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    Annual Report 2015 North European Oil Royalty Trust ATTENTION: PLEASE RETAIN CRITICAL TAX INFORMATION ENCLOSED


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    The Annual Meeting of Unit Owners will be held on February 16, 2016, at 10:00 A.M., in Room 2, Ninth Floor, at the University Club, 1 West 54th Street, New York City (northwest corner of 5th Avenue; entrance on 54th Street). All unit owners are cordially invited to attend. If you plan to attend the meeting, please note that The University Club has a dress code. Men are required to wear a jacket and women are required to wear business attire. The University Club does not make exceptions. Table of Contents Report to Unit Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-3 Ten Year History of Net Gas Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Net Proved Producing Gas Reserves (Est.) and Volume of Net Gas Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Gross Gas Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Description of Trust Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-9 Management’s Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-17 Dollar Royalties Western and Eastern Oldenburg . . . . . . . . . . . . . . . . . . . . . . . 14 Critical Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Distributions and Trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Comparison of Five Year Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-21 Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . 23 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24-27 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-30 Disclosure Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Internal Control over Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . 31-32 2015 Tax Letter (Removable) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33-36 IMPORTANT TAX INFORMATION For your convenience, the information necessary to prepare your 2015 tax return is included in the removable “2015 Tax Letter” on Pages 33 through 36. Please note that there will be no separate mailing of the tax letter.


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    NORTH EUROPEAN OIL ROYALTY TRUST Report to Unit Owners: FOURTH QUARTER 2015 Net income for the Trust for the fourth quarter of fiscal 2015 was $2,096,955, a decrease of 42.67% from net income of $3,657,783 for the fourth quarter of fiscal 2014. The Trust receives nearly all of its royalties under two royalty agreements. The Mobil Agreement, the higher royalty rate agreement, covers gas sales from the western half of the Oldenburg concession. The OEG Agreement, the lower royalty rate agreement, covers gas sales from the entire Oldenburg concession. Gas royalties under the Mobil Agreement for the fourth quarter of fiscal 2015 were reduced by negative adjustments from the prior quarter of $378,697, as compared to negative adjustments totaling $271,157 for the fourth quarter of fiscal 2014. Total royalties under the Mobil Agreement in the fourth quarter of fiscal 2015 were further reduced by a negative adjustment of $213,103, correcting the overpayment of sulfur royalties in 2013 and 2014. Gas royalties under the OEG Agreement for the fourth quarter of fiscal 2015 were reduced by a combination of negative and positive adjustments from the prior quarter and year totaling $104,277, as compared to negative adjustments totaling $205,145 for the fourth quarter of fiscal 2014. Net income in the fourth quarter of 2015 was lower than the fourth quarter of 2014 due to a combination of higher negative adjustments in fiscal 2015 along with lower gas prices, lower gas sales and lower average exchange rates. The relevant details for the fourth quarters of fiscal 2015 and 2014 for gas sales under the Mobil and OEG Agreements are shown in the table below. Factors Determining Gas Royalties Payable 3rd Calendar Quarter 3rd Calendar Quarter Percentage Ended 9/30/2015 Ended 9/30/2014 Change Mobil Agreement: Gas Sales (Bcf1) 5.829 7.675 - 24.05% Gas Prices (Ecents/kWh2) 2.1662 2.1709 - 0.22% Average Exchange Rate3 1.1301 1.2944 - 12.69% Gas Royalties $1,636,070 $2,474,536 - 33.88% OEG Agreement: Gas Sales (Bcf) 18.728 23.139 - 19.06% Gas Prices (Ecents/kWh) 2.2187 2.2803 - 2.70% Average Exchange Rate 1.1309 1.2891 - 12.27% Gas Royalties $ 714,479 $1,083,346 - 34.05% 1 2 Billion cubic feet Euro cents per Kilowatt hour 3 Based on average exchange rates of royalty transfers 1


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    NORTH EUROPEAN OIL ROYALTY TRUST FISCAL 2015 REPORT For fiscal 2015, the Trust’s gross royalty income decreased 34.53% to $12,390,575 from $18,927,005 in fiscal 2014 continuing to reflect the disruption in the energy market and the uncertainty of the world economy. The decrease in royalty income is due to declines in gas sales, gas prices and average exchange rates under both the Mobil and OEG Agreements. 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 2015, the combination of positive and negative adjustments reduced total royalty income by $807,974, the equivalent of $0.0879 per unit. In contrast during fiscal 2014, the negative adjustments decreased royalty income by $52,676, the equivalent of $0.0057 per unit. Further details relating to the changes in gas sales, gas prices and average exchange rates for fiscal 2015 and 2014 are presented on pages 12 through 14. The decrease in the amount of royalty income resulted in the lower distributions. The total distribution for fiscal 2015 was $1.27 per unit compared to $1.95 per unit for fiscal 2014. 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 additional information the Trust’s German consultant received from representatives of ExxonMobil Production Deutschland GmbH (“EMPG”) on November 20, 2015. 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. EMPG has continued to abide by its decision to suspend drilling during 2015 and 2016. However, it has conducted three workovers of existing wells in 2015 and has planned five workovers for 2016. Workovers are conducted on older wells that for various reasons have experienced a drop in production due to a decline in pressure and can possibly benefit from further developmental efforts. These reasons can include the presence of formation debris, bacterial infestation and formation water influx. Depending on the difficulties presented by the well and the nature of the problem, the operators have a number of avenues by which they can potentially alleviate the problems. Beyond the four wells still listed as part of the drilling plans for the Carboniferous zone and subject to the moratorium on fracking, there are six named wells still planned and, with one exception, scheduled for the years 2017-2018. Three of the wells, Visbek Z-16a and Alhorn Z-3, both sour gas wells, and Hemmelte NW T-1, a sweet gas well, are all located in western Oldenburg. The most interesting well, but perhaps the riskiest, is Hemmelte NW T-1 which is planned to develop a new area of the Bunter zone in western Oldenburg. This well was initially planned as a dual purpose well tapping both the Bunter and the deeper Zechstein zones but, due to technical difficulties, was scaled back. A second well to access the Zechstein zone at a later date was initially mentioned but no further information has been forthcoming. Visbek Z-16a represents a new parallel sidetrack to a successful sour gas well that suffered a severe casing collapse six months after it began production. Alhorn Z-3, another sour gas well, is intended to re-open the old Alhorn field, which had 2


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    NORTH EUROPEAN OIL ROYALTY TRUST been abandoned in 1997. This well’s drilling start has been postponed until 2020. The remaining three wells, Doetlingen Z-3a and Goldenstedt Z-12a M1 and Goldenstedt Z-25 M1, both multilateral wells, are located in eastern Oldenburg and are all sour gas infill wells. Multilateral wells take advantage of a single master well to draw from multiple sidetracks. The obvious advantage is the cost saving in using a single borehole for more than one sidetrack. No firm dates have been announced for any of the six wells. Information on wells that are not named or are in preliminary planning stages is not divulged by EMPG. Based on the limited information available, Ralph E. Davis Associates, LLC, the Trust’s petroleum consultant (“Davis Associates”), has prepared and submitted their report on the cost depletion percentage ap- plicable to Trust unit owners for calendar 2015. The 2015 cost depletion percentage of 10.2093% and related tax information is contained in the removable “2015 Tax Letter” on Pages 33 through 36 of this report. The calculation of the cost depletion percentage is based on Davis Associates’ estimate of re- maining net proved producing reserves as of October 1, 2015. (The complete text of the report is available in the Trust’s 2015 Report on Form 10-K as exhibit 99.1.) The application of the Trust’s two royalty rates to gross remaining proved producing gas reserves or to gross gas sales for both eastern and western Oldenburg yields the net gas reserves or sales attributable to the Trust, as referenced in the charts on pages 4 and 5. The report indicates that net Trust gas reserves increased 1.67% to 14.400 Bcf from 14.163 Bcf on net sales for 2015 of 1.642 Bcf and a positive reserve adjustment of 1.879 Bcf. As shown in the chart on page 5, the efforts by the operating companies were successful in replacing current gas sales with additions to proved producing reserves. Gas sales have continued to decline but, at least temporarily, gas reserves have increased slightly. Respectfully submitted, John R. Van Kirk Managing Director December 30, 2015 3


