Exhibit 99.1 -35-
NORTH EUROPEAN OIL ROYALTY TRUST
ESTIMATE OF
PROVED PRODUCING RESERVES
IN THE NORTHWEST BASIN OF THE
FEDERAL REPUBLIC OF GERMANY
AS OF
SEPTEMBER 30, 1995
RALPH E. DAVIS ASSOCIATES, INC.
HOUSTON, TEXAS DECEMBER, 1995
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T A B L E O F C O N T E N T S
Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Description of Holdings. . . . . . . . . . . . . . . . . . . . .2
Limitations of Available Data. . . . . . . . . . . . . . . . . .3
Oldenburg Area - Sales and Reserves. . . . . . . . . . . . . . .4
Net Reserves . . . . . . . . . . . . . . . . . . . . . . . . . .5
Table 1 . . . . .Reserve Summary and Five Year
Net Sales History . . . . . . . . . . . . . . .7
Certificate of Qualification . . . . . . . . . . . . . . . . . .8
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Ralph E. Davis Associates, Inc.
Consultants - Petroleum and Natural Gas
3555 Timmons Lane - Suite 1105
Houston, Texas 77027
(713) 622-8955
December 21, 1995
The Trustees of
North European Oil Royalty Trust
P. O. Box 456
Red Bank, New Jersey 07701
Gentlemen:
In accordance with your request, we have prepared an
estimate of remaining proved producing reserves attributable to
the overriding royalty interest of North European Oil Royalty
Trust ("Trust" or "NEORT") in the Northwest German Basin of the
Federal Republic of Germany. The proved producing reserves are
as of October 1, 1995 and the reported sales are for the twelve
month period ending September 30, 1995. The use of the period
ending September 30, 1995 is consistent with prior years and
allows the timely calculation of the royalty reserves and the
cost depletion percentage.
In annual reserve reports prepared for the Trust prior to
1992, reserve estimates were presented for the Trust's interests
in fields located in the Alpine Foreland Area of Bavaria and
other non-Oldenburg areas. Reports from 1992 forward omit such
an estimate. The Trust still receives royalty payments from
these interests, but the annual royalties are less than two (2)
percent of the total royalties received by the Trust and the
expenses associated with the computations necessary to determine
the reserve estimates are not warranted by the royalties
received. We will continue to monitor the quarterly statements
and if increases are noted that could add reserves to the Trust,
we will resume estimating future reserves.
The Trust normally receives from Mobil Oil A.G. ("Mobil"),
the German subsidiary of Mobil Corp., a 2% royalty on gross
receipts from sales of sulfur obtained as a by-product of sour
gas produced from the western portion of Oldenburg. This
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North European Oil Royalty Trust December 21, 1995
Page 2
agreement is subject to an escalation clause which provides that
if Mobil's selling price is below the escalated base price,
payment of royalties is deferred until such time as the selling
price again exceeds the escalated base price. Throughout fiscal
1995, Mobil's selling price was below the escalated base price.
We will continue to monitor this situation, but until the point
that Mobil's selling price again exceeds the escalated base
price, reserves subject to this royalty will not be included in
overall reserve calculations.
DESCRIPTION OF HOLDINGS
-----------------------
The Trust holds various overriding royalty rights on sales
of gas, sulfur and oil from certain concessions and leases in the
Federal Republic of Germany. 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. Although
the Trust holds overriding royalty rights on other areas outside
the Oldenburg concession, the reserve calculations for this year
do not include reserves from these areas due to the low level of
royalty income and intermittent production.
1. The Oldenburg concession is held by Oldenburgische Erdol
Gesellschaft ("OEG"). Within this concession Mobil and
BEB Erdgas und Erdol GmbH ("BEB"), a joint venture of
Exxon Corp. and Royal Dutch Group, carry out all
exploration, drilling, production and sales activities.
(a) 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 payment 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, which base
price is adjusted by an inflation index. Where the
average selling price falls below the adjusted base
price, no royalties are payable.
(b) Under another series of rights covering the entire
Oldenburg concession and pursuant to an agreement with
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North European Oil Royalty Trust December 21, 1995
Page 3
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 provides 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.
LIMITATIONS OF AVAILABLE DATA
-----------------------------
The reserves considered in this report are defined as proved
producing reserves. Proved producing reserves are limited to
those quantities which can be expected to be recoverable
commercially from known reservoirs at current prices and costs,
under existing regulatory practices and with existing
conventional equipment and operating methods. Proved producing
reserves do not include either proved developed non-producing
reserves or any class of probable reserves.
The reserve estimates were prepared using engineering
methods generally accepted by the petroleum industry. The
reliability of any reserve estimate is a function of the quality
of available information and of engineering interpretation and
judgment.
The Trust, as an overriding royalty interest owner, is not
privileged to receive proprietary data from the various operators
on producing wells. Data, such as logs, core analysis, reservoir
tests, pressure tests, gas analyses, geologic maps, and
individual well production histories which are used in volumetric
and material balance type reserve estimates, are not available to
the Trust.
The Trust receives various monthly and quarterly statements
that report production, sales and revenue data from the
operators. This information, plus published information received
from W.E.G. (a German organization comparable to the American
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North European Oil Royalty Trust December 21, 1995
Page 4
Petroleum Institute or the American Gas Association) has been
used to prepare this annual report. We believe the reserve
estimates prepared using this data represent realistic values;
however, due to the limitation of data, these estimated values do
not have the same degree of accuracy as an estimate of reserves
prepared using all pertinent data. The lack of data is somewhat
compensated for by our experience in the evaluation of reserves
using similar data.
