Financial Performance - For fiscal 2023, the Trust's gross royalty income increased by 23.7% to $22,016,103 from $17,800,119 in fiscal 2022[75]. - The total distribution for fiscal 2023 was $2.26 per unit, compared to $1.83 per unit for fiscal 2022, reflecting a significant increase[75]. - Trust expenses increased by $253,674, or 35.5%, to $967,591 in fiscal 2023 from $713,917 in fiscal 2022 due to higher Trustees' fees and legal expenses[92]. - The distribution in the third quarter of fiscal 2023 was $0.21 per unit, representing an 80% decline from the second quarter's distribution of $1.05 per unit[74]. Gas Sales and Pricing - Gas sales under the Mobil Agreement decreased by 16.4% to 12.439 billion cubic feet (Bcf) in fiscal 2023 from 14.874 Bcf in fiscal 2022[77]. - Average gas prices for sales under the Mobil Agreement increased by 49.5% to 8.3231 Euro cents per kilowatt hour (Ecents/kWh) in fiscal 2023 from 5.5665 Ecents/kWh in fiscal 2022[80]. - Gas sales under the OEG Agreement decreased by 15.8% to 44.944 Bcf in fiscal 2023 from 53.385 Bcf in fiscal 2022[83]. - Average gas prices for sales under the OEG Agreement increased by 48.2% to 8.4965 Ecents/kWh in fiscal 2023 from 5.7342 Ecents/kWh in fiscal 2022[88]. Accounting and Financial Structure - The Trust utilizes a modified cash basis of accounting, disclosing revenue when cash is received and expenses when cash is paid, which provides a more meaningful presentation to unit owners[96]. - The Trust has no off-balance sheet arrangements, indicating a straightforward financial structure[97]. - The Trust's distributable income consists of royalty income received during the period plus interest income, less any expenses incurred, all on a cash basis[96]. - The Trust's financial statements are not prepared under GAAP, which would require accruing expected royalty payments that are difficult to project accurately[96]. Risks and Uncertainties - Forward-looking statements are subject to risks such as depleting assets and uncertainties in gas production and sale prices, which could materially affect actual results[98]. - Political and economic uncertainties, such as those arising from Russia's invasion of Ukraine, may impact the Trust's operations and financial performance[99]. - The Trust's ability to predict future results is limited due to emerging factors and uncertainties beyond its control[99]. Currency and Market Risk - The average Euro/U.S. dollar exchange rate for fiscal 2023 was 0.9900, a decrease of 4.9% from 1.0405 in fiscal 2022[81]. - The Trust does not engage in trading activities related to foreign exchange fluctuations, minimizing market risk associated with currency[101]. - There are no financial instruments used to hedge against commodity price fluctuations, indicating a direct exposure to market conditions[101]. - The Trust's bank in Germany processes royalty payments promptly, reducing market risk related to funds held in foreign accounts[101]. Future Operations - The Trust's consultant indicated that no new wells are planned for calendar 2024, and no major exploration work has been initiated[94].
North European Oil Royalty Trust(NRT) - 2023 Q4 - Annual Report