All of the Trustees, with the exception of Lawrence A. Kobrin, constitute the Audit Committee of the Trustees of North European Oil Royalty Trust.  The Audit Committee meets the definition of an audit committee set forth in Section 3(a)(58)(A) of the Exchange Act.  All of the members of the Audit Committee are “independent” as that term is defined in the rules of the Securities & Exchange Commission and the applicable listing standards of New York Stock Exchange.  The Trustees have determined that both Robert P. Adelman and Rosalie J. Wolf are financial experts, as the term is defined in the Commission rules. The Audit Committee is chaired by Samuel M. Eisenstat.  The Trustees of North European Oil Royalty Trust have adopted a written Charter outlining the duties and responsibilities of the Audit Committee. Mr. Eisenstat serves on the audit committees of several funds managed by AIG Sun America Asset Management Corp. The Trustees have determined that such service by Mr. Eisenstat does not impair his ability to effectively serve on the Trust’s Audit Committee.

Pursuant to the Audit Committee Charter and the requirements of the Securities and Exchange Commission, the Audit Committee has provided the following report for inclusion in this proxy statement:

A representative of Weiser LLP is expected to attend the annual meeting and to be available to respond to appropriate questions from unit owners. The representative from Weiser LLP will also have the opportunity to make a statement at the meeting if he/shehe chooses to do so.

Effective July 18, 2006 the Audit Committee approved the appointment of Weiser LLP as the Trust’s new independent registered public accounting firm replacing Ernst & Young LLP (“E&Y”&Y LLP”).  This action was taken primarily to reduce the Trust’s audit and audit-related expenses.

With respect to the auditsaudit of the Trust’s financial statements for the fiscal yearsyear ended October 31, 2005 and 2004 and the subsequent interim periods through April 30, 2006 and through the date of replacement,dismissal, there were no disagreements with E&Y LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of E&Y LLP, would have caused E&Y LLP to make reference to the subject matter of the disagreements in connection with its report. Further, the audit reportsreport of E&Y LLP on the financial statements of the Trust for the yearsyear ended October 31, 2005 and 2004 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or, except as noted in the following sentence, as to accounting principles. E&Y LLP noted in its opinion that the Trust’s 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 the opinion of the Trustees and the Trust’s management the use of the cash basis provides a more meaningful presentation to unit owners of the results of operations of the Trust.

During the Trust’s fiscal yearsyear ended October 31, 2005 and 2004 and the subsequent interim period through the date of engagement, neither the Trust nor anyone acting on its behalf consulted with Weiser LLP regarding

Weiser LLP assumed audit responsibilities for the Trust on July 18, 2006 and has conducted a review of the financial statements for the Trust’s four quarters of fiscal 2006 and has performed an audit of the Trust’s 2006 and 2007 fiscal year financial statements.

For the fiscal year ended October 31, 2005,2006, the Trust paid $23,900 to E&Y LLP for audit services for the first six months of fiscal 2006 and agreed to pay $47,800 as the aggregate amount for audit services to E&Y. For the fiscal year ended October 31, 2006, E&Y proposed a significantly higher audit fee of $75,000-$80,000. Following subsequent discussions, E&Y agreed to bill the trust at the prior year’s rate pending the retention of a new auditor. At the time of the replacement of E&Y prior to the third quarter review, the Trust had already paid $23,900 to E&Y. With respect to fiscal 2006, the Trust agreed to pay Weiser LLP $49,000 for the review of the first three fiscal quarters, the year-end audit and the attestation to the sufficiency of the Trust’s internal control over financial reportingcontrols to be performed by Weiser.Weiser LLP.  For the fiscal year ended October 31, 2007, the Trust agreed to pay $54,500 to Weiser LLP for audit services. In addition, for the fiscal year ended October 31, 2007, additional payments in the amount of $8,500 were made to E&Y LLP for transition work with the new auditor.

At the Trust’s direction and as part of its monitoring process, the German affiliate of E&Y,Ernst & Young LLP, Ernst & Young AG, reviewedreviews the basis for royalty payments and allowable cost deductions for Mobil Erdgas Erdol GmbH and BEB Erdgas und Urdol GmbH in Germany on a biennial basis. No fees for the period 2003-04 and has beenthese services were paid $8,041.72 by theduring fiscal 2007. The Trust paid $8,042 for these services in fiscal 2006.