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    4 NORTH EUROPEAN OIL ROYALTY TRUST TEN YEAR HISTORY OF NET GAS SALE VOLUMES 5 BILLION CUBIC FEET 4 3 2 1 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Adjusted for Effective Royalty Rates Applicable to Western and Eastern Oldenburg WESTERN OLDENBURG EASTERN OLDENBURG


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    NORTH EUROPEAN OIL ROYALTY TRUST NET PROVED PRODUCING GAS RESERVES (EST.) AND VOLUME OF NET GAS SALES 45 40 BILLION CUBIC FEET 35 30 25 20 15 10 5 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 As of October 1st NET PROVED PRODUCING RESERVES (EST.) ANNUAL NET SALES 5


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    6 NORTH EUROPEAN OIL ROYALTY TRUST GROSS GAS SALES 180 160 BILLION CUBIC FEET 140 120 100 80 60 40 20 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 WESTERN OLDENBURG EASTERN OLDENBURG


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    NORTH EUROPEAN OIL ROYALTY TRUST North European Oil Royalty Trust Selected Financial Data (Cash Basis) For Fiscal Years Ended October 31 2015 2014 2013 2012 2011 German gas, sulfur and oil royalties received $12,390,575 $18,927,005 $21,546,298 $23,672,808 $25,148,523 Interest Lncome 9,439 18,724 25,363 40,156 26,233 Trust Hxpenses ( 819,341) ( 901,150) ( 936,355) ( 1,103,003) ( 978,849) Net income $11,580,673 $18,044,579 $20,635,306 $22,609,961 $24,195,907 Net income per unit $ 1.26 $ 1.96 $ 2.25 $ 2.46 $ 2.63 Distributions per unit paid or to be paid to unit owners $ 1.27 $ 1.95 $ 2.25 $ 2.46 $ 2.63 Units outstanding end of period 9,190,590 9,190,590 9,190,590 9,190,590 9,190,590 7


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    NORTH EUROPEAN OIL ROYALTY TRUST Description of Trust Assets The properties of the Trust, which the Trust and Trustees hold pursuant to the Trust Agreement on behalf of the unit owners, are overriding royalty rights on sales of gas, sulfur and oil under certain concessions or leases in the Federal Republic of Germany. The actual leases or concessions are held either by Mobil Erdgas-Erdol GmbH (“Mobil Erdgas”), a German operating subsidiary of ExxonMobil, or by Oldenburgische Erdolgesellschaft (“OEG”). As a result of direct and indirect ownership, ExxonMobil owns two-thirds of OEG and the Royal Dutch/Shell Group of Companies owns one-third of OEG. The Oldenburg concession (1,386,000 acres), covering virtually the entire former Grand Duchy of Oldenburg and located in the federal state of Lower Saxony, provides nearly 100% of the royalties received by the Trust. BEB Erdgas und Erdol GmbH (“BEB”), a joint venture in which ExxonMobil and the Royal Dutch/Shell Group of Companies each own 50%, administers the concession held by OEG. In 2002, Mobil Erdgas and BEB formed EMPG to carry out all exploration, drilling and production activities. All sales activities are still handled by either Mobil Erdgas or BEB. Vermilion Energy Inc. (“Vermilion”), a Canadian based international oil and gas producer, entered into a Farm-In Agreement (the “Farm-In Agreement”) with Mobil Erdgas and BEB. The Farm-In Agree- ment specifies that Vermillion has acquired an interest in various portions of a concession or areas owned by Mobil Erdgas and BEB. Three of these licenses cover the three northernmost areas of the Oldenburg concession. The Farm-In Agreement commits Vermilion to financial participation at a 50% level in 11 gross exploratory wells over the next five years. If Vermilion conducts any successful drilling within the confines of the Oldenburg concession, sales of that gas or oil would be subject to the relevant royalty contract. Under the Mobil Agreement covering the western part of the Oldenburg concession (approximately 662,000 acres), the Trust receives a royalty payment of 4% on gross receipts from sales by Mobil Erdgas of gas well gas, oil well gas, crude oil and condensate. Under the Mobil Agreement there is no deduction of costs prior to the calculation of royalties from gas well gas and oil well gas, which together account for approximately 98% of all the royalties under said agreement. Historically, the Trust has received significantly greater royalty payments under the Mobil Agreement (as compared to the OEG Agreement described below) due to the higher royalty rate specified by that agreement. The Trust is also entitled under the Mobil Agreement to receive a 2% royalty on gross receipts of sales of sulfur obtained as a by-product of sour gas produced from the western part of Oldenburg. The payment of the sulfur royalty is conditioned upon sales of sulfur by Mobil Erdgas at a selling price above an agreed upon base price. This base price is adjusted annually by an inflation index. When the average quarterly selling price falls below the indexed base price, no sulfur royalties are paid by Mobil Erdgas. Sulfur royalties under the Mobil Agreement totaled $78,094, $375,614 and $600,514 during fiscal 2015, 2014 and 2013, respectively. The 2015 figure includes negative adjustments from 2013 and 2014 of $80,516 and $132,587, respectively. The operating companies improperly allocated sulfur sales to the Mobil Agreement during 2013 and 2014 resulting in the overpayment of sulfur royalties. In 2015, the operating companies made negative adjustments to correct the earlier overpayment of sulfur royalties. Under the OEG Agreement covering the entire Oldenburg concession , the Trust receives royalties at the rate of 0.6667% on gross receipts from sales by BEB of gas well gas, oil well gas, crude oil, condensate and sulfur (removed during the processing of sour gas) less a certain allowed deduction of costs (the “OEG Agreement”). Under the OEG Agreement, 50% of the field handling, treatment and transportation costs as reported for state royalty purposes are deducted from the gross sales receipts prior to the calculation of the royalty to be paid to the Trust. 8


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    NORTH EUROPEAN OIL ROYALTY TRUST In addition to the Oldenburg area, the Trust also holds overriding royalties at various rates on a number of currently non-producing leases of various sizes in other areas of Germany. One of these leases, Grosses Meer, was formerly active but provided no royalties during fiscal 2015, 2014 and 2013. Management’s Discussion and Analysis of Financial Condition and Results of Operations Executive Summary The Trust is a passive fixed investment trust which holds overriding royalty rights, receives income under those rights from certain operating companies, pays its expenses and distributes the remaining net funds to its unit owners. As mandated by the Trust Agreement, distributions of income are made on a quarterly basis. These distributions, as determined by the Trustees, constitute substantially all of the funds on hand after provision is made for Trust expenses then anticipated. The Trust does not engage in any business or extractive operations of any kind in the areas over which it holds royalty rights and is precluded from engaging in such activities by the Trust Agreement. There are no requirements, therefore, for capital resources with which to make capital expenditures or investments in order to continue the receipt of royalty revenues by the Trust. The properties of the Trust are described above in “Description of Trust Assets.” Of particular importance with respect to royalty income are the two royalty agreements, the Mobil Agreement and the OEG Agreement. The Mobil Agreement covers gas sales from the western part of the Oldenburg concession. Under the Mobil Agreement, the Trust has traditionally received the majority of its royalty income due to the higher royalty rate of 4%. The OEG Agreement covers gas sales from the entire Oldenburg concession but the royalty rate of 0.6667% is significantly lower and gas royalties have been correspondingly lower. The operating companies pay monthly royalties to the Trust based on their sales of natural gas, sulfur and oil. Of these three products, natural gas provides approximately 95% of the total royalties in fiscal 2015. The amount of royalties paid to the Trust is primarily based on four factors: the amount of gas sold, the price of that gas, the area from which the gas is sold and the exchange rate. On approximately the 25th of the months of January, April, July and October, the operating companies calculate the amount of gas sold during the previous calendar quarter and determine the amount of royalties that were payable to the Trust based on those sales. This amount is divided into thirds and forms the monthly royalty payments to the Trust (payable on the 15th of each month) for its upcoming fiscal quarter. At the same time that the operating companies determine the actual amount of royalties that were payable for the prior calendar quarter, they look at the actual amount of royalties that were paid to the Trust for that period and calculate the difference between what was paid and what was payable. Additional amounts payable by the operating companies are paid immediately and any overpayment is deducted from the payment for the first month of the following fiscal quarter. In September of each year, the operating companies make the final determination of any necessary royalty adjustments for the prior calendar year with a positive or negative adjustment made accordingly. Currently, the Trust’s German ac- countants review the royalty calculations on a biennial basis. There are two types of natural gas found within the Oldenburg concession, sweet gas and sour gas. Sweet gas has little or no contaminants and needs no treatment before it can be sold. Sour gas, in comparison, must be processed at the Grossenkneten desulfurization plant before it can be sold. The desulfurization process removes hydrogen sulfide and other contaminants. The hydrogen sulfide in gaseous form is converted to sulfur in a solid form and sold separately. As needed, EMPG, the operator 9


