SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended July 31, 2007 or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from __________ to ___________ .
Commission file number 1-8245
NORTH EUROPEAN OIL ROYALTY TRUST
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(Exact name of registrant as specified in its charter)
Delaware 22-2084119
----------------------- --------------------------
(State of organization) (I.R.S. Employer I.D. No.)
Suite 19A, 43 West Front Street, Red Bank, New Jersey 07701
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(Address of principal executive offices)
(732) 741-4008
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer or a non-accelerated filer.
See definition of "accelerated filer and large accelerated filer" in
Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer Accelerated filer X Non-accelerated filer
---- ---- ----
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Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes No X
----- -----
Class Outstanding at July 31, 2007
---------------------------- ------------------------------
Units of Beneficial Interest 9,190,590
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PART I -- FINANCIAL INFORMATION
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Item 1. Financial Statements.
--------------------
STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS (NOTE 1)
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JULY 31, 2007 AND OCTOBER 31, 2006
----------------------------------
2007 2006
----------------- ----------------
(unaudited)
Current assets - - Cash and
cash equivalents (Note 1) $ 5,361,626 $ 7,204,250
Producing gas and oil royalty rights,
net of amortization (Notes 1 and 2) 1 1
------------ ------------
Total Assets $ 5,361,627 $ 7,204,251
============ ============
Current liabilities - - Cash
distributions payable to unit owners $ 5,330,542 $ 7,168,660
Contingent liability (Note 3)
Trust corpus (Notes 1 and 2) 1 1
Undistributed earnings 31,084 35,590
------------ ------------
Total Liabilities and Trust Corpus $ 5,361,627 $ 7,204,251
============ ============
The accompanying notes are an integral part
to these financial statements.
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STATEMENTS OF REVENUE COLLECTED AND EXPENSES PAID (NOTE 1)
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FOR THE THREE MONTHS ENDED JULY 31, 2007 AND 2006
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2007 2006
----------------- ----------------
(unaudited)
German gas, oil and sulfur
royalties received $ 5,402,889 $ 7,312,458
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Interest income 57,459 53,882
------------ ------------
Trust expenses (195,843) (225,639)
------------ ------------
Net income $ 5,264,505 $ 7,140,701
============ ============
Net income per unit $ .57 $ .78
====== ======
Cash distributions paid or to be paid:
Dividends and distributions per unit
paid to formerly unlocated
shareholders (Note 3) $ .00 $ .00
====== ======
Distributions per unit paid or
to be paid to unit owners $ .58 $ .77
====== ======
The accompanying notes are an integral part
to these financial statements.
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STATEMENTS OF REVENUE COLLECTED AND EXPENSES PAID (NOTE 1)
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FOR THE NINE MONTHS ENDED JULY 31, 2007 AND 2006
--------------------------------------------------
2007 2006
----------------- -----------------
(unaudited)
German gas, oil and sulfur
royalties received $21,430,819 $23,794,149
------------ ------------
Interest income 168,362 108,578
------------ ------------
Trust expenses (741,048) (754,975)
------------ ------------
Net income $20,858,133 $23,147,752
============ ============
Net income per unit $2.27 $2.52
====== ======
Cash distributions paid or to be paid:
Dividends and distributions per unit
paid to former unlocated
shareholders (Note 3) $ .00 $ .02
====== ======
Distributions per unit paid or
to be paid to unit owners $2.27 $2.50
====== ======
The accompanying notes are an integral part
to these financial statements.
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STATEMENTS OF UNDISTRIBUTED EARNINGS (NOTE 1)
---------------------------------------------
FOR THE NINE MONTHS ENDED JULY 31, 2007 AND 2006
------------------------------------------------
2007 2006
----------------- ----------------
(unaudited)
Balance, beginning of period $ 35,590 $ 64,299
Net income 20,858,133 23,147,752
------------ ------------
20,893,723 23,212,051
------------ ------------
Less:
Dividends and distributions paid
to formerly unlocated
shareholders (Note 3) 0 148,097
Current year distributions paid or
to be paid to unit owners (Note 3) 20,862,639 22,970,896
------------ ------------
20,862,639 23,118,993
------------ ------------
Balance, end of period $ 31,084 $ 93,058
============ ============
The accompanying notes are an integral part
to these financial statements.