The data in the reports received by the Trust is in metric
tons and cubic meters. The following Metric to English Unit
conversion factors were used:
Oil:7.23 barrels per metric ton
Gas:37.25 cubic feet per cubic meter at 14.7 psia
and 60 degrees Fahrenheit
Sulfur:1.1 short tons per metric ton
OLDENBURG AREA - SALES AND RESERVES
------------------------------------
The Trust's royalty income comes primarily from the
Oldenburg area. Gas production accounts for the majority of the
income; however, the high hydrogen sulfide content of much of the
gas produced necessitates its removal before the gas can be sold.
The present facilities at the Grossenkneten desulfurization plant
are operating at or near the plant input capacity of
approximately 600,000 cubic meters per hour. In 1994 a 60 Km.
pipeline connecting the Oldenburg concession with the NEAG
desulfurization plant was completed. This pipeline has provided
access to excess capacity at NEAG of up to 15% of Grossenkneten's
capacity (approximately 90,000 cu. meters per hour). This excess
capacity is being used to maintain current production levels of
saleable gas, not to increase production.
During the 12 months ending September 30, 1995 total sales
for the Oldenburg area were 331,173 barrels of oil and
condensate, 183,464 million cubic feet (MMcf) of non-associated
gas, 414 MMcf of associated gas and 752,175 short tons of sulfur.
The sales from the western portion of Oldenburg, where the Trust
has a greater interest, were 192,170 barrels of condensate and
oil, 77,341 MMcf of non-associated gas, 158 MMcf of associated
gas and 239,739 short tons of sulfur.
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North European Oil Royalty Trust December 21, 1995
Page 5
Estimated gross remaining proved producing reserves
attributable to the total Oldenburg area are 3,245,294 barrels of
condensate and oil, 2,014,575 MMcf of non-associated gas, 4,133
MMcf of associated gas and 8,607,550 short tons of sulfur.
NET RESERVES
------------
To present an accurate picture of estimated proved producing
reserves net to the Trust, the gross reserve figures outlined
above must be modified by the impact of the different royalty
rates in effect in the Oldenburg concession. A comparison of the
Trust's overriding royalty rates in both the western and eastern
areas of Oldenburg is as follows:
Mobil Oil A. G. West East
--------------- ---- ----
Oil & Gas 4% 0%
Sulfur 2%* 0%
BEB
---------------
Oil & Gas 0.6667%** 0.6667%**
Sulfur 0.6667%** 0.6667%**
*Temporarily suspended.
**Prior to the calculation of royalties, a portion of the
field handling, transport and manipulation costs for
products produced and sold is deducted.
The application of these royalty rates to the estimated
gross remaining proved producing reserves attributable to the
western and eastern Oldenburg areas yields the combined estimated
proved producing reserves net to the Trust. As of October 1,
1995, these figures stand at 82,687 barrels of oil and
condensate, 39,972 MMcf of gas and 40,851 short tons of sulfur.
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A summary of net proved producing reserves by product and a
five year history of net sales attributable to the royalty
interests of the Trust are presented in Table 1.
Sincerely yours,
RALPH E. DAVIS ASSOCIATES, INC.
/s/ Larry A. Barnett
-------------------------------
Larry A. Barnett, P. E.
Senior Vice-President
LAB:sw
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TABLE 1
NORTH EUROPEAN OIL ROYALTY TRUST
RESERVE SUMMARY AND FIVE YEAR NET SALES HISTORY
ESTIMATED NET PROVED PRODUCING RESERVES
AS OF OCTOBER 1, 1995
- ---------------------------------------
OLDENBURG
----------------------------------------------------
Oil/Cond. Associated Non-Associated Sulfur
Gas Gas
Barrels MMcf MMcf Short Tons
--------- ---------- -------------- ----------
82,687 62 39,910 40,851**
**Note: At current prices, no royalties are presently
being paid under the Mobil sulfur royalty.
FIVE YEAR NET SALES SUMMARY
12 MONTHS ENDING SEPTEMBER 30
- -----------------------------
OLDENBURG
----------------------------------------------------
Oil/Cond. Associated Non-Associated Sulfur
Gas Gas
Barrels MMcf MMcf Short Tons
--------- ---------- -------------- ----------
1995 9,226 8 4,098 4,081**
1994 8,984 11 3,681 2,391**
1993 10,550 18 4,031 3,790**
1992 10,100 10 4,056 8,102
1991 10,752 14 4,094 7,810
**Note: At current prices, no royalties are presently
being paid under the Mobil sulfur royalty.
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CERTIFICATE OF QUALIFICATION
I, Larry A. Barnett, Registered Professional Engineer, do
hereby certify:
1. That I am senior vice-president of the consulting firm of
Ralph E. Davis Associates, Inc. with offices at 3555
Timmons Lane, Suite 1105, Houston, Texas 77027.
2. That I have prepared a reserve report on the interests of
the North European Oil Royalty Trust in the Northwest
Basin of the Federal Republic of Germany for the twelve
month period ending September 30, 1995.
3. That I have no direct or indirect interest, nor do I
expect to receive any direct or indirect interest, in the
properties or in any securities of the North European Oil
Royalty Trust.
4. That I attended The University of Texas and that I
graduated with a Bachelor of Science Degree in Petroleum
Engineering in 1958.
5. That I am a Registered Professional Engineer in the
States of Texas and Louisiana, Registration Numbers 23399
and 9647 respectively, and that I am a member in good
standing of the Society of Petroleum Engineers, the
Society of Petroleum Evaluation Engineers and the Society
of Professional Well Log Analysts.
6. That I have in excess of thirty-five years experience in
the evaluation of oil and gas properties in the United
States, Canada, Mexico, South America and Germany, and
that I have been practicing as a consultant in petroleum
engineering and geology since 1987.
RALPH E. DAVIS ASSOCIATES, INC.
/S/ Larry A. Barnett
-------------------------------
Larry A. Barnett, P. E.
Senior Vice-President