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    NORTH EUROPEAN OIL ROYALTY TRUST of the Grossenkneten desulfurization plant, conducts maintenance on the plant, generally during the summer months when demand is lower. Maintenance was conducted from August 31 through October 13, 2015. Historically, sour gas production capacity during the period of maintenance work has been reduced by approximately one-third. Under the Mobil and OEG Agreements, the gas is sold in one of three ways: (1) directly on the spot market; (2) between Mobil Erdgas and BEB (intra-company sales); or (3) directly to various distributors under contracts (which delineate, among other provisions, the timing, manner, volume and price of the gas sold). While gas supply contracts have in the past used the price of light heating oil in Germany as one of the primary pricing components, the number of such contracts now account for only a minor percentage of all Oldenburg gas sales. In contrast, the price of gas sold on the spot market or sold between Mobil Erdgas and BEB is largely determined by the quoted market price of gas then trading as determined by supply and demand and has no relationship to the price of oil. The Trust itself does not have access to the specific sales contracts under which gas from the Oldenburg concession is sold. However, working under a confidentiality agreement with the operating companies, the Trust’s German accountants review the spot market sales, the intra-company sales and the contractual sales periodically on behalf of the Trust to verify their correctness. The Trust’s accountants in Germany have begun their examination of the operating companies for 2013 and 2014. For unit owners, changes in the dollar value of the Euro have an immediate impact. This impact occurs at the time the royalties, which are paid to the Trust in Euros, are converted into U.S. dollars based upon the mid-day exchange rate in effect on the date the funds are transferred to the Trust’s bank account in the U.S. In relation to the dollar, a stronger Euro would yield more dollars and a weaker Euro would yield less dollars. Seasonal demand factors affect the income from the Trust’s royalty rights insofar as they relate to energy demands and increases or decreases in prices, but on average they are generally not material to the annual income received under the Trust’s royalty rights. The Trust has no means of ensuring continued income from overriding royalty rights at their present level or otherwise. The Trust’s consultant in Germany provides general information to the Trust on the German and European economies and energy markets. This information provides a context in which to evaluate the actions of the operating companies. The Trust’s consultant receives reports from the operating companies with respect to current and planned drilling and exploration efforts. However, the unified exploration and production venture, EMPG, which provides the reports to the Trust’s consultant, continues to limit the information flow to that which is required by German law. The low level of administrative expenses of the Trust limits the effect of inflation on costs. Sustained price inflation would be reflected in sales prices. Sales prices along with sales volumes form the basis on which the royalties paid to the Trust are computed. 10


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    NORTH EUROPEAN OIL ROYALTY TRUST Results: Fiscal 2015 versus Fiscal 2014 For fiscal 2015, the Trust’s gross royalty income decreased 34.53% to $12,390,575 from $18,927,005 in fiscal 2014 continuing to reflect the disruption in the energy market and the uncertainty of the world economy. The decrease in royalty income is due to declines in gas sales, gas prices and average exchange rates under both royalty agreements. The decrease in the amount of royalty income resulted in the lower distributions. The total distribution for fiscal 2015 was $1.27 per unit compared to $1.95 per unit for fiscal 2014. As in prior years, the Trust receives adjustments from the operating companies based on their final calculations of royalties payable during the previous periods. During fiscal 2015 the combination of positive and negative adjustments reduced royalty income by $592,626, the equivalent of $0.0645 per unit. Due to the incorrect allocation of sulfur sales under the Mobil Sulfur Agreement, an additional negative adjustment of $215,348, the equivalent of $0.0234 per unit, was assessed. During fiscal 2014, the negative adjustments decreased royalty income by $52,676, the equiv- alent of $0.0057 per unit. Gas sales under the Mobil Agreement declined 7.84% to 28.729 Bcf in fiscal 2015 from 31.172 Bcf in fiscal 2014. A significant portion of this decline occurred during the 4th fiscal quarter and was likely caused by the partial shutdown of the Grossenkneten desulfurization plant for a six week period. Since the Trust does not receive information about the decision making process of the operating companies, it is impossible to determine to what extent, if any, which factors may have impacted gas sales. However, according to the Trust’s consultant in Germany, it is likely that some portion of the decline in gas production is due to the normal reduction in well pressure that is experienced over time. Quarterly and Yearly Gas Sales under the Mobil Agreement in Billion cubic feet Fiscal Quarter 2015 Gas Sales 2014 Gas Sales Percentage Change First 7.876 8.108 - 2.86% Second 7.642 7.651 - 0.12% Third 7.382 7.738 - 4.60% Fourth 5.829 7.675 - 24.05% Fiscal Year Total 28.729 31.172 - 7.84% Average prices for gas sold under the Mobil Agreement decreased 10.99% to 2.2162 Ecents/kWh in fiscal 2015 from 2.4899 Ecents/kWh in fiscal 2014. Average Gas Prices under the Mobil Agreement in Euro cents per Kilowatt Hour Fiscal Quarter 2015 Gas Prices 2014 Gas Prices Percentage Change First 2.3538 2.7458 - 14.28% Second 2.3212 2.6635 - 12.85% Third 2.0017 2.3661 - 15.40% Fourth 2.1662 2.1709 - 0.22% Fiscal Year Avg. 2.2162 2.4899 - 10.99% 11


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    NORTH EUROPEAN OIL ROYALTY TRUST Converting gas prices into more familiar terms, using the average exchange rate, yielded a price of $7.22 per thousand cubic feet (“Mcf”), a 25.18% decrease from fiscal 2014’s average price of $9.65/Mcf. For fiscal 2015, royalties paid under the Mobil Agreement were converted and transferred at an average Euro/dollar exchange rate of $1.1323, a decrease of 16.12% from the average Euro/dollar exchange rate of $1.3499 for fiscal 2014. Average Euro Exchange Rate under the Mobil Agreement 2015 Average 2014 Average Fiscal Quarter Euro Exchange Rate Euro Exchange Rate Percentage Change First 1.2127 1.3597 - 10.81% Second 1.0754 1.3776 - 21.94% Third 1.1113 1.3577 - 18.15% Fourth 1.1301 1.2944 - 12.69% Fiscal Year Avg. 1.1323 1.3499 - 16.12% Excluding the effects of differences in prices and average exchange rates, the combination of royalty rates on gas sold from western Oldenburg results in an effective royalty rate approximately seven times higher than the royalty rate on gas sold from eastern Oldenburg. This is of particular significance to the Trust since gas sold from western Oldenburg provides the bulk of royalties paid to the Trust. For fiscal 2015, the volume of gas sold from western Oldenburg accounted for only 32.66% of the volume of all gas sales. However, western Oldenburg gas royalties provided approximately 79.32% or $9,289,836 out of a total of $11,711,215 in overall Oldenburg gas royalties. Gas sales under the OEG Agreement decreased 9.47% to 87.952 Bcf in fiscal 2015 from 97.155 Bcf in fiscal 2014. A significant portion of this decline occurred during the fourth fiscal quarter and was likely caused by the partial shutdown of the Grossenkneten desulfurization plant for a six week period. Since the Trust does not receive information about the decision making process of the operating companies, it is impossible to determine to what extent, if any, which factors may have impacted gas sales. However, according to the Trust’s consultant in Germany, it is likely that some portion of the decline in gas production is due to the normal reduction in well pressure that is experienced over time. Quarterly and Yearly Gas Sales under the OEG Agreement in Billion cubic feet Fiscal Quarter 2015 Gas Sales 2014 Gas Sales Percentage Change First 23.497 25.467 - 7.74% Second 23.137 24.355 - 5.00% Third 22.590 24.194 - 6.63% Fourth 18.728 23.139 - 19.06% Fiscal Year Total 87.952 97.155 - 9.47% 12


