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NE

NORTH EUROPEAN OIL ROYALTY TRUST (NRT)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY2025 saw Trust Income of $2.64M (+6.4% YoY) and Net Income of $2.46M (+6.1% YoY), with Net Income per unit at $0.27 and distributions per unit at $0.26, up 23.8% YoY on lower adjustments and higher gas prices/exchange rates .
  • Gas royalties under the Mobil Agreement rose 36.9% YoY to $1.68M, while OEG gas royalties rose 47.5% YoY to $0.77M, driven by higher GBIP-linked prices and a stronger euro; western Oldenburg accounted for ~77.5% of gas royalties despite ~29% of volumes .
  • Management highlighted a small net negative adjustment in Q3 (net sulfur royalty of $31,235 after offset) and indicated scheduled Q4 royalty payments are estimated at ~$2.6M (subject to exchange rates and adjustments), setting up a potential further distribution increase; the 12‑month cumulative distribution reached $0.81/unit (+69% YoY) .
  • No earnings call transcript was available for Q3; commentary was provided via the 10‑Q and PRs. Wall Street quarterly consensus estimates (EPS and revenue) were unavailable, limiting beat/miss analysis versus the Street [GetEstimates]*.

What Went Well and What Went Wrong

What Went Well

  • Gas royalties increased materially YoY as GBIP-based gas prices rose 37–38% and the euro strengthened ~5–6%, lifting Mobil and OEG gas royalty receipts despite lower volumes; “Gas Royalties $1,680,818 vs $1,228,023 (+36.9%) [Mobil]; $769,494 vs $521,713 (+47.5%) [OEG]” .
  • Distribution per unit rose to $0.26 vs $0.21 YoY (+23.8%), underpinned by higher royalty income and fewer negative adjustments; management: “total royalty income was not affected by any prior period adjustments” in Q3 FY2025 .
  • Management expects Q4 scheduled royalty payments of ~$2.6M at the current 1.1755 exchange rate, highlighting potential for robust November distribution; “Scheduled royalty payments for the fourth quarter… estimated to be $2.6 million” .

What Went Wrong

  • Gas volumes declined YoY (Mobil −6.5%, OEG −5.7%), reflecting the ongoing lack of new drilling and reliance on existing wells/workovers; EMPG “has not scheduled any new gas well drilling through 2025” .
  • The sour gas processing risk persists (single unit, 200 MMCF capacity); “any future shutdown could significantly impact royalty income,” given sour gas is ~71% of overall gas sales and ~97% of western sales .
  • Continued sensitivity to exchange rates and end‑of‑quarter adjustments; Q3 included a net offset of a Mobil overpayment against sulfur royalties ($30,047 vs $61,282), yielding $31,235, and an €8,705 OEG negative adjustment carried into Q4 .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Trust Income ($USD)$2.48M $2.49M $2.64M
Net Income ($USD)$2.32M $2.26M $2.46M
Interest Income ($USD)$26,394 $19,224 $25,220
Trust Expenses ($USD)$165,722 $229,519 $183,344
Net Income per Unit ($)$0.25 $0.25 $0.27
Distribution per Unit ($)$0.21 $0.20 $0.26
Net Income Margin (%)93.3% (2.318/2.484) 90.8% (2.261/2.491) 93.1% (2.459/2.642)

Segment breakdown (Gas royalties basis, Q3 YoY):

Segment KPIQ3 2024Q3 2025
Mobil Gas Sales (Bcf)3.073 2.873
Mobil Gas Prices (Ecents/KWh)3.25 4.46
Mobil Gas Royalties ($USD)$1,228,023 $1,680,818
OEG Gas Sales (Bcf)10.455 9.858
OEG Gas Prices (Ecents/KWh)3.31 4.55
OEG Gas Royalties ($USD)$521,713 $769,494
Mobil Sulfur Royalty Net ($USD)Deferred (Q3’24 Mobil sulfur withheld to Q4 due to overpayment) $31,235 (61,282 − 30,047)

KPIs and operational drivers:

KPIQ1 2025Q2 2025Q3 2025
Mobil Sulfur Royalties ($USD)$70,202 $57,240 $31,235 net after offset
Western Oldenburg Share of Gas Sales (%)30.3% (but 100% of gas royalties due to OEG elimination) ~29% of gas sales, ~78% of royalties 29.1% of sales, ~77.5% of royalties

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Scheduled Royalty Payments (est.)Q4 2025None disclosed~$2.6M at EUR/USD 1.1755; actual depends on exchange rate, year-end adjustments, and end-of-quarter reconciliation Raised/Introduced
Distribution CadenceOngoingQuarterly (Feb/May/Aug/Nov) Quarterly unchanged Maintained
12‑Month Cumulative DistributionTrailing 12M$0.48/unit $0.81/unit (+69% YoY) Improved

Notes: Management explicitly cautioned the Q4 estimate excludes possible positive/negative calendar 2024 adjustments and end‑October reconciliation; expenses also deducted prior to distribution calculation .

