-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SBhNFj7qhSrGl8baZZi8yT9fDiZ4Grd9S6FpqM2gR7Ewi/u+FlnFTeCagleKtTh1 EM/b9cmeOtW7JClozZxlfA== 0000072633-96-000002.txt : 19960117 0000072633-96-000002.hdr.sgml : 19960117 ACCESSION NUMBER: 0000072633-96-000002 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951231 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960116 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTH EUROPEAN OIL ROYALTY TRUST CENTRAL INDEX KEY: 0000072633 STANDARD INDUSTRIAL CLASSIFICATION: OIL ROYALTY TRADERS [6792] IRS NUMBER: 222084119 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08245 FILM NUMBER: 96503305 BUSINESS ADDRESS: STREET 1: P O BOX 456 STREET 2: 43 WEST FRONT STREET SUITE 19-A CITY: RED BANK STATE: NJ ZIP: 07701 BUSINESS PHONE: 9087414008 MAIL ADDRESS: STREET 1: P O BOX 456 STREET 2: 43 WEST FRONT STREET SUITE 19-A CITY: RED BANK STATE: NJ ZIP: 07701 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): January 11, 1996 ----------------- NORTH EUROPEAN OIL ROYALTY TRUST ---------------------------------- (Exact name of Registrant as specified in its charter) Commission File No. 1-8245 Delaware 22-2084119 ----------------------- ----------------------- (State of organization) (IRS Employer I.D. No.) Suite 19A, 43 West Front Street, Red Bank, N.J. 07701 ---------------------------------------------------------------- (Address of principal executive offices) 908-741-4008 --------------------------------------------------- (Registrant's telephone number including area code) This report (including exhibits) consists of 13 pages. The Exhibit Index is located on page 4. -2- Item 5. Other Materially Important Event. -------------------------------- On January 11, 1996, the registrant Trust mailed to certificate holders of units of beneficial interest in the Trust an advisory letter, dated January 8, 1996, concerning the appropriate percentage for cost depletion computations to be made by such holders under the provisions of the Internal Revenue Code. A copy of the letter is attached to this report as Exhibit 99.1. The information included in the advisory letter to certificate holders was based upon computations furnished to the Trust by Ralph E. Davis Associates, Inc., 3555 Timmons Lane, Suite 1105, Houston, Texas, 77027 in a letter report dated December 21, 1995. A copy of this letter report is attached as Exhibit 99.2. These computations were also partially based upon the reserve report furnished to the Trustees and to be included as Exhibit 99 to the Annual Report on Form 10-K for the fiscal year ended October 31, 1995. Reference is made to Item 2 of that Form 10-K for a description of the limited nature of certain of these computations. -3- Item 7. Financial Statements and Exhibits. (c) Exhibits. Exhibit 99.1. Letter to certificate holders dated January 8, 1996. Exhibit 99.2. Letter report from Ralph E. Davis Associates, Inc. dated December 21, 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. NORTH EUROPEAN OIL ROYALTY TRUST ________________________________ (Registrant) By: /S/ John R. Van Kirk ______________________________ John R. Van Kirk Managing Director Dated: January 12, 1996 -4- EXHIBIT INDEX Page Exhibit 99.1. Letter to certificate 5 holders dated January 8, 1996. Exhibit 99.2. Letter report from 8 Ralph E. Davis Associates, Inc., dated December 21, 1995. EX-99 2 North European Oil Royalty Trust Office of the Managing Director P.O. Box 456 Red Bank, New Jersey 07701 (908) 741-4008 IMPORTANT RETAIN THIS LETTER FOR PREPARATION OF YOUR 1995 INCOME TAX RETURNS THE TRUST DOES NOT FILE NOR FURNISH TO OWNERS FORM 1099 January 8, 1996 To the Present and Former Unit Owners of North European Oil Royalty Trust: This letter sets forth the information you will require for preparation of your personal income tax returns in connection with ownership of units of beneficial interest ("Units") in North European Oil Royalty Trust ("Trust") during 1995. For Federal income tax reporting purposes, each owner of Units in the Trust is considered to be a grantor or substitute grantor as well as a beneficiary of the Trust. As such, you are deemed to have received your pro rata share of overriding royalties when paid to the Trust and are permitted to deduct your share of Trust expenses. Consequently, your net taxable income may not correspond exactly to the cash distributions received. TRUST DISTRIBUTIONS SHOULD NOT BE INCLUDED ON INCOME TAX RETURNS - ----------------------------------------------------------------- AS "DIVIDEND INCOME" AND ARE NOT ELIGIBLE FOR THE DIVIDENDS - ----------------------------------------------------------- RECEIVED DEDUCTION FOR CORPORATIONS. - ------------------------------------ The Internal Revenue Service has ruled that the overriding royalty rights held by the Trust represent economic