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    NORTH EUROPEAN OIL ROYALTY TRUST Average gas prices for gas sold under the OEG Agreement decreased 10.47% to 2.2939 Ecents/kWh in fiscal 2015 from 2.5622 Ecents/kWh in fiscal 2014. Average Gas Prices under the OEG Agreement in Euro cents per Kilowatt Hour Fiscal Quarter 2015 Gas Prices 2014 Gas Prices Percentage Change First 2.4808 2.7962 - 11.28% Second 2.4128 2.7096 - 10.95% Third 2.0401 2.4367 - 16.28% Fourth 2.2187 2.2803 - 2.70% Fiscal Year Avg. 2.2939 2.5622 - 10.47% Converting gas prices into more familiar terms, using the average exchange rate, yielded a price of $7.29/Mcf, a 24.85% decrease from fiscal 2014’s average price of $9.70/Mcf. For fiscal 2015, royalties paid under the OEG Agreement were converted and transferred at an average Euro/dollar exchange rate of $1.1291, a decrease of 16.41% from the average Euro/dollar exchange rate of $1.3507 for fiscal 2014. Average Euro Exchange Rate under the OEG Agreement 2015 Average 2014 Average Fiscal Quarter Euro Exchange Rate Euro Exchange Rate Percentage Change First 1.1973 1.3604 - 11.99% Second 1.0830 1.3774 - 21.37% Third 1.1159 1.3577 - 17.81% Fourth 1.1309 1.2891 - 12.27% Fiscal Year Avg. 1.1291 1.3507 - 16.41% Interest income for fiscal 2015 decreased 49.59% to $9,439 as compared to $18,724 for fiscal 2014 reflecting the reduction in royalty receipts. Trust expenses decreased 9.08% to $819,341 in fiscal 2015 from $901,150 in fiscal 2014 primarily due to the absence of accounting costs associated with the biennial examination of the royalty calculations by the German operating companies and the reduction in Trustees fees as specified according to the provisions of the Trust Agreement. 13


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    14 NORTH EUROPEAN OIL ROYALTY TRUST DOLLAR ROYALTIES WESTERN AND EASTERN OLDENBURG 35 MILLION DOLLARS 30 25 20 15 10 5 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Dollar Royalties by Fiscal Year WESTERN OLDENBURG EASTERN OLDENBURG


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    NORTH EUROPEAN OIL ROYALTY TRUST Results: Fiscal 2014 versus Fiscal 2013 For fiscal 2014, the Trust’s gross royalty income decreased 12.16% to $18,927,005 from $21,546,298 in fiscal 2013. The decrease in royalty income is due to declines in gas sales and gas prices. The impact of these factors was partially offset by a slight increase in average exchange rates. The decrease in the amount of royalty income resulted in the lower distributions. The total distribution for fiscal 2014 was $1.95 per unit compared to $2.25 per unit for fiscal 2013. As in prior years, the Trust receives adjustments from the operating companies based on their final calculations of royalties payable during the previous calendar year. The adjustment for the 2013 calendar year attributable to gas sales under the Mobil Agreement was a reduction of $561,584 and represented a negative impact of approximately $0.0611 per unit. This negative adjustment was not applied against the royalty income payable until the second quarter of fiscal 2015. In the fourth fiscal quarter of 2013, the 2012 calendar year adjustment represented a minor positive impact of $0.0043 per unit. Gas sales under the Mobil Agreement declined 7.85% to 31.172 Bcf in fiscal 2014 from 33.829 Bcf in fiscal 2013. Since the Trust does not receive information about the decision making process of the operating companies, it is impossible to determine to what extent, if any, which factors may have impacted gas sales. According to the Trust’s consultant in Germany, it is likely that the decline in gas production is due to the normal reduction in well pressure that is experienced over time. Quarterly and Yearly Gas Sales under the Mobil Agreement in Billion cubic feet Fiscal Quarter 2014 Gas Sales 2013 Gas Sales Percentage Change First 8.108 8.897 - 8.87% Second 7.651 8.656 - 11.61% Third 7.738 8.102 - 4.49% Fourth 7.675 8.174 - 6.10% Fiscal Year Total 31.172 33.829 - 7.85% Average prices for gas sold under the Mobil Agreement decreased 8.01% to 2.4899 Ecents/kWh in fiscal 2014 from 2.7066 Ecents/kWh in fiscal 2013. Average Gas Prices under the Mobil Agreement in Euro cents per Kilowatt Hour Fiscal Quarter 2014 Gas Prices 2013 Gas Prices Percentage Change First 2.7458 2.9620 - 7.30% Second 2.6635 2.4352 + 9.38% Third 2.3661 2.7651 - 14.43% Fourth 2.1709 2.6583 - 18.34% Fiscal Year Avg. 2.4899 2.7066 - 8.01% Converting gas prices into more familiar terms, using the average exchange rate, yielded a price of $9.65/ Mcf, a 5.76% decrease from fiscal 2013’s average price of $10.24/Mcf. For fiscal 2014, royalties paid under the Mobil Agreement were converted and transferred at an average Euro/dollar exchange rate of $1.3499, an increase of 2.48% from the average Euro/dollar exchange rate of $1.3172 for fiscal 2013. 15


  • Page 18

    NORTH EUROPEAN OIL ROYALTY TRUST Average Euro Exchange Rate under the Mobil Agreement 2014 Average 2013 Average Fiscal Quarter Euro Exchange Rate Euro Exchange Rate Percentage Change First 1.3597 1.3158 + 3.34% Second 1.3776 1.3105 + 5.12% Third 1.3577 1.3090 + 3.72% Fourth 1.2944 1.3334 - 2.92% Fiscal Year Avg. 1.3499 1.3172 + 2.48% Excluding the effects of differences in prices and average exchange rates, the combination of roy- alty rates on gas sold from western Oldenburg results in an effective royalty rate approximately seven times higher than the royalty rate on gas sold from eastern Oldenburg. This is of particular significance to the Trust since gas sold from western Oldenburg provides the bulk of royalties paid to the Trust. For fiscal 2014, the volume of gas sold from western Oldenburg accounted for only 32.08% of the volume of all gas sales. However, western Oldenburg gas royalties provided approximately 78.91% or $14,076,205 out of a total of $17,837,669 in overall Oldenburg gas royalties. Gas sales under the OEG Agreement decreased 5.91% to 97.155 Bcf in fiscal 2014 from 103.256 Bcf in fiscal 2013. Since the Trust does not receive information about the decision making process of the operating companies, it is impossible to determine to what extent, if any, which factors may have im- pacted gas sales. According to the Trust’s consultant in Germany, it is likely that the decline in gas pro- duction is due to the normal reduction in well pressure that is experienced over time. Quarterly and Yearly Gas Sales under the OEG Agreement in Billion cubic feet Fiscal Quarter 2014 Gas Sales 2013 Gas Sales Percentage Change First 25.467 27.117 - 6.08% Second 24.355 26.508 - 8.12% Third 24.194 24.436 - 0.99% Fourth 23.139 25.195 - 8.16% Fiscal Year Total 97.155 103.256 - 5.91% Average gas prices for gas sold under the OEG Agreement decreased 10.29% to 2.5622 Ecents/kWh in fiscal 2014 from 2.8561 Ecents/kWh in fiscal 2013. Average Gas Prices under the OEG Agreement in Euro cents per Kilowatt Hour Fiscal Quarter 2014 Gas Prices 2013 Gas Prices Percentage Change First 2.7962 3.0363 - 7.91% Second 2.7096 2.9002 - 6.57% Third 2.4367 2.7696 - 12.02% Fourth 2.2803 2.7003 - 15.55% Fiscal Year Total 2.5622 2.8561 - 10.29% 16


