
attorneys for the Trust and the Delaware Attorney General
representing the Escheator filed a joint petition in the
Delaware Chancery Court seeking approval for a settlement
of the litigation on negotiated terms. The settlement
requires approval of the Court after opportunity for public
hearing. The Court has appointed a Solicitor ad litem to
represent the interests of the unlocated shareholders.
As of December 7, 1995 there were a total of 875,946
authorized but unissued units reflecting the unexchanged
shares of the Trust's predecessor corporations. If the
proposed settlement is approved, 760,560 units will be
issued to the Escheator in three installments as follows:
within thirty (30) days after the Court's order approving
the settlement becomes final and non-appealable, one-half
of these units (380,280) will be issued to the Escheator;
subject to reductions for subsequent exchanges, an
additional 50% of the remaining units will be issued in the
year 2000; and the remainder in the year 2005. As these
units are issued and become outstanding, they will be
entitled to receive the ordinary distributions of the
Trust.
Under the terms of the settlement, the Trust would not be
required to make payments of arrearages of Company
dividends or Trust distributions to the Escheator with
respect to the units issued. Claims for the issuance of
units and the payment of prior dividends and distributions
received before the year 2005 from previously unlocated
shareholders would be paid jointly by the Escheator and the
Trust under a formula provided in the settlement, with
claimant owners entitled to receive both units and arrears
payments. Until the final issuance of units in 2005, the
Escheator's liability will be limited to the total value of
units and distributions it has received. Any claims in
excess of this amount will be paid by the Trust. After the
final issuance of units in the year 2005, no further
payments of arrearages of Company dividends or Trust
distributions would be required to be paid to shareholders
subject to this settlement and the contingent liability for
such possibility described above would no longer be
applicable.
F-8
-28-
This settlement also permits the Trust to seek to apply the
same or similar settlement procedures to the authorized but
unissued units that were not subject to the litigation
(115,386 units as of December 7, 1995). Any additional
issuances that occur as in the course of subsequent
settlements with respect to these units would involve some
additional dilution.
F-9
-29-
(4) Quarterly results (unaudited):
------------------------------
The table below summarizes the quarterly results and
distributions of the Trust for the years ended October 31,
1995 and 1994.
1995 Quarter
---------------------------------------
1st 2nd 3rd 4th Year
---------- ---------- ---------- ---------- -------------
Royalties
received $2,760,129 $3,633,648 $3,056,999 $3,027,012 $12,477,788
Net income on
a cash basis 2,590,726 3,476,434 2,952,057 2,922,458 11,941,675
Net income
per unit on
a cash basis .31 .42 .35 .35 1.43
Current year cash
distributions
paid or
to be paid 2,576,998 3,491,943 2,910,161 2,909,894 11,888,996
Current year cash
distributions
per unit .31 .42 .35 .35 1.43
1994 Quarter
---------------------------------------
1st 2nd 3rd 4th Year
---------- ---------- ---------- ---------- -------------
Royalties
received $2,579,218 $3,114,996 $1,843,579 $1,938,459 $ 9,476,252
Net income on
a cash basis 2,380,956 2,963,754 1,661,147 1,771,565 8,777,422
Net income
per unit on
a cash basis .29 .36 .20 .21 1.06
Current year cash
distributions
paid or
to be paid 2,241,709 2,988,967 1,330,064 1,828,838 8,389,578
Current year cash
distributions
per unit .27 .36 .16 .22 1.01
F-10
-30-
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
------------------------------------------------
Inapplicable.
-31-
PART III
Item 10. Directors and Executive Officers of the Registrant.
---------------------------------------------------
The identity, business experience, relationships, and other
information about the Trustees as set forth under the caption
"Election of Trustees" in Registrant's definitive Proxy
Statement, dated January 11, 1996, as filed with the Commission,
are incorporated herein by reference in accordance with
Instruction G(3) to Form 10-K. See "Executive Officers of the
Trust" under Item 1 for information concerning the executive
officers of the Trust.