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STATEMENTS OF CHANGES IN CASH AND CASH EQUIVALENTS (NOTE 1)
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FOR THE NINE MONTHS ENDED JULY 31, 2007 AND 2006
------------------------------------------------
2007 2006
----------------- ---------------
(unaudited)
Sources of cash and cash equivalents:
German gas, oil and sulfur royalties $21,430,819 $23,794,149
Interest income 168,362 108,578
------------ ------------
21,599,181 23,902,727
------------ ------------
Uses of cash and cash equivalents:
Payment of Trust expenses 741,048 754,975
Distributions and dividends
paid (Note 3) 22,700,757 19,898,207
------------ ------------
23,441,805 20,653,182
------------ ------------
Net increase (decrease) in cash and
cash equivalents during the period (1,842,624) 3,249,545
Cash and cash equivalents,
beginning of period 7,204,250 3,920,267
------------ ------------
Cash and cash equivalents, end of period $ 5,361,626 $ 7,169,812
============ ============
The accompanying notes are an integral part
to these financial statements.
-8-
NORTH EUROPEAN OIL ROYALTY TRUST
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NOTES TO FINANCIAL STATEMENTS
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(Unaudited)
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(1) Summary of significant accounting policies:
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Basis of accounting -
-------------------
The accompanying financial statements of North European Oil Royalty
Trust the "Trust") 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
financial statements disclose revenue when cash is received and
expenses when cash is paid. GAAP basis financial statements disclose
income 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. 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 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.
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Cash and cash equivalents -
-------------------------
Included in cash and cash equivalents are amounts deposited in bank
accounts and amounts invested in certificates of deposit and U. S.
Treasury bills with original maturities of three months or less from
The date of purchase.
Net income per unit -
-------------------
Net income per unit is based upon the number of units outstanding at
the end of the period. As of both July 31, 2007 and 2006, there were
9,190,590 units of beneficial interest outstanding.
(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, condensate and sulfur.
(3) Contingent liability:
---------------------
Since its inception in 1975, the Trust had served as fiduciary for
certain unlocated or unknown shareholders of North European Oil
Corporation (the "Corporation") and North European Oil Company,
corporate predecessors of the Trust. Pursuant to an order of the
Delaware Court of Chancery dated February 26, 1996, from and after
July 1, 2005, the Trust has no further obligation to make payments
of dividends or distributions attributable to any unexchanged
Corporation and Company shares.
From the liquidation of the Company to October 31, 2006, 729,761 Trust
units were issued in exchange for Corporation or Company shares and
dividends of $358,804 and distributions of $4,618,699 were paid to
formerly unlocated Corporation and Company shareholders. With the
escheat of the last Trust units attributable to unexchanged
Corporation and Company shares completed in April 2006, all Trust
units, including those issuable in exchange for Corporation and
Company shares, have been issued.
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(4) 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 $6,985 and $4,539
in the third quarter of fiscal 2007 and 2006, respectively. For such
office space and services, the Trust reimbursed the Managing Director
$17,748 and $16,160 in the first nine months of fiscal 2007 and 2006,
respectively.
As of January 1, 2007, Lawrence A. Kobrin, a Trustee of the Trust, was
named Senior Counsel at Cahill Gordon & Reindel LLP which serves as
counsel to the Trust. Prior to such time, Mr. Kobrin was a partner at
Cahill Gordon & Reindel LLP. For the third quarter of fiscal 2007,
the Trust paid Cahill Gordon & Reindel LLP $12,589 for legal services.
For the first nine months of fiscal 2007, the Trust paid Cahill Gordon
& Reindel LLP $53,195 for legal services.
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
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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. 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 any such involvement 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, 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 the ExxonMobil Corp. ("ExxonMobil"), or by Oldenburgische
Erdolgesellschaft ("OEG"). In 2002 Mobil Erdgas and BEB Erdgas und Erdol
GmbH ("BEB"), a joint venture of ExxonMobil and the Royal Dutch/Shell Group
of Companies, formed a company ExxonMobil Production Deutschland GmbH
("EMPG") to carry out all exploration, drilling and production activities.