  • Page 19

    NORTH EUROPEAN OIL ROYALTY TRUST Converting gas prices into more familiar terms, using the average exchange rate, yielded a price of $9.70/Mcf, a 7.71% decrease over fiscal 2013’s average price of $10.51/Mcf. For fiscal 2014, royalties paid under the OEG Agreement were converted and transferred at an average Euro/dollar exchange rate of $1.3507, an increase of 2.82% from the average Euro/dollar exchange rate of $1.3136 for fiscal 2013. Average Euro Exchange Rate under the OEG Agreement 2014 Average 2013 Average Fiscal Quarter Euro Exchange Rate Euro Exchange Rate Percentage Change First 1.3604 1.3083 + 3.98% Second 1.3774 1.3105 + 5.10% Third 1.3577 1.3048 + 4.05% Fourth 1.2891 1.3352 - 3.45% Fiscal Year Avg. 1.3507 1.3136 + 2.82% Interest income for fiscal 2014 decreased 26.18% to $18,724 as compared to $25,363 for fiscal 2013 reflecting the reduction in royalty receipts. Trust expenses decreased 3.76% to $901,150 in fiscal 2014 from $936,355 in fiscal 2013 primarily due to the absence of legal costs associated with the previous year’s litigation in Germany and the reduction in Trustees fees as specified according to the provisions of the Trust Agreement. 17


  • Page 20

    NORTH EUROPEAN OIL ROYALTY TRUST Critical Accounting Policies The financial statements, appearing subsequently in this Report, present financial statement balances and financial results on a modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States (“GAAP basis”). Cash basis accounting is an accepted accounting method for royalty trusts such as the Trust. GAAP basis financial statements disclose income as earned and expenses as incurred, without regard to receipts or payments. The use of GAAP would require the Trust to accrue for expected royalty payments. This is exceedingly difficult since the Trust has very limited information on such payments until they are received and cannot accurately project such amounts. The Trust’s cash basis financial statements disclose revenue when cash is received and expenses when cash is paid. The one modification of the cash basis of accounting is that the Trust accrues for distributions to be paid to unit owners (those distributions approved by the Trustees for the Trust). The Trust’s distributable income represents royalty income received by the Trust during the period plus interest income less any expenses incurred by the Trust, all on a cash basis. In the opinion of the Trustees, the use of the modified cash basis provides a more meaningful presentation to unit owners of the results of operations of the Trust and presents to the unit owners a more accurate calculation of income and expenses for tax reporting purposes. ___________________________________________________________ This Annual Report may contain forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Such statements address future expectations and events or conditions concerning the Trust. Many of these statements are based on information provided to the Trust by the operating companies or by consultants using public information sources. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in any forward-looking statements. These include: l risks and uncertainties concerning levels of gas production and gas sale prices, general economic conditions and currency exchange rates; l the ability or willingness of the operating companies to perform under their contractual obligations with the Trust; l potential disputes with the operating companies and the resolution thereof; and l the risk factors set forth above under Item 1A of the Trust’s Annual Report on Form 10-K for the fiscal year ended October 31, 2015 (the “Trust’s Form 10-K”). All such factors are difficult to predict, contain uncertainties that may materially affect actual results, and are generally beyond the control of the Trust. New factors emerge from time to time and it is not possible for the Trust to predict all such factors or to assess the impact of each such factor on the Trust. Any forward-looking statement speaks only as of the date on which such statement is made, and the Trust does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made. 18


  • Page 21

    NORTH EUROPEAN OIL ROYALTY TRUST Distributions and Trading The Trust’s units of beneficial interest are listed for trading on the New York Stock Exchange under the symbol NRT. Under the Trust Agreement, the Trustees distribute to unit owners, on a quarterly basis, the net royalty income after deducting expenses and reserving limited funds for anticipated administrative expenses. As of November 30, 2015, there were 743 unit owners of record. The following table presents the high and low closing prices for the quarterly periods ended in fiscal 2015 and 2014 as reported by the NYSE as well as the cash distributions paid to unit owners by quarter for the past two fiscal years. Fiscal Year 2015 Low High Distribution Quarter Ended Closing Price Closing Price per Unit January 31, 2015 $11.80 $18.88 $0.35 April 30, 2015 $11.66 $14.71 $0.33 July 31, 2015 $8.73 $14.14 $0.36 October 31, 2015 $9.29 $11.46 $0.23 Fiscal Year 2014 Low High Distribution Quarter Ended Closing Price Closing Price per Unit January 31, 2014 $18.65 $23.60 $0.54 April 30, 2014 $20.15 $24.40 $0.56 July 31, 2014 $22.87 $24.65 $0.46 October 31, 2014 $18.29 $23.00 $0.39 The quarterly distributions to unit owners represent their undivided interest in royalty payments from sales of gas, sulfur and oil during the previous quarter. Each unit owner is entitled to recover a portion of his or her investment in these royalty rights through a cost depletion percentage. The calculation of this cost depletion percentage is set forth in detail in Attachment B to the Cost Depletion Report attached as Exhibit 99.1 to the Trust’s Form 10-K. The Cost Depletion Report has been prepared by Davis Associates using the limited information described in Item 2 of the Trust’s Form 10-K to which reference is made. The Trustees believe that the calculations and assumptions used in the Cost Depletion Report are reasonable according to the facts and circumstances of available information. The cost depletion percentage recommended by the Trust’s independent petroleum and natural gas consultants for calendar 2015 is 10.2093%. Specific details relative to the Trust’s income and expenses and cost depletion percentage as they apply to the calculation of taxable income for the 2015 calendar year are included on special removable pages in this 2015 Annual Report. Additionally, the tax reporting information for 2015 is available on the Trust’s website, www.neort.com, in the section marked Tax Letters contained within the Tax Information section. The Trust does not maintain any compensation plans under which units are authorized for issuance. The Trust did not make any repurchases of Trust units during fiscal 2015, 2014 and 2013 and has never made such repurchases. 19


  • Page 22

    NORTH EUROPEAN OIL ROYALTY TRUST Comparison of Five Year Returns The graph set forth on the following page compares, for the last five years, the cumulative return on Trust Units, the securities in a peer group index, and the S&P 500 Composite Index. Because no published peer group index exists and the Trust has been unable to locate any royalty trusts publicly traded in the U.S. with reserves and sales in Europe, the Trustees have developed a peer group consisting of the following three domestic oil royalty trusts: Mesa Royalty Trust, Sabine Royalty Trust and San Juan Basin Royalty Trust (the “Royalty Peer Group”). The composition of the Royalty Peer Group has been the same since the Trust’s proxy statement for its 1993 Annual Meeting of Unit Owners. While these three domestic oil royalty trusts appear to be the most comparable for comparison purposes, there are a number of differences between North European Oil Royalty Trust and the Royalty Peer Group. As previously mentioned, the reserves and sales attributed to the royalty trusts comprising the Royalty Peer Group are located in the United States, while the reserves and sales attributed to North European Oil Royalty Trust are located in Germany. There are fundamental differences between the energy markets in the United States and Germany that affect commodity pricing and as a result severely restrict the usefulness of any comparison of their cumulative returns. In determining the cumulative return on investment, it has been assumed that on October 31, 2010, an equal dollar amount was invested in the Trust Units, in the securities of the trusts of the Royalty Peer Group, and in the S&P 500 Composite Index. The comparisons assume in all cases the reinvestment of all dividends or distributions on the respective payment dates. The cumulative returns shown for the Trust and the Royalty Peer Group do not reflect any differences between the tax treatment of Trust distributions, due to permitted cost depletion, and dividends on securities in the S&P 500 Composite Index. 20