It is the policy of the Audit Committee that all audit and non-audit services provided to the Trust must be pre-approved by the Audit Committee.  All of the audit and non-audit services described above were pre-approved by the Audit Committee.

With the exception of the Lawrence A. Kobrin, none of the Trustees have a financial relationship with the Trust other than as Trustees under the terms of the Trust Agreement.  Until December 31, 2006, Mr. Kobrin was a partner of the law firm of Cahill Gordon & Reindel LLP in New York, New York, a position he has held since 1984. Cahill Gordon & Reindel LLP has provided legal services to the Trust since that time. Mr. Kobrin is currently senior counsel to Cahill Gordon & Reindel LLP. The Trustees have determined that all the current Trustees are considered independent according to the rules of the New York Stock Exchange. Prior to his retirement as Managing Trustee effective October 31, 2006, John H. Van Kirk was not considered independent.

The independentTrustees have designated a standing Audit Committee of the Trustees of North European Oil Royalty Trust (the “Audit Committee”) and a standing Compensation Committee of the Trustees of North European Oil Royalty Trust (the “Compensation Committee”).  Samuel M. Eisenstat serves as the Chairman of both committees and Robert P. Adelman, Willard B. Taylor and Rosalie J. Wolf serve as members of both committees. Lawrence A. Kobrin is a member of the Compensation Committee.  The Audit Committee has a charter, but the Compensation Committee does not.

During fiscal 2007, the Trustees met nine times.  The Trustees, presided over by the Managing Trustee, met in executive session twice during fiscal 2006without management and had additional communications as needed during fiscal 2007. During fiscal 2007 the Audit Committee and the Compensation Committee met formally five times and six times, respectively, and each had additional informal meetings and communications.  All of the Trustees attended more than 75% of all of the meetings of the Trustees and the meetings of the Audit Committee and the Compensation Committee (if a member thereof) during fiscal 2007. It is the expectation of the Trustees that all of the Trustees attend each Annual Meeting of Unit Owners in person. All of the Trustees attended last year’s Annual Meeting.

The Trustees have not created and do not intend to create a separate Nominating Committee.  The ongoing supervision of the Trust requires continuity of experience and familiarity with its unique structure. The Trust is precluded from business activities and would not benefit from the rotation of its member Trustees.  Rotation of the Trustees would, in the opinion of the Trustees, substantially increase costs and be counter to the best interests of the unit owners. Accordingly, absent the retirement, resignation, incapacity or death of any Trustee, the Trustees have customarily been re-nominated every year.

At such time as a vacancy occurs in the Trustees by reason of retirement, resignation or death of any Trustee, all of the remaining Trustees serve the function of a nominating committee and do so pursuant to the provisions of the Trust Agreement and the orders of the Delaware Court of Chancery.

Any unit owner may at any time communicate in writing with either the Managing Trustee, or the senior Trustee then serving, to make a nomination and such nominee will be considered by the Trustees without differentiation as to the source of the suggestion.  In the event of a vacancy among the Trustees, nominees would be sought who had the background, experience and competence in those areas where the former

The Trustees are not aware of any other matter to be presented for action at the annual meeting.  If any other matter is brought before the meeting, it is the intention of the persons named in the proxy to vote in accordance with their discretion pursuant to the terms of the proxy.

The Trust will havehas filed with the SEC prior to the Annual Meeting of Unit Owners an Annual Report on Form 10-K.10-K for the fiscal year ended October 31, 2007. A copy of thethis report for the period ended October 31, 2006, including the financial statements, will be furnished without charge to any unit owner who sends a written request to John R. Van Kirk, Managing Director, P.O. Box 456, Red Bank, New Jersey 07701.  A copy of the report is also accessible through the Trust’s website, www.neort.com.

The 20082009 Annual Meeting of Unit Owners is tentatively scheduled to be held on February 13, 2008.2009.  Any proposals of the unit owners intended to be presented at the 20082009 annual meeting must be received by the Trust by September 12, 20072008 for inclusion in the Trust's proxy statement and form of proxy relating to that meeting. Any proposals of the unit owners intended to be presented at the 20082009 annual meeting that are not to be included in the Trust’s proxy statement and form or proxy relating to that meeting must be received by the Trust by November 26, 2007.2008.  Such proposals should be sent to John R. Van Kirk, Managing Director, P.O. Box 456, Red Bank, New Jersey 07701.  If the date of the 20082009 annual meeting is changed by more than 30 days from February 13, 2008,2009, unit owners will be advised of such change and of the new dates for submission of proposals.