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NE

NORTH EUROPEAN OIL ROYALTY TRUST (NRT)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 distributable results were impacted by large prior-year royalty adjustments: distribution was $0.04 per unit and net income was $0.29M ($0.03 per unit); total royalty income was $0.51M, up 19.0% YoY, while distribution fell 20% YoY as OEG royalties were eliminated for the quarter due to carry-over adjustments .
  • The Trust highlighted that gas prices have risen steadily since 3Q FY2024 and “seem to have stabilized,” and the Trustees anticipate a higher distribution in 2Q FY2025 versus 1Q FY2025, citing residual OEG adjustments largely offset in February .
  • Prior-period adjustments reduced 1Q FY2025 total royalty income by $2.49M, a key negative surprise; sulfur royalties contributed $70,202 in the quarter, partially offsetting pressure .
  • No earnings call was held; there were no transcript or Q&A materials available. Wall Street consensus (S&P Global) was unavailable for Q1 2025, so estimate comparisons are omitted [ListDocuments earnings-call-transcript=0] [GetEstimates error].

What Went Well and What Went Wrong

What Went Well

  • Net income rose 59.4% YoY to $285,468 and royalty income increased 19.0% YoY to $505,697, despite heavy prior-period adjustments, indicating underlying stabilization in gas pricing and volumes .
  • Management commentary: “From a low point in the third quarter of fiscal 2024 gas prices have risen steadily and the gas prices applicable to the royalty calculations for the first quarter of fiscal 2025 seem to have stabilized.”
  • Trust expenses decreased by 7.6% YoY (-$19,320) to $233,965, reflecting the off-year in biennial royalty examinations, supporting near-term distributable income .

What Went Wrong

  • Negative carry-over adjustments from calendar 2023 totaled $2,485,712 and eliminated all OEG royalty payments for the quarter; the Mobil adjustment was fully offset by the December 2024 scheduled payment, but still pressured Q1 distribution .
  • Distribution per unit declined to $0.04 from $0.05 YoY and followed a very weak 4Q FY2024 ($0.02), underscoring sensitivity to reconciliation swings and operator adjustments .
  • Structural risk persists: sour gas processing is dependent on a single remaining unit at Grossenkneten; any shutdown would significantly impact royalty income, and EMPG has not scheduled new drilling through 2025, raising medium-term volume concerns .

Financial Results

Trend Across Prior Two Quarters and Current Quarter

MetricQ3 2024Q4 2024Q1 2025
Royalties received ($USD)$2,457,422 $670,204 $505,697
Net Income ($USD)$2,318,094 $526,734 $285,468
Net income per unit ($USD)$0.25 $0.06 $0.03
Distribution per unit ($USD)$0.21 $0.02 $0.04

YoY Comparison (Q1 2025 vs Q1 2024)

MetricQ1 2024Q1 2025
Royalties received ($USD)$424,910 $505,697 (+19.0%)
Net Income ($USD)$179,085 $285,468 (+59.4%)
Net income per unit ($USD)$0.02 $0.03
Distribution per unit ($USD)$0.05 $0.04 (-20.0%)

Key Operational KPIs (Basis for Q1 2025 Royalties – 4Q Calendar)

KPI4Q 20234Q 2024
Mobil Agreement – Gas Sales (Bcf)3.223 3.199
Mobil Agreement – Gas Prices (Ecents/kWh)3.8530 3.8837
Mobil Agreement – Avg Exchange Rate (EUR/USD)1.0816 1.0341
Mobil Agreement – Gas Royalties Payable (EUR)€1,420,221 €1,421,601
Mobil Agreement – Gas Prices ($/Mcf)$11.92 $11.49
OEG Agreement – Gas Sales (Bcf)11.085 10.549
OEG Agreement – Gas Prices (Ecents/kWh)3.9293 3.9606
OEG Agreement – Gas Royalties Payable (EUR)€654,224 €621,016
Sulfur Royalties ($USD)$68,205 (Q1 FY2024) $70,202 (Q1 FY2025)
Prior-period Adjustments Impact ($USD)-$1,944,954 (Q1 FY2024) -$2,485,712 (Q1 FY2025)