  • Page 23

    NORTH EUROPEAN OIL ROYALTY TRUST COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among North European Oil Royalty Trust, the S&P 500 Index, and a Peer Group $250 $200 $150 $100 $50 $0 10/31/2010 10/31/2011 10/31/2012 10/31/2013 10/31/2014 10/31/2015 North European Oil Royalty Trust S&P 500 Peer Group *$100 invested on 10/31/10 in stock or index, including reinvestment of dividends. Fiscal year ending October 31. 21


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    NORTH EUROPEAN OIL ROYALTY TRUST REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees and Unit Owners of North European Oil Royalty Trust We have audited the accompanying statements of assets, liabilities and trust corpus of North European Oil Royalty Trust (the “Trust”) as of October 31, 2015 and 2014, and the related statements of revenue collected and expenses paid, undistributed earnings, and changes in cash and cash equivalents for each of the years in the three-year period ended October 31, 2015. The Trust’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As described in Note 1, these financial statements have been prepared on the modified cash basis of accounting, which is a comprehensive basis of accounting other than U.S. generally accepted accounting principles. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets, liabilities and trust corpus of the Trust as of October 31, 2015 and 2014, its revenue collected and expenses paid, its undistributed earnings, and changes in its cash and cash equivalents for each of the years in the three-year period ended October 31, 2015, on the basis of accounting described in Note 1. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Trust’s internal control over financial reporting as of October 31, 2015, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated December 30, 2015 expressed an unqualified opinion. WeiserMazars LLP New York, NY December 30, 2015 23


  • Page 26

    24 NORTH EUROPEAN OIL ROYALTY TRUST STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS (NOTE 1) OCTOBER 31, 2015 AND 2014 ASSETS 2015 2014 Current assets - - Cash and cash equivalents $ 2,192,865 $ 3,754,736 Producing gas and oil royalty rights, net of amortization (Notes 1 and 2) 1 1 Total Assets $ 2,192,866 $ 3,754,737 LIABILITIES AND TRUST CORPUS 2015 2014 Current liabilities - - Distributions to be paid to unit owners, $ 2,113,835 $ 3,584,330 paid November 2015 and 2014 Trust corpus (Notes 1 and 2) Undistributed earnings 79,030 170,406 Total Liabilities and Trust Corpus $ 2,192,866 $ 3,754,737 The accompanying notes are an integral part of these financial statements.


  • Page 27

    NORTH EUROPEAN OIL ROYALTY TRUST STATEMENTS OF REVENUE COLLECTED AND EXPENSES PAID (NOTE 1) FOR THE FISCAL YEARS ENDED OCTOBER 31, 2015, 2014, AND 2013 2015 2014 2013 Gas, sulfur and oil royalties received $ 12,390,575 $ 18,927,005 $ 21,546,298 Interest income 9,439 18,724 25,363 Trust Income 12,400,014 18,945,729 21,571,661 Non-related party expenses (732,209) (819,004) (857,334) Related party expenses (87,132) (82,146) (79,021) Trust Expenses (819,341) (901,150) (936,355) Net Income $ 11,580,673 $ 18,044,549 $ 20,635,306 Net income per unit $ 1.26 $ 1.96 $ 2.25 Distributions per unit paid or to be paid $ 1.27 $ 1.95 $ 2.25 to unit owners The accompanying notes are an integral part of these financial statements. 25


  • Page 28

    26 NORTH EUROPEAN OIL ROYALTY TRUST STATEMENTS OF UNDISTRIBUTED EARNINGS (NOTE 1) FOR THE FISCAL YEARS ENDED OCTOBER 31, 2015, 2014 AND 2013 2015 2014 2013 Balance, beginning of year $ 170,406 $ 47,477 $ 90,999 Net income 11,580,673 18,044,579 20,635,306 11,751,079 18,092,056 20,726,305 Less: Current year distributions paid or 11,672,049 17,921,650 20,678,828 to be paid to unit owners Balance, end of year $ 79,030 $ 170,406 $ 47,477 The accompanying notes are an integral part of these financial statements.


  • Page 29

    NORTH EUROPEAN OIL ROYALTY TRUST STATEMENTS OF CHANGES IN CASH AND CASH EQUIVALENTS (NOTE 1) FOR THE FISCAL YEARS ENDED OCTOBER 31, 2015, 2014 AND 2013 2015 2014 2013 Sources of Cash and Cash Equivalents: Gas, sulfur and oil royalties received $ 12,390,575 $ 18,927,005 $ 21,546,298 Interest income 9,439 18,724 25,363 12,400,014 18,945,729 21,571,661 Uses of Cash and Cash Equivalents: Payment of Trust expenses 819,341 901,150 936,355 Distributions paid 13,142,544 19,208,333 20,495,015 13,961,885 20,109,483 21,431,370 Net increase (decrease) in cash (1,561,871) (1,163,754) 140,291 and cash equivalents, during the year Cash and cash equivalents, 3,754,736 4,918,490 4,778,199 beginning of year Cash and cash equivalents, $ 2,192,865 $ 3,754,736 $ 4,918,490 end of year The accompanying notes are an integral part of these financial statements. 27


  • Page 30

    NORTH EUROPEAN OIL ROYALTY TRUST NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2015, 2014, AND 2013 (1) Summary of significant accounting policies: Basis of accounting - The accompanying financial statements of North European Oil Royalty Trust (the “Trust”) are prepared in accordance with the rules and regulations of the SEC. Financial statement balances and financial results are presented on a modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States (“GAAP basis”). On a modified cash basis, revenue is earned when cash is received and expenses are incurred when cash is paid. GAAP basis financial statements disclose revenue as earned and expenses as incurred, without regard to receipts or payments. The modified cash basis of accounting is utilized to permit the accrual for distributions to be paid to unit owners (those distributions approved by the Trustees for the Trust). The Trust’s distributable income represents royalty income received by the Trust during the period plus interest income less any expenses incurred by the Trust, all on a cash basis. In the opinion of the Trustees, the use of the modified cash basis of accounting provides a more meaningful presentation to unit owners of the results of operations of the Trust. Producing gas and oil royalty rights - The rights to certain gas and oil royalties in Germany were transferred to the Trust at their net book value by North European Oil Company (the “Company”) (see Note 2). The net book value of the royalty rights has been reduced to one dollar ($1) in view of the fact that the remaining net book value of royalty rights is de minimis relative to annual royalties received and distributed by the Trust and does not bear any meaningful relationship to the fair value of such rights or the actual amount of proved producing reserves. Federal and state income taxes - The Trust, as a grantor trust, is exempt from federal income taxes under a private letter ruling issued by the Internal Revenue Service. The Trust has no state income tax obligations. Cash and cash equivalents - Cash and cash equivalents are amounts deposited in bank accounts, money market accounts and amounts invested in certificates of deposit and U. S. Treasury bills with original maturities of approximately three months or less from the date of purchase. The investment options available to the Trust are limited in accordance with specific provisions of the Trust Agreement. As of October 31, 2015, the uninsured amounts held in the Trust’s U.S. bank accounts were $1,940,514. In addition, the Trust held € 3,575, the equivalent of $3,950, in its German bank account at October 31, 2015. 28