All sales activities are still handled by the operating companies, either
Mobil Erdgas or BEB.
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 98% of the total royalties. The amount of
royalties paid to the Trust is based on four primary factors: the amount of
gas sold, the price of that gas, the area from which the gas is sold and the
exchange rate. The Oldenburg concession is the primary area from which the
natural gas, sulfur and oil are extracted and provides nearly 100% of all the
royalties received by the Trust. The Oldenburg concession (1,398,000 acres)
covers virtually the entire former Principality of Oldenburg and is located
in the federal state of Lower Saxony.
Under one set of rights 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 (the "Mobil Agreement"). 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 99% of all the royalties under this agreement. Historically,
the Trust has received significantly greater royalty payments under the
Mobil Agreement due to the higher royalty rate specified by that agreement.
Under another set of rights covering the entire Oldenburg concession and
pursuant to the agreement with OEG, 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,
-12-
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.
The gas is sold to various distributors under long-term contracts which
delineate, among other provisions, the timing, manner, volume and price of
the gas sold. The pricing mechanisms contained in these contracts include a
delay factor of three to six months and use the price of light heating oil in
Germany as one of the primary pricing components. Since Germany must import
a large percentage of its energy requirements, the U.S. dollar price of oil
on the international market has a significant impact on the price of light
heating oil and a delayed impact on the price of gas. The Trust itself does
not have access to the specific sales contracts under which gas from the
Oldenburg concession is sold. These contacts are reviewed periodically on
behalf of the Trust by Ernst & Young AG to verify the correctness of
application of the Agreement formulas for the computation of royalty payments.
For unit owners, changes in the value of the Euro have both an immediate
and long term impact. The immediate impact is from the exchange rate that is
applied at the time the royalties, paid to the Trust in Euros, are converted
into dollars at the time of their transfer from Germany to the United States.
A higher exchange rate would yield more dollars and a lower exchange rate
fewer dollars. The long term impact relates to the mechanism of gas pricing.
Since oil on the international market is priced in dollars, a weaker Euro
would mean that oil imported into Germany is more expensive. A stronger Euro
would mean that oil imported into Germany is less expensive. These changes
in the price of oil in Germany are subsequently reflected in the price of
light heating oil, which is used as a component in the calculation of gas
prices in the contracts under which the gas is sold. The changes in German
domestic light heating oil prices are in turn reflected in gas prices with a
built-in delay of three to six months.
Seasonal demand factors affect the income from royalty rights insofar
as they relate to energy demands and increases or decreases in prices, but
on average they are not material to the regular annual income received under
the royalty rights.
The Trust has no means of ensuring continued income from overriding
royalty rights at their present level or otherwise. The Trust's current
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. In his
position as consultant, he 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 relatively low level of administrative expenses of the Trust limits
the effect of inflation on its financial prospects. Continued price
inflation would be reflected in sales prices, which with sales volumes form
the basis on which the royalties paid to the Trust are computed. The impact
of inflation or deflation on energy prices in Germany is delayed by the use
in certain long-term gas sales contracts of a delay factor of three to six
months prior to the application of any changes in light heating oil prices
to gas prices.
-13-
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 the funds on hand after provision is made for
Trust expenses then anticipated.
Results: Third Quarter of Fiscal 2007 Versus Third Quarter of Fiscal 2006
-------------------------------------------------------------------------
For the third quarter of fiscal 2007, the Trust's net income was
$5,264,505, a decrease of 26.27% from the net income of $7,140,701 for the
third quarter of fiscal 2006. This income was derived from sales of gas,
sulfur and oil from the Trust's overriding royalty areas in Germany during
the second calendar quarter of 2007. A distribution of 58 cents per unit
was paid on August 29, 2007 to owners of record as of August 10, 2007.