Earnings Call Themes & Trends

No Q3 2025 earnings call transcript was available; themes are drawn from 10‑Q MD&A and press releases.

TopicQ1 2025 (older)Q2 2025Q3 2025 (current)Trend
Gas prices & FXGBIP prices stabilized vs Q3’24; OEG payments eliminated by 2023 adjustments; distribution $0.04 Higher GBIP prices and FX lifted royalties; distribution $0.20 Prices +37–38% YoY; stronger euro; lifted Mobil/OEG royalties; distribution $0.26 Improving pricing tailwinds
Sulfur royalties$70,202 in Q1 from prior periods $57,240 paid in Q2 Net $31,235 after offset of Mobil overpayment Ongoing but variable
Western vs eastern concentration100% gas royalties from Mobil due to OEG elimination ~29% of volumes → ~78% of royalties 29.1% of volumes → ~77.5% of royalties Stable concentration
Drilling/production outlookNo new wells since 2014; none planned in 2025 EMPG indicated no drilling in 2025; focus on workovers No new gas well drilling through 2025 No growth capex
Sour gas plant riskSingle unit, 200 MMCF capacity; shutdown risk Same; sour gas ~71% overall, ~97% western Same; future shutdown could significantly impact royalties Persistent operational risk
End‑of‑quarter/year adjustmentsLarge 2023 negative adjustments suppressed Q1 Minor OEG negative carryover and sulfur positive Small negative carryover (€8,705) and sulfur offset; fewer negatives overall Normalizing vs 2023

Management Commentary

  • “Total royalty income was not affected by any prior period adjustments” in Q3 FY2025; Mobil overpayment of $30,047 offset against sulfur royalty of $61,282, yielding $31,235; OEG overpayment €8,705 to carry into Q4 .
  • “Scheduled royalty payments for the fourth quarter of fiscal 2025 are estimated to be $2.6 million at the current exchange rate of 1.1755” with potential calendar 2024 adjustments and end‑October reconciliation to follow .
  • Strategic/operational context: “EMPG has not scheduled any new gas well drilling through 2025” and sour gas accounts for ~71% of overall gas sales and ~97% of western sales; a shutdown of the single desulfurization unit could significantly impact royalty income .

Q&A Highlights

No Q3 2025 earnings call transcript was available; no Q&A to report [ListDocuments].

Estimates Context

  • S&P Global consensus estimates for quarterly EPS and revenue were unavailable for Q3 FY2025, and no EPS/revenue consensus counts were found; as a result, we cannot assess a beat/miss vs the Street for Q3 [GetEstimates]*.
  • Actuals: Q3 FY2025 Trust Income $2.64M and Net Income $2.46M; Net Income per unit $0.27; distribution $0.26 .

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Pricing tailwinds: Higher GBIP-linked gas prices and a stronger euro drove a YoY increase in gas royalty receipts; with fewer negative adjustments, distributions rose to $0.26 in Q3 and scheduled Q4 royalties are estimated at ~$2.6M, a potential catalyst for November distribution and near-term income attractiveness .
  • Volume headwinds persist: Gas volumes declined YoY and EMPG plans no new drilling in 2025; structural reliance on existing wells/workovers implies royalty growth will be predominantly price/FX-driven rather than volume-driven .
  • Concentration risk: Western Oldenburg continues to contribute ~78% of gas royalties with ~29% of volumes; investors should monitor operational continuity in western fields and sulfur processing .
  • Operational risk at desulfurization plant: Single-unit sour gas processing is a key risk; any shutdown could materially impact royalties and distributions; position sizing should reflect this operational sensitivity .
  • Adjustments normalization: After outsized 2023 negative adjustments, quarterly reconciliations are normalizing, reducing volatility in distributions; however, year-end 2024 adjustments (September/October) can still swing Q4 outcomes .
  • FX sensitivity: The euro’s strength directly lifts USD royalty receipts; Q4’s outcome will depend on actual EUR/USD at transfer dates; hedging strategies may be considered for income predictability .
  • Income profile: 12‑month cumulative distributions reached $0.81/unit (+69% YoY); for yield-focused investors, the trust remains a tactical play on European gas pricing/FX with idiosyncratic operational and adjustment risks .