  • Page 31

    NORTH EUROPEAN OIL ROYALTY TRUST Net income per unit - Net income per unit is based upon the number of units outstanding at the end of the period. As of October 31, 2015, 2014 and 2013, there were 9,190,590 units of beneficial interest outstanding. New accounting pronouncements – The Trust is not aware of any recently issued, but not yet effective, accounting standards that would be expected to have a significant impact on the Trust’s financial position or results of operations. (2) Formation of the Trust: The Trust was formed on September 10, 1975. As of September 30, 1975, the Company was liquidated and the remaining assets and liabilities of the Company, including its royalty rights, were transferred to the Trust. The Trust, on behalf of the owners of beneficial interest in the Trust, holds overriding royalty rights covering gas and oil production in certain concessions or leases in the Federal Republic of Germany. These rights are held under contracts with local German exploration and development subsidiaries of ExxonMobil Corp. and the Royal Dutch/Shell Group of Companies. Under these contracts, the Trust receives various percentage royalties on the proceeds of the sales of certain products from the areas involved. At the present time, royalties are received for sales of gas well gas, oil well gas, crude oil, distillate and sulfur. (3) Related party transactions: John R. Van Kirk, the Managing Director of the Trust, provides office space and services to the Trust at cost. For such office space and services, the Trust reimbursed the Managing Director $25,729, $24,634 and $25,602 in fiscal 2015, 2014 and 2013, respectively. Lawrence A. Kobrin, a Trustee of the Trust, is a Senior Counsel at Cahill Gordon & Reindel LLP, which serves as counsel to the Trust. For legal services, the Trust paid Cahill Gordon & Reindel LLP $61,403, $57,512 and $53,419 in fiscal 2015, 2014 and 2013, respectively. (4) Employee benefit plan: The Trust has established a savings incentive match plan for employees (SIMPLE IRA) that is available to both employees of the Trust, one of whom is the Managing Director. The Trustees authorized the making of contributions by the Trust to the accounts of employees, on a matching basis, of up to 3% of cash compensation paid to each such employee for the 2015, 2014 and 2013 calendar years. 29


  • Page 32

    NORTH EUROPEAN OIL ROYALTY TRUST (5) Quarterly results (unaudited): The tables below summarize the quarterly results and distributions of the Trust for the fiscal years ended October 31, 2015 and 2014: Fiscal 2015 by Quarter and Year First Second Third Fourth Year Royalties received $3,442,713 $3,238,135 $3,459,645 $2,250,082 $12,390,575 Net income $3,096,916 $3,074,495 $3,312,307 $2,096,955 $11,580,673 Net income per unit $0.34 $0.33 $0.36 $0.23 $1.26 Distributions paid or to be paid $3,216,706 $3,032,895 $3,308,613 $2,113,835 $11,672,049 Distributions per unit paid or to be paid to unit owners $0.35 $0.33 $0.36 $0.23 $1.27 Fiscal 2014 by Quarter and Year First Second Third Fourth Year Royalties received $5,295,533 $5,346,449 $4,462,842 $3,822,181 $18,927,005 Net income $4,958,808 $5,140,001 $4,287,987 $3,657,783 $18,044,579 Net income per unit $0.54 $0.56 $0.47 $0.40 $1.96 Distributions paid or to be paid $4,962,919 $5,146,730 $4,227,671 $3,584,330 $19,921,650 Distributions per unit paid or to be paid to unit owners $0.54 $0.56 $0.46 $0.39 $1.95 30


  • Page 33

    NORTH EUROPEAN OIL ROYALTY TRUST Disclosure Controls and Procedures The Trust maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Trust is recorded, processed, summarized, accumulated and communicated to its management, which consists of the Managing Director, to allow timely decisions regarding required disclosure, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. The Managing Director has performed an evaluation of the effectiveness of the design and operation of the Trust’s disclosure controls and procedures as of October 31, 2015. Based on that evaluation, the Managing Director concluded that the Trust’s disclosure controls and procedures were effective as of October 31, 2015. Internal Control over Financial Reporting Part A. Management’s Report on Internal Control over Financial Reporting The Trust’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) for the Trust. There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even effective internal controls can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal control may vary over time. Management has evaluated the Trust’s internal control over financial reporting as of October 31, 2015. This assessment was based on criteria for effective internal control over financial reporting described in the standards promulgated by the Public Company Accounting Oversight Board and in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Trust’s internal control over financial reporting was effective as of October 31, 2015. Management’s assessment of the effectiveness of our internal control over financial reporting as of October 31, 2015 has been audited by WeiserMazars LLP, the Trust’s independent auditor, as stated in their report which follows. Part B. Attestation Report of Independent Registered Public Accounting Firm REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees and Unit Owners of North European Oil Royalty Trust We have audited North European Oil Royalty Trust’s (the “Trust”) internal control over financial reporting as of October 31, 2015, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The Trust’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Trust’s internal control over financial reporting based on our audit. 31


  • Page 34

    NORTH EUROPEAN OIL ROYALTY TRUST We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. The Trust’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Trust’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Trust; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Trust are being made only in accordance with authorizations of management and Trustees of the Trust; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Trust’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the Trust maintained, in all material respects, effective internal control over financial reporting as of October 31, 2015, based on criteria established in Internal Control—Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the statements of assets, liabilities and trust corpus as of October 31, 2015 and 2014, and the related statements of revenue collected and expenses paid, undistributed earnings and changes in cash and cash equivalents for each of the years in the three-year period ended October 31, 2015 and our report dated December 30, 2015 expressed an unqualified opinion thereon. WeiserMazars LLP New York, NY December 30, 2015 32


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    NORTH EUROPEAN OIL ROYALTY TRUST North European Oil Royalty Trust P.O. Box 456 Red Bank, New Jersey 07701 (732) 741-4008 IMPORTANT – 2015 TAX LETTER RETAIN THIS LETTER FOR PREPARATION OF YOUR 2015 INCOME TAX RETURNS January 4, 2016 To the Current and Former Unit Owners of North European Oil Royalty Trust: There are three parts to the tax letter. PART ONE applies to all unit owners. PART TWO applies to unit owners who have held their units for the entire year. PART THREE applies to unit owners who have held their units for only a portion of the year. The following is provided to assist current and former unit owners of North European Oil Royalty Trust (the “Trust”) to prepare their personal income tax returns for the tax year ended December 31, 2015. This letter serves to assist Owners, and their tax professionals, in determining the accurate and true income from the Trust for income tax reporting purpose. Further, this letter is for informational purposes and TEAR OUT HERE neither the Trust nor Trust employees intend, nor may it be construed, for this letter to serve as either legal or tax advice. It is recommended that you seek the advice of your trusted tax professional or attorney should you require further guidance. PART ONE – ALL UNIT OWNERS To determine your proportional and, therefore, reportable, share of Trust income you must first know how many Trust units you owned during 2015, the periods during which you owned the units, and the cost or tax basis of the units. The information contained in this letter is applicable to those unit owners who held their units for either the entire year or only a portion of the year. Please note that Trust distributions are not dividends and should not be included on your income tax return as dividend income. The Trust is considered a “grantor trust” for federal income tax purposes and each unit owner is deemed a “grantor” of the Trust. As such, unit owners realize income, in proportion to the owned units, when royalty income is paid to the Trust. Further, unit owners may deduct, from income, a proportional share of Trust expenses. Because realization of proportional Trust income and expenses is a time sensitive inquiry, you should not use the amount of quarterly Trust distributions received for income tax reporting purposes. Additionally, you should disregard the amounts listed on any 2015 Form 1099-Misc you receive from your broker or other nominee. The listed amounts are incomplete because they do not include your proportional share of Trust expenses and/or the cost depletion allowance. Income and expenses should be reported on Federal Income Tax Form 1040, Schedule E. Royalty income is generally considered portfolio income under the passive loss rules enacted by the Tax Reform Act of 1986. Under Part I, Income or Loss from Rental Real Estate and Royalties, on Line 1a enter property description as “oil and gas overriding royalty rights, Germany through North European Oil Royalty Trust.” The type of property is royalties. On Federal Income Tax Form 1040, Schedule E, royalty income should be entered on Line 4 and expenses should be entered on Line 19 as “miscellaneous Trust expenses.” Some tax preparation computer programs ask for a tax identification number. North European Oil Royalty Trust’s tax identification number is 22-2084119. 33