The amount of royalties paid to the Trust is based on four primary
factors: the amount of gas sold, the price of that gas, the area from which
the gas is sold and the exchange rate. The primary factor affecting royalty
revenue for the quarter just ended was the decrease in gas prices under both
the Mobil and the OEG agreements. Gas sales under the two agreements
declined as well. In comparison to the third quarter of fiscal 2006, the
higher average value of the Euro relative to the dollar increased the number
of dollars received when the royalties paid in Euros were converted to
dollars at the time of their transfers to the U.S. This increase helped to
reduce the impact of the lower gas prices and gas sales and partially offset
the decline in royalty income.
For the quarter just ended, the average price of gas sold under the
Mobil Agreement decreased 25.75% to 1.5159 Eurocents/Kwh ("Ecents/Kwh") from
2.0417 Ecents/Kwh in the third quarter of fiscal 2006. For the quarter just
ended, gas sales under the Mobil Agreement decreased 8.15% to 16.177 billion
cubic feet ("Bcf") from 17.613 Bcf in the third quarter of fiscal 2006.
During the quarter just ended, royalties paid under the Mobil Agreement were
valued at an average Euro exchange rate of $1.3540, an increase of 7.20% from
the average Euro exchange rate of $1.2631 for the third quarter of fiscal
2006. Converting the average gas prices using this average exchange rate
into more familiar terms yields an average gas price under this agreement of
$5.90 per thousand cubic feet ("Mcf") compared to $7.42/Mcf for the third
quarter of fiscal 2006.
If we exclude 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 the quarter just ended gas sales
from western Oldenburg accounted for only 42.6% of all gas sales. However,
royalties on these gas sales provided approximately 83% or $4,507,370 out of
a total of $5,438,716 in Oldenburg royalties attributable to gas.
For the quarter just ended, the average price of gas sold under the OEG
Agreement decreased 14.27% to 1.8774 Ecents/Kwh from 2.1900 Ecents/Kwh in the
third quarter of fiscal 2006. For the quarter just ended, gas sales under
the OEG Agreement decreased 10.76% to 37.982 Bcf from 42.563 Bcf in the third
quarter of fiscal 2006. During the quarter just ended, royalties paid under
the OEG Agreement were valued at an average Euro exchange rate of $1.3455, an
increase of 6.66% from the average Euro exchange rate of $1.2615 for the
-14-
third quarter of fiscal 2006. Converting the average gas prices using this
average exchange rate into more familiar terms yields an average gas price
under this agreement of $7.10/Mcf compared to $7.75/Mcf for the third
quarter of fiscal 2006.
Interest income was slightly higher reflecting the increased funds
available for investment and the increase in interest rates applicable during
the period. For the quarter just ended, Trust interest income increased
6.64% to $57,459 from $53,882 in the third quarter of fiscal 2006. Trust
expenses for the third quarter of fiscal 2007 declined 13.21% or $29,796 to
$195,843 in comparison to the prior year's equivalent period. This decline
resulted primarily from a drop in legal and professional expenses.
The current Statement of Assets, Liabilities and Trust Corpus of the
Trust at July 31, 2007, compared to that at fiscal year end (October 31,
2006), shows a decline in assets due to the lower royalty receipts during
the quarter.
Results: First Nine Months of Fiscal 2007 Versus
------------------------------------------------
First Nine Months of Fiscal 2006
--------------------------------
For the nine month period, the Trust's net income was $20,858,133, a
decrease of 9.89% from the net income of $23,147,752 for last year's
equivalent period. This income was derived from sales of gas, sulfur and
oil from the Trust's overriding royalty areas in Germany during the fourth
calendar quarter of 2006 and the first two calendar quarters of 2007. For
the nine month period ended July 31, 2007 total distributions were equal to
$2.27 per unit compared to total distributions of $2.50 for the first nine
months of fiscal 2006.
The primary factor affecting royalty revenue for the nine months just
ended was the decline in gas sales under both the Mobil and the OEG
agreements. Gas prices under the Mobil Agreement declined as well, although
gas prices under the OEG Agreement showed a slight improvement. In
comparison to the first nine months of fiscal 2006, the higher average value
of the Euro relative to the dollar increased the number of dollars received
when the royalties paid in Euros were converted to dollars at the time of
their transfers to the U.S. This increase helped to reduce the impact of
the lower gas sales and gas prices and partially offset the decline in
royalty income.
