March 20, 2013 Turnkey Agreement Sale Analysis

Information Requested by Staff                                        Location

Funding received                                                                 Table 1 (Sale Amounts)

Revenues recognized Table 1 – Predrilling. All pre-drilling revenue is recognized in the year received. For example, 2009 pre-drilling revenue is composed of Project 2008B ($439,579), Project 2009A ($1,639,731), and Project 2009B ($247,999), for a total of $2,327,309 (See Table 2)

Contract dates Table 1 (Contract Date Range)

Drilling dates Table 1 (Date Drilled)

Amounts designated as drilling and Table 1 (Pre-Drilling and Drilling)

pre-drilling

Revenue recognized each period Table 2 (Annual Totals – Income Statement)

Underlying properties & reserve status Table 3

Royale Energy, Inc.

Turnkey Agreement Sale Analysis

For the three years ended December 31, 2011

 Table 1

			Sale Amount					Working Interest Recognized
Project/Wells	Contracts Date Range	Date Drilled	Prior to 2009	2009	2010	2011	Total Sales Thru 2011	Prior to 2009	2009	2010	2011	Total Interest Recognized	Retained by Royal
Project - 2008B	Jul '08 - Sept '09
Well #1		12/18/2009	$589,639	$286,695			$876,334	29.56%	14.25%			43.81%	55.88%
Well #2		10/28/2009	$539,090	$262,117			$801,207	29.56%	14.25%			43.81%	53.82%
Well #3		9/1/2010	$573,880	$279,032			$852,912	29.56%	14.25%			43.81%	55.88%
Well #4		5/31/2010	$637,890	$310,156			$948,046	29.56%	14.25%			43.81%	55.88%
TOTAL			$2,340,500	$1,138,000			$3,478,500
Pre-drilling @ 38.63%				$439,579
Deferred Drilling @ 61.37%				$698,421
Project - 2009A	Apr '09 - Dec '09
Well #1		4/16/2010		$1,062,280			$1,062,280		57.14%			57.14%	40.21%
Well #2		7/28/2010		$1,179,017			$1,179,017		57.14%			57.14%	41.19%
Well #3		9/4/2011		$467,520			$467,520		17.14%			17.14%	81.68%
Well #4		7/23/2010		$1,096,182			$1,096,182		57.14%			57.14%	12.23%
TOTAL				$3,805,000			$3,805,000
Pre-drilling @ 43.094%				$1,639,731
Deferred Drilling @ 56.906%				$2,165,269
Project - 2009B	Dec '09 - Aug '10
Well #1		11/11/2010		$255,595	$647,285		$902,880		13.67%	34.61%		48.28%	49.09%
Well #2		9/9/2010		$239,713	$607,065		$846,778		13.67%	34.61%		48.28%	50.03%
Well #3		3/4/2011		$236,296	$598,412		$834,708		13.67%	34.61%		48.28%	50.06%
Well #4		6/19/2011		$230,896	$584,738		$815,634		13.67%	34.61%		48.28%	49.65%
TOTAL				$962,500	$2,437,500		$3,400,000
Pre-drilling @ 25.766				$247,999	$628,050
Deferred Drilling @ 74.234%				$714,501	$1,809,450
Project - 2010A	Jul '10 - Feb '11
Well #1		11/20/2011			$986,567	$6,277	$992,844			54.02%	0.37%	54.39%	43.96%
Well #2		To be drilled			$518,368	$3,298	$521,666			43.40%	0.30%	43.70%	56.00%
Well #3		9/27/2011			$1,157,071	$7,362	$1,164,433			54.02%	0.37%	54.39%	44.22%
Well #4		12/2/2012			$925,656	$5,890	$931,546			54.02%	0.37%	54.39%	45.24%
TOTAL					$3,587,662	$22,827	$3,610,489
Pre-drilling @ 27.874%					$1,000,013	$6,363
Deferred Drilling @ 72.126%					$2,587,649	$16,464

Turnkey Agreement Sale Analysis

Royale Energy, Inc.