interest in oil and gas deposits. Consequently, income realized from such interests is taxable to each Unit owner as ordinary income subject to cost depletion. Each Unit owner's basis for computing cost depletion is the adjusted cost basis for their Units. This adjusted cost basis is to be reduced annually by the depletion previously allowed. Ralph E. Davis Associates, Inc. of Houston, Texas, based upon computations of proven reserves estimated in accordance with accepted engineering analytical principles, has recommended that the percentage to be applied to the cost basis to determine deductions for cost depletion for the year 1995 is 9.343%. The suggested percentage for cost depletion deduction will be adjusted annually in accordance with reported production results and revised reserve estimates. Since the above percentage covers the entire year 1995, if you owned Units for only a portion of the year, you are required to pro rate the percentage depletion in the ratio that the total income per Unit shown on the schedule below for the period of your ownership bears to the total income per Unit for the entire year. If you owned Units for the period January 1, 1995 through December 31, 1995, you will be considered to have received and expended, on the cash basis, the respective totals shown below for each Unit. On the other hand, if you owned Units during only a portion of that period, then the schedule shows the amounts of income and deductible expenses reportable by you for each Unit owned for the respective months. For your information, income is received between the 24th and the end of each month. Income per Unit Expenses per Unit January 1995 $ 0.1343 $ 0.0085 February 0.1019 0.0094 March 0.1406 0.0066 April 0.1945 0.0029 May 0.1232 0.0058 June 0.1368 0.0043 July 0.1076 0.0050 August 0.1209 0.0053 September 0.1218 0.0041 October 0.1214 0.0044 November 0.1220 0.0067 December 0.1083 0.0067 --------- --------- TOTAL 1995 $ 1.5333 $ 0.0726 ========= ========= Income and expenses should be reported on Federal Income Tax Form 1040, Schedule E. Under Part I, Income or Loss from Rentals and Royalties, line 1 enter property description as "oil and gas overriding royalty rights, Germany through North European Oil Royalty Trust." Your income and expenses are calculated by multiplying the above per Unit figures by the number of Units you owned. Your income should be entered on line 4. Expenses should be entered on line 18 as "miscellaneous Trust expenses." Your cost depletion deduction should be entered on line 20. This figure is derived by multiplying the total adjusted cost of all your Units by .09343. Your adjusted cost is your original cost minus depletion deducted in prior years. Your net reportable income or loss should be entered on lines 22 and 26 in Part I and on line 40 in Part V and is determined by subtracting the amounts entered on lines 18 and 20 from the amount on line 4. All of the above entries should be adjusted for the period of time you owned your Units, if you did not own them throughout 1995. The royalty income received by the Trust represents income from Germany. Although there are no German taxes imposed on this income, this information should be considered if you have available foreign tax credits from other sources. The Trust will submit this letter and the listing of Unit --------------------------------------------------------- owners during 1995 to the Internal Revenue Service. This list - --------------------------------------------------- will contain names, addresses, tax ID or Social Security numbers; you may wish to attach a copy of this letter to your tax returns. Most sincerely, /S/ John R. Van Kirk EX-99 3 NORTH EUROPEAN OIL ROYALTY TRUST COMPUTATION OF COST DEPLETION FACTOR For 1995 Tax Year Ralph E. Davis Associates, Inc. Houston, Texas December, 1995 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 preformed an estimate of remaining proved producing reserves attributable to the overriding royalty interests of North European Oil Royalty Trust ("Trust" or "NEORT") in the Northwest German Basin of the Federal Republic of Germany. Based on that estimate, we have submitted our reserve report (the "Davis Report") to you. The Davis Report forms the basis on which the calculation of the cost depletion percentage for 1995 is made. As detailed in Attachment A, the total cost depletion to be taken for the twelve month period ending December 31, 1995 is 9.343 percent. 