Note: Margin metrics are not disclosed by the Trust; financials are reported on a modified cash basis focused on royalties, interest income, and trust expenses .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Distribution per unitQ2 2025N/ATrustees “anticipate a higher distribution in the second quarter of 2025 compared to the first quarter” Raised
OEG scheduled royalty paymentFeb 2025N/ARemaining negative OEG adjustment (~€40,200) to partly reduce February payment Lowered (near term)
Mobil royalty adjustment statusDec 2024N/ANegative adjustment for calendar 2023 fully offset by December scheduled payment Resolved

Earnings Call Themes & Trends

No earnings call transcript was available for Q1 2025 (the Trust does not host regular earnings calls), so themes are derived from press releases and filings [ListDocuments earnings-call-transcript=0].

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Royalty adjustmentsQ3: Negative adjustments under Mobil ($387,930) and OEG ($219,645) to offset in Q4 . Q4: “substantial negative adjustment from calendar 2023” to impact Q1 FY2025 .Large carry-over adjustments (-$2.49M) eliminated OEG royalties for Q1; Mobil fully offset in Dec 2024 .Adjustments largely clearing; residual OEG balance to Feb .
Distribution trajectoryQ3 distribution $0.21; Q4 distribution $0.02 reflecting adjustments .Q1 distribution $0.04; Trustees anticipate higher in Q2 .Expected sequential improvement .
Gas pricesQ3/Q4 commentary on volatility and GBIP linkage .“Gas prices … have risen steadily … and … stabilized” .Stabilizing .
Plant operations (sour gas)Single remaining train at Grossenkneten; shutdown risk .Risk reiterated; sour gas predominates; shutdown would significantly impact income .Persistent operational risk .
CurrencyEUR/USD conversion impacts USD royalties .Exchange rate variability noted; average rates cited in basis table .Ongoing FX sensitivity .
Drilling plansNo new wells since 2014; no new wells planned through 2025 .No change; workovers/maintenance continue .Flat (no growth capex) .

Management Commentary

  • “For the quarter ending January 31, 2025, the reduction in the amount of the distribution payable largely resulted from the substantial negative adjustment from calendar 2023 under both the Mobil and OEG royalty agreements. The negative carry-over adjustment from calendar 2023 eliminated all first quarter fiscal 2025 royalty payments under the OEG royalty...” .
  • “From a low point in the third quarter of fiscal 2024 gas prices have risen steadily and the gas prices applicable to the royalty calculations for the first quarter of fiscal 2025 seem to have stabilized.”
  • “Reflecting both higher prices and the small negative adjustment remaining under the OEG royalty, the Trustees anticipate a higher distribution in the second quarter of 2025 compared to the first quarter of fiscal 2025.”

Q&A Highlights

  • No analyst Q&A was available; the Trust did not hold an earnings call, and no transcript exists for Q1 2025 [ListDocuments earnings-call-transcript=0].

Estimates Context

  • Wall Street consensus from S&P Global for Q1 2025 EPS and revenue was unavailable at the time of this analysis due to data access limits; estimate comparisons are therefore omitted [GetEstimates error].

Key Takeaways for Investors

  • Distribution was $0.04 per unit for Q1 2025, with net income of $285,468 ($0.03 per unit), reflecting heavy prior-year adjustments despite YoY improvement in royalty income .
  • Prior-period adjustments from calendar 2023 reduced Q1 royalty income by $2,485,712 and eliminated OEG payments; Mobil’s negative adjustment was offset in December 2024 .
  • Gas prices linked to GBIP have stabilized, and Trustees expect a higher distribution in Q2 FY2025 versus Q1, a potential near-term catalyst for units .
  • Sulfur royalties contributed $70,202 in Q1, offering incremental support to income amid adjustment headwinds .
  • Trust expenses declined 7.6% YoY (-$19,320) to $233,965, marginally aiding distributable income .
  • Medium-term volume outlook remains constrained: no new wells planned through 2025; reliance on a single sour-gas processing train introduces operational downside risk .
  • FX remains a key sensitivity as royalties are paid in EUR and converted to USD; movements in EUR/USD can materially affect reported royalties and distributions .