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    NORTH EUROPEAN OIL ROYALTY TRUST A unit owner may be entitled to cost depletion for tax reporting purposes. At the outset, in the first year of ownership, the unit owner’s cost or tax basis for the units is the basis for computing cost depletion. In each subsequent year, the basis for computing cost depletion is that original cost less the cumulative amount of depletion previously taken. The Trust retains Ralph E. Davis Associates, LLC, of Houston, Texas, a petroleum engineering company, to calculate the cost depletion percentage each year. The cost depletion percentage is calculated based upon computations of proved producing reserves estimated in accordance with accepted engineering analytical principles. Ralph E. Davis Associates, LLC has recommended an annual cost depletion percentage of 10.2093% for the 2015 calendar year. The IRS periodically changes the format for Schedule E (including the line numbers and descriptions), and may do so even after the date of this letter, so please make certain you follow the Form 1040 Schedule E directions carefully and enter the information on the correct lines. The Trust’s royalty income represents income from Germany. Although Germany does not tax the royalty income received by the Trust, 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 2015 to the Internal Revenue Service. This list will contain names, addresses and tax ID or Social Security Numbers. You may wish to attach a copy of this letter to your tax returns. This letter does not constitute legal or tax advice. Neither the Trust nor its employees may offer tax or legal advice relevant to your unique situation. The Trust recommends that you direct any questions to your tax advisor or attorney. PART TWO – OWNERSHIP OF UNITS FOR THE ENTIRE YEAR A. If you owned all your units for the entire year, you would calculate your royalty income by multiplying the number of units you owned by $1.2341. On Federal Income Tax Form 1040, Sched- ule E, royalty income should be entered on Line 4. B. If you owned all your units for the entire year, you would calculate your expenses by multiplying the number of units you owned by $0.0899. On Federal Income Tax Form 1040, Schedule E, expenses should be entered on Line 19 as “miscellaneous Trust expenses.” C. If you owned all your units for the entire year, you would calculate your cost depletion deduction by multiplying your cost basis or adjusted cost basis by .102093. On the Federal Income Tax Form 1040, Schedule E, your cost depletion deduction should be entered on Line 18. PART THREE – OWNERSHIP OF UNITS FOR A PARTIAL YEAR If you owned your units for only a portion of the year, you should use the charts and instructions on the following pages to determine your royalty income, royalty expenses and cost depletion deduction. 34


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    NORTH EUROPEAN OIL ROYALTY TRUST ROYALTY INCOME PER UNIT FOR THE 2015 TAX YEAR First month during Last month during which units were owned: which units January February March April May June July August September October November December were owned: January $0.1346 $0.2404 $0.3628 $0.4869 $0.6091 $0.7339 $0.8634 $0.9029 $1.0178 $1.1082 $1.1525 $1.2341 February $0.1058 $0.2282 $0.3523 $0.4745 $0.5993 $0.7288 $0.7683 $0.8832 $0.9736 $1.0179 $1.0995 March $0.1224 $0.2465 $0.3687 $0.4935 $0.6230 $0.6625 $0.7774 $0.8678 $0.9121 $0.9937 April $0.1241 $0.2463 $0.3711 $0.5006 $0.5401 $0.6550 $0.7454 $0.7897 $0.8713 May $0.1222 $0.2470 $0.3765 $0.4160 $0.5309 $0.6213 $0.6656 $0.7472 June $0.1248 $0.2543 $0.2938 $0.4087 $0.4991 $0.5434 $0.6250 July $0.1295 $0.1690 $0.2839 $0.3743 $0.4186 $0.5002 August $0.0395 $0.1544 $0.2448 $0.2891 $0.3707 September $0.1149 $0.2053 $0.2496 $0.3312 October $0.0904 $0.1347 $0.2163 November $0.0443 $0.1259 December $0.0816 . A. To determine your royalty income per unit for your period of ownership, place your finger on the chart above on the first month in the left hand column during which you owned your units and slide your finger to the right until you reach the column showing the last month during which you owned your units. This figure should be multiplied by the number of units you owned during that pe- riod to calculate your royalty income. On Federal Income Tax Form 1040, Schedule E, royalty income should be entered on Line 4. ROYALTY EXPENSES PER UNIT FOR THE 2015 TAX YEAR First month during Last month during which units were owned: which units January February March April May June July August September October November December were owned: January $0.0232 $0.0312 $0.0364 $0.0410 $0.0500 $0.0525 $0.0570 $0.0636 $0.0682 $0.0737 $0.0797 $0.0899 February $0.0080 $0.0132 $0.0178 $0.0268 $0.0293 $0.0338 $0.0404 $0.0450 $0.0505 $0.0565 $0.0667 March $0.0052 $0.0098 $0.0188 $0.0213 $0.0258 $0.0324 $0.0370 $0.0425 $0.0485 $0.0587 April $0.0046 $0.0136 $0.0161 $0.0206 $0.0272 $0.0318 $0.0373 $0.0433 $0.0535 May $0.0090 $0.0115 $0.0160 $0.0226 $0.0272 $0.0327 $0.0387 $0.0489 June $0.0025 $0.0070 $0.0136 $0.0182 $0.0237 $0.0297 $0.0399 July $0.0045 $0.0111 $0.0157 $0.0212 $0.0272 $0.0374 August $0.0066 $0.0112 $0.0167 $0.0227 $0.0329 September $0.0046 $0.0101 $0.0161 $0.0263 October $0.0055 $0.0115 $0.0217 November $0.0060 $0.0162 December $0.0102 B. To determine your royalty expenses per unit for your period of ownership, place your finger on the chart above on the first month in the left hand column during which you owned your units and slide your finger to the right until you reach the column showing the last month during which you owned your units. This figure should be multiplied by the number of units you owned during that period to calculate your expenses. On Federal Income Tax Form 1040, Schedule E, expenses should be entered on Line 19 as "mis- 35 cellaneous Trust expenses."


  • Page 38

    NORTH EUROPEAN OIL ROYALTY TRUST C. If you owned your units for only a portion of the year you must prorate the depletion percentage to reflect your period of ownership. In the same way that you calculated your royalty income per unit, place your finger on the Royalty Income per Unit Chart on the first month in the left hand column during which you owned your units and slide your finger to the right until you reach the column showing the last month during which you owned your units. This figure should be divided by $1.2341. The resulting figure is then multiplied by .102093 to yield the prorated depletion percentage. Multiply this prorated depletion percentage by your cost basis or adjusted cost basis to calculate your cost depletion deduction. Your cost depletion deduction should be entered on Line 18 on the Federal Income Tax Form 1040, Schedule E. This letter does not constitute legal or tax advice. Neither the Trust nor its employees may offer tax or legal advice relevant to your unique situation. If you dispose of some or all of your Trust units, you should consult your tax advisor as to the tax consequence of that disposition. The Trust recommends that you direct any questions to your tax advisor or attorney. Most sincerely yours, John R. Van Kirk Managing Director 36


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    NORTH EUROPEAN OIL ROYALTY TRUST Trustees Managing Director Counsel Robert P. Adelman John R. Van Kirk Cahill Gordon & Reindel Managing Trustee, 80 Pine Street Director or Trustee New York, N.Y. 10005 of various Office of the profit and non-profit Managing Director Auditors companies PO Box 456 WeiserMazars LLP 43 West Front Street 135 West 50th Street Samuel M. Eisenstat Suite 19A New York, N.Y. 10020 Audit Comm. Chairman, Red Bank, N.J. 07701 Attorney; CEO, Tel: (732) 741-4008 Abjac Energy Corp. Fax: (732) 741-3140 E-Mail: neort@neort.com Lawrence A. Kobrin Website: www.neort.com Clerk to the Trustees, Senior Counsel, Transfer Agent Cahill Gordon & Petroleum and Natural American Stock Transfer & Reindel LLP Gas Consultants Trust Company, LLC Ralph E. Davis Associates, LLC 6201 15th Avenue Willard B. Taylor Of 711 Louisiana Street Brooklyn, NY 11219 Counsel, Sullivan and Suite 3100 Tel: (800) 937-5449 Cromwell LLP Houston, Texas 77002 (718) 921-8200 ext. 4801 E-Mail: info@amstock.com Rosalie J. Wolf Website: www.amstock.com Managing Partner, Botanica Capital Partners LLC A copy of the Trust’s Form 10-K Annual Report for fiscal 2015 as filed with the Securities and Exchange Commission will be sent upon written request to John R. Van Kirk, Managing Director, P.O. Box 456, Red Bank, New Jersey 07701. In addition to the 2015 10-K, other pertinent filings and documents are available at the Trust’s website, www.neort.com


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