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. Reserves and net sales for these areas were used in the calculation of cost depletion in those prior years. Reports from 1992 forward omit such an estimate. The Trust still receives royalty payments from these interests, but the annual revenues 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. The exclusion of these reserves does not have a material effect on the calculation of the cost depletion percentage. The Trust's net proved producing reserves as of October 1, 1995 and net sales for the twelve month period ending September 30, 1995 are as follows: Reserves Sales -------- ----- Oil, Barrels 82,687 9,226 Associated Gas, MMcf 62 8 Non-Associated Gas, MMcf 39,910 4,098 Sulfur - Short Tons 40,851** 4,081** (MMcf = millions of cubic feet @ 14.7 psia and 60 Degrees Fahrenheit) **Note: At current prices no royalties are presently being paid under the Mobil sulfur royalty. Computation of Cost Depletion Percentage ---------------------------------------- A cost base for the Trust was established as of January 1, 1976 for each category of reserves. This cost base is adjusted (reduced) each year by an amount of depletion that is calculated by multiplying the remaining cost base at the beginning of the current year by a unit cost depletion factor. The unit cost depletion factor is the ratio of the net sales during the current year to the adjusted net proved producing reserves at the beginning of the current year. The categories of reserves considered are oil, associated gas and non-associated gas. Sulfur is a by-product of the gas production and is not considered in the cost depletion calculation. Significant items in the cost depletion percentage calculation that appear on Attachment A as specific item numbers ( ) and their sources are as follows: The cost base as of 1-1-94 (2) and the depletion taken in 1994 (3) were obtained from the previous year's report. The cost base for 1-1-95 (4) forms the initial starting point for the calculation of the cost depletion percentage for the 1995 tax year. The cost base for 1-1-95 (4) then is (2)-(3). The adjusted net proved producing reserves as of 10-1-94 (8) is obtained by adding back annual sales (7) to the current estimated remaining net proved producing reserves as of 10-1-95 (6). Therefore (8)=(6)+(7). The unit cost depletion factor (10) is obtained by dividing net sales for the taxable year (7) by adjusted net proved producing reserves at the beginning of the taxable year (8). Therefore (10)=(7)/(8). The cost depletion to be taken for each category of reserves that is used to reduce the original base each year (11) then is the product of the unit cost depletion factor (10) multiplied by the cost base at the beginning of the taxable year (4). Therefore (11)=(4)x(10). The total Trust cost depletion percentage then is the sum of the cost depletion to be taken on each category (11) divided by the sum of the cost base as of the beginning of the taxable year for each category. Therefore (12)= Sum(11)/Sum(4). The Trust's cost depletion percentage represents the allowable cost depletion for the current tax year, expressed as a percentage of the cost base at the beginning of the tax year. Sincerely yours, RALPH E. DAVIS ASSOCIATES, INC. /S/ Larry A. Barnett, P.E. ------------------------------- Larry A. Barnett, P.E. Senior Vice-President LAB:sw ATTACHMENT A NORTH EUROPEAN OIL ROYALTY TRUST COMPUTATION OF COST DEPLETION FACTOR For the Year Ending December 31, 1995 OLDENBURG --------------------------------------- 1.Product Associated Non-Assoc. Oil Gas Gas Barrels MMCF MMCF ------- ---------- --------- NEORT COST BASE ALLOCATION (%) - ----------------------------- 2. Cost base as of 1-1-94 0.73044 0.06295 20.31197 3. Less depletion taken during 1994 0.06750 0.00597 1.62286 4. Cost base as of 1-1-95 0.66294 0.05698 18.68911 NEORT NET RESERVES (Barrels of Oil and Millions of Cubic Feet) - -------------------------------------------------------------- 5. Estimated remaining net proved producing reserves as of 10-1-94 88,235 105 42,391 6. Estimated remaining net proved producing reserves as of 10-1-95 82,687 62 39,910 7. Net sales from 10-1-94 to 10-1-95 9,226 8 4,098 8. Adjusted net proved producing reserves as of 10-1-94 91,913 70 44,008 9. Reserves adjustments during period 3,678 -35 1,617 COST DEPLETION CALCULATION (%) - ------------------------------- 10. Unit cost depletion factor 0.10038 0.11429 0.09312 11. 1995 cost depletion to be taken 0.06654 0.00651 1.74032 - ----------------------------------------------------------------- 12. Total NEORT cost depletion percentage = 9.343 percent of 1-1-95 cost base - ----------------------------------------------------------------- Footnotes: Line (2) from 1994 depletion computations Line (3) from 1994 depletion computations Line (4) = Line (2) - Line (3) Line (5) from reserves review as of 10-1-94 Line (6) from reserves review as of 10-1-95 Line (7) from OEG and MOBIL statements Line (8) = Line (6) + Line (7) Line (9) = Line (8) - Line (5) Line (10) = Line (7)/Line (8) Line (11) = Line (10) x Line (4) Line (12) = Sum of Line (11)/Sum of Line (4) -----END PRIVACY-ENHANCED MESSAGE-----