# Report to Unit Owners

_Source: `DeepSeekOCR_Ardian_pruned_1k/energy-oil-gas-e-p/NYSE_NRT_2020/NYSE_NRT_2020.mmd` · pages 1-7_

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Report to Unit Owners ..... 1-2
Description of Trust Assets ..... 3
Management's Discussion and Analysis ..... 4-7
Critical Accounting Policies ..... 8
Report of Independent Registered Public Accounting Firm ..... 9-10
Financial Statements ..... 11-12
Notes to Financial Statements ..... 13-15
Disclosure Controls and Procedures ..... 16
Internal Control over Financial Reporting ..... 16
Trustees, Administration and Important Contacts ..... 17
2020 Tax Letter (Removable) ..... 19-22

## IMPORTANT TAX INFORMATION

For your convenience, the information necessary to prepare your 2020 tax return is included in the removable "2020 Tax Letter" on Pages 19 through 22. Please note that there will be no separate mailing of the tax letter. The 2020 Tax Letter is also available at the Trust's website, www.neort.com.

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## Report to Unit Owners:

## FOURTH QUARTER 2020

Net income for the Trust for the fourth quarter of fiscal 2020 was \(218,649, a decrease of 85.58% from net income of \)1,516,063 for the fourth quarter of fiscal 2019. The Trust receives nearly all of its royalties under two royalty agreements. The Mobil Agreement is the 4% royalty rate agreement covering gas sales from the western half of a concession in the Federal Republic of Germany (the "Oldenburg concession"). The OEG Agreement is the 0.6667% royalty rate agreement covering gas sales from the entire Oldenburg concession. Total royalties under the Mobil Agreement, including sulfur royalties under the 2% Mobil Sulfur Agreement, for the fourth quarter of fiscal 2020 were reduced by negative adjustments from prior periods of (\(483,809), as compared to negative adjustments totaling (\)74,991) for the fourth quarter of fiscal 2019. Total royalties under the OEG Agreement for the fourth quarter of fiscal 2020 were reduced by negative adjustments from prior periods of (\(213,393), as compared to negative adjustments of (\)24,364) for the fourth quarter of fiscal 2019. Net income in the fourth quarter of 2020 was lower than the fourth quarter of 2019 due to the impact of these prior period adjustments as well as declines in both gas prices and gas sales. Gas sales were lower due to the combination of reduced demand resulting from the economic impact of COVID-19 and the complete shutdown of Grossenkneten for its 10-year maintenance program from September 8 to October 13, 2020. The relevant details for the fourth quarters of fiscal 2020 and 2019 for gas sales under the Mobil and OEG Agreements are shown in the table below.

<table><tr><td colspan="4">Quarterly Gas Data Providing Basis for Fiscal Quarter Royalties</td></tr><tr><td></td><td>3rd Calendar Quarter Ended 9/30/2020</td><td>3rd Calendar Quarter Ended 9/30/2019</td><td>Percentage Change</td></tr><tr><td>Mobil Agreement:</td><td></td><td></td><td></td></tr><tr><td>Gas Sales (Bcf \( ^{1} \) )</td><td>3.186</td><td>4.881</td><td>-34.73%</td></tr><tr><td>Gas Prices \( ^{2} \)  (Ecents/kWh \( ^{3} \) )</td><td>0.9255</td><td>1.4612</td><td>-36.66%</td></tr><tr><td>Average Exchange Rate \( ^{4} \)</td><td>1.1761</td><td>1.1004</td><td>+ 6.88%</td></tr><tr><td>Gas Royalties</td><td>\(395,791</td><td>\)901,077</td><td>-56.08%</td></tr><tr><td>OEG Agreement:</td><td></td><td></td><td></td></tr><tr><td>Gas Sales (Bcf)</td><td>10.601</td><td>16.205</td><td>-34.58%</td></tr><tr><td>Gas Prices (Ecents/kWh)</td><td>0.9438</td><td>1.4901</td><td>-36.66%</td></tr><tr><td>Average Exchange Rate</td><td>1.1730</td><td>1.0989</td><td>+ 6.74%</td></tr><tr><td>Gas Royalties</td><td>\(97,128</td><td>\)369,501</td><td>-73.71%</td></tr></table>

 \( ^{1} \) Billion cubic feet  \( ^{2} \) Gas prices derived from May-July period  \( ^{3} \) Euro cents per Kilowatt hour

 \( ^{4} \) Based on average Euro/dollar exchange rates of cumulative royalty transfers

## FISCAL 2020 REPORT

For fiscal 2020, the Trust's total royalty income decreased 51.47% to \(4,050,017 from \)8,344,712 in fiscal 2019. The decrease in royalty income was the result of a combination of factors including the economic impact of COVID-19, lower gas sales and gas prices and the difference in the amount of adjustments between fiscal 2020 and 2019. As in prior years, the Trust receives information concerning adjustments from the operating companies based on their final calculations of royalties payable during the previous periods as well as other required adjustments. During fiscal 2020 and 2019, these adjustments decreased royalty income by $653,916 and increased royalty income by

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$225,450, respectively. During fiscal 2020 and 2019, Mobil sulfur royalties totaled $71,280 and $150,157, respectively. The total distribution for fiscal 2020 was $0.32 per unit compared to $0.82 per unit for fiscal 2019.

The Trust's German consultant periodically contacts the representatives of the operating companies to inquire about their planned and proposed drilling and geophysical work and other general matters. The following represents a summary of the most recent information the Trust's German consultant received from representatives of the operating companies' unified exploration and production venture, ExxonMobil Production Deutschland GmbH ("EMPG"). The Trust is not able to confirm the accuracy of any of the information supplied by the operating companies. In addition, the operating companies are not required to take any of the actions outlined and, if they change their plans with respect to any such actions, they are not obligated to inform the Trust. Information on wells that are not named or are in preliminary planning stages is not divulged by EMPG.

Doetlingen Z-3A, which had ceased production in 2013, was plugged and abandoned in 2020. Varenesch Z-1 as well as Varmhorn Z-5 and Z-10 have been secured and are awaiting final plugging and abandonment.

Varnhorn Z-2 underwent a workover and several stimulation jobs to optimize performance. The surface facilities of two Carboniferous wells, Goldenstedt Z-9 and Z-23, had suffered heavy corrosion and suspended production for four weeks during May-June 2020.

Ahlhorn Z-3, a sour gas exploration/re-development well, has been postponed indefinitely due to budget reasons and low gas prices. While preliminary permit requests had been filed with the Mining Authority in October 2019, it is unclear whether drilling will commence in 2021. If drilling is started, the project duration is estimated by EMPG to be about one year. This well will attempt to reactivate the Ahlhorn field which was abandoned in 1997.

Based on the limited information available, Graves & Co. Consulting LLC, the Trust's petroleum consultant ("Graves & Co."), has prepared and submitted their report on the cost depletion percentage applicable to Trust unit owners for calendar 2020. The 2020 cost depletion percentage of 16.5776% and related tax information is contained in the removable "2020 Tax Letter" on Pages 19 through 22 of this report. The calculation of the cost depletion percentage is based on Graves & Co.'s estimate of remaining net proved producing reserves as of October 1, 2020. (The complete text of the report is available in the Trust's 2020 Report on Form 10-K as exhibit 99.1.) The report indicates that net Trust gas reserves decreased 26.64% to 4.524 Bcf from 6.430 Bcf on net sales for 2020 of 0.940 Bcf and a negative reserve adjustment of 0.966 Bcf.

Respectfully submitted,

December 30, 2020

John R. Van Kirk
Managing Director