Item 11. Executive Compensation.
-----------------------
The information about remuneration of the Trustees and
Management as set forth under the caption "Management
Compensation" in Registrant's definitive Proxy Statement, dated
January 11, 1996, as filed with the Commission, is incorporated
herein by reference in accordance with Instruction G(3) to Form
10-K.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
---------------------------------------------------
The information about security ownership of certain
beneficial owners and Management as set forth in the introduction
to and under the caption "Election of Trustees" in Registrant's
definitive Proxy Statement dated January 11, 1996, as filed with
the Commission, is incorporated herein by reference in accordance
with Instruction G(3) to Form 10-K.
Item 13. Certain Relationships and Related Transactions.
-----------------------------------------------
The information about certain relationships and related
transactions as set forth under the captions "Election of
Trustees" and "Management Compensation" in Registrant's
definitive Proxy Statement, dated January 11, 1996 as filed with
the Commission, is incorporated herein by reference in accordance
with Instruction G(3) to Form 10-K.
-32-
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.
----------------------------------------------------
(a) The following is a list of the documents filed as part
of this report:
1. Financial Statements
Index to Financial Statements and Schedule for the
Years Ended October 31, 1995, 1994 and 1993
Report of Independent Public Accountants
Statements of Assets, Liabilities and Trust Corpus as
of October 31, 1995 and 1994
Statements of Income and Expenses on a Cash Basis for
the Years Ended October 31, 1995, 1994 and 1993
Statements of Undistributed Earnings for the Years
Ended October 31, 1995, 1994 and 1993
Statements of Changes in Cash and Cash Equivalents
for the Years Ended October 31, 1995, 1994 and 1993
Notes to Financial Statements
2. Exhibits
The Exhibit Index following the signature page lists
all exhibits filed with this report or incorporated
by reference.
(b) No Current Report on Form 8-K was filed during the
last quarter of the period covered by this Report but
one was filed on December 11, 1995 to reflect
information concerning the joint petition to settle
pending litigation brought by Delaware State Escheator.
-33-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Trust has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
NORTH EUROPEAN OIL ROYALTY TRUST
Dated: January 11, 1996 By: /s/ John H. Van Kirk
-------------------------------
John H. Van Kirk,
Managing Trustee
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
Dated: January 11, 1996 /s/ John H. Van Kirk
-------------------------------
John H. Van Kirk, Trustee
Dated: January 11, 1996 /s/ Robert P. Adelman
-------------------------------
Robert P. Adelman, Trustee
Dated: January 11, 1996 /s/ Robert J. Castle
-------------------------------
Robert J. Castle, Trustee
Dated: January 11, 1996 /s/ Willard B. Taylor
-------------------------------
Willard B. Taylor, Trustee
-34-
Exhibit Index
-------------
Exhibit Page
- ------- ----
(3) Trust Agreement, dated September 10, 1975,
amended May 13, 1976, and February 10, 1981,
(incorporated by reference to Exhibit 4(i) to
Form 10-Q for the quarter ended April 30, 1981
(File No. 0-8378)).
(10.1) Agreement with OEG, dated April 2, 1979,
exhibit to Current Report on Form 8-K,
filed May 11, 1979 (incorporated by
reference as Exhibit 1 to Current Report
on Form 8-K, filed May 11, 1979
(File No. 0-8378)).
(10.2) Agreement with Mobil Oil, A.G. concerning
sulfur royalty payment, dated March 30,
1979, (incorporated by reference to Exhibit 3
to Current Report on Form 8-K, filed
May 11, 1979 (File No. 0-8378)).
(22) There are no parents and no subsidiaries
of the Trust.
(99.1) Report and Production Summary Information 35
for Twelve Months Ended September 30,
1995, by Ralph E. Davis Associates, Inc.
(99.2) Notice to Unit Owners of hearing date and terms 45
of the Joint Petition for Approval of Settlement
of Pending Litigation on Form 8-K, filed
December 11, 1995.