For the nine months just ended, gas sales under the Mobil Agreement
decreased 9.53% to 50.814 Bcf from 56.169 Bcf in the first nine months of
fiscal 2006. For the nine months just ended, the average price of gas sold
under the Mobil Agreement decreased 8.74% to 1.9364 Ecents/Kwh from 2.1218
Ecents/Kwh in the first nine months of fiscal 2006. During the nine months
just ended, royalties paid under the Mobil Agreement were valued at an
average Euro exchange rate of $1.3269, an increase of 8.72% from the average
Euro exchange rate of $1.2205 for the first nine months of fiscal 2006.
Converting the average gas prices using this average exchange rate into more
familiar terms yields an average gas price under this agreement of $7.38/Mcf
compared to $7.45/Mcf for the first nine months of fiscal 2006.
-15-
For the nine months just ended, gas sales under the OEG Agreement
decreased 12.20% to 120.476 Bcf from 137.214 Bcf in the first nine months of
fiscal 2006. For the nine months just ended, the average price of gas sold
under the OEG Agreement increased 0.18% to 2.2034 Ecents/Kwh from 2.2074
Ecents/Kwh in the first nine months of fiscal 2006. During the nine months
just ended, royalties paid under the OEG Agreement were valued at an average
Euro exchange rate of $1.3242, an increase of 7.96% from the average Euro
exchange rate of $1.2266 for the first nine months of fiscal 2006.
Converting the average gas prices using this average exchange rate into more
familiar terms yields an average gas price under this agreement of $8.19/Mcf
compared to $7.60/Mcf for the first nine months of fiscal 2006.
Interest income was higher reflecting the increased funds available for
investment and the increase in interest rates applicable during the period.
Interest income for the nine month period increased 55.06% to $168,362 from
$108,578 in the first nine months of fiscal 2006. Trust expenses for the
nine month period decreased 1.84% or $13,927 to $741,048 in comparison to
the prior year's equivalent period. This decline resulted primarily from a
drop in legal and professional expenses.
-----------------------------------
This report on Form 10-Q contains forward looking statements concerning
business, financial performance and financial condition of 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 uncertainties concerning levels
of gas production and gas prices, general economic conditions and currency
exchange rates and the risks described in Item 1A, "Risk Factors," in the
Trust's Annual Report on 10-K for the fiscal year ended October 31, 2006.
Actual results and events may vary significantly from those discussed in the
forward looking statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
----------------------------------------------------------
The Trust does not engage in any trading activities with respect to
possible foreign exchange fluctuations. The Trust does not use any financial
instruments to hedge against possible risks related to foreign exchange
fluctuations. The market risk is negligible because standing instructions
at its German bank require the bank to process conversions and transfers of
royalty payments as soon as possible following their receipt. The Trust does
not engage in any trading activities with respect to possible commodity price
fluctuations.
-16-
Item 4. 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 July 31, 2007.
Based on that evaluation, the Managing Director concluded that the Trust's
disclosure controls and procedures were effective as of July 31, 2007.
There have been no changes in our internal control over financial
reporting identified in connection with the evaluation described above that
occurred during the third quarter of fiscal 2007 that have materially
affected or are reasonably likely to materially affect our internal control
over financial reporting.
Part II -- OTHER INFORMATION
----------------------------
Item 6. Exhibits.
--------
(a) Exhibits.
Exhibit 31. Certification of Chief Executive Officer
and Chief Financial Officer
pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 32. Certification of Chief Executive and
Chief Financial Officers pursuant to
Section 906 of the Sarbanes-Oxley
Act of 2002
-17-
SIGNATURE
---------
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 thereunto duly authorized.
NORTH EUROPEAN OIL ROYALTY TRUST
---------------------------------
(Registrant)
/s/ John R. Van Kirk
---------------------------------
John R. Van Kirk
Managing Director
Dated: August 31, 2007