For the three years ended December 31, 2011

			Sale Amount					Working Interest Recognized
Project/Wells	Contracts Date Range	Date Drilled	Prior to 2009	2009	2010	2011	Total Sales Thru 2011	Prior to 2009	2009	2010	2011	Total Interest Recognized	Retained by Royal
Project - 2010B	Oct '10 - Nov '10
Well #1		11/30/2010			$445,874		$445,874			19.79%		19.79%	75.99%
Well #2		1/29/2011			$445,874		$445,874			19.79%		19.79%	76.71%
TOTAL					$891,747		$891,747
Pre-drilling @ 39.138%					$349,015
Deferred Drilling @ 60.862%					$542,732
Project - 2010C	Dec '10 - Jul '11
Well #1		10/31/2011			$87,867	$985,545	$1,073,412			4.05%	45.42%	49.47%	49.23%
Well #2		12/31/2012			$89,824	$1,007,493	$1,097,316			4.05%	45.42%	49.47%	50.22%
Well #3		To be drilled			$76,021	$852,674	$928,695			4.86%	54.54%	59.40%	40.23%
Well #4		To be drilled			$71,288	$799,594	$870,882			4.05%	45.42%	49.47%	50.22%
TOTAL					$325,000	$3,645,306	$3,970,306
Pre-drilling @ 27.659%					$89,892	$1,008,255
Deferred Drilling @ 72.341%					$235,108	$2,637,051
Project - 2011A	Jul '11 - Aug '12
Well #1		To be drilled				$680,585	$680,585				30.25%	30.25%	48.90%
Well #2		To be drilled				$680,585	$680,585				30.25%	30.25%	48.90%
Well #3		To be drilled				$556,380	$556,380				30.25%	30.25%	48.90%
Well #4		To be drilled				$542,144	$542,144				30.25%	30.25%	48.90%
Well #5		To be drilled				$564,806	$564,806				30.25%	30.25%	48.90%
TOTAL						$3,024,500	$3,024,500
Pre drilling @ 26.805						$810,712
Deferred Drilling @ 73.195						$2,213,788

Turnkey Agreement Sale Analysis

Royale Energy, Inc.

For the three years ended December 31, 2011

 Table 2

Sale Amount

Working Interest Recognized

Project/Wells

Contracts Date Range

Date Drilled

Prior to 2009

2009

2010

2011

Total Sales Thru 2011

Prior to 2009

2009

2010

2011

Total Interest Recognized

Retained by Royal

Deferred Drilling Recognition – Completion of Obligations under Turnkey Agreement

2006A – Well #2

1/31/2009

$422,157

2007A – Well #1

1/31/2009

$502,304

2008B – Well #2

10/28/2009

$491,718

2008A – Well #3

11/4/2009

$780,472

2008B – Well #1

12/18/2009

$537,829

2009A – Well #1

4/16/2010

$604,500

2006B – Well #1

5/31/2010

$1,103,980

2008B – Well #4

5/31/2010

$581,828

2009A – Well #4

7/23/2010

$623,792

2009A – Well #2

7/28/2010

$670,930

2008B – Well #3

9/1/2010

$523,440

2009B – Well #2

9/9/2010

$627,039

2004A – Well #5

9/30/2010

$122,569

2009B – Well #1

11/11/2010

$671,833

2010B – Well #1

11/30/2010

$271,366

2010B – Well #2

1/29/2011

$271,366

2009B – Well #3

3/4/2011

$617,350

2009B – Well #4

6/19/2011

$607,729

2009A – Well #3

9/4/2011

$266,047

2010A – Well #3

9/27/2011

$847,972

2010C – Well #1

10/31/2011

$782,410

2010A – Well #1

1/31/2009

$714,947

Deferred Drilling Recognized

$2,734,479

$5,801,276

$4,107,822

Turnkey Agreement Sale Analysis

Royale Energy, Inc.

For the three years ended December 31, 2011

Annual Totals – Income Statement		2009	2010	2011	2009-2011 Total
	Pre-drilling	$2,327,309	$2,066,969	$1,825,329	$6,219,608
	Deferred Drilling Recognized as Revenue	$2,734,479	$5,801,276	$4,107,822	$12,643,577
Total Turnkey Drilling Revenue
	Per Above Schedule	$5,061,789	$7,868,246	$5,933,151	$18,863,185
	Per Financial Stmts	$5,061,804	$7,868,273	$5,933,065	$18,863,142
	Difference	-$15	-$27	$86	$43
Annual Totals
	Total Receipts	$5,905,500	$7,241,909	$6,692,633	$19,840,042
	Total Spoilage Costs	$98,042	$201,883	$12,959	$312,884
	Total Marketing Costs	$1,171,511	$1,175,049	$1,284,575	$3,631,185
	Total Lease Costs – Unproved Property Only	$17,327	$133,534	$85,444	$236,305
	Total Other Land Costs – Unproved Property Only	$37,788.40	$150,067.80	$78,523.57	$266,380
	Total Intangible Drilling Costs	$3,685,931	$4,491,656	$6,552,776	$14,730,362
	Total Tangible Drilling Costs	$531,016	$671,762	$794,967	$1,997,746
	Total Costs	$5,541,615	$6,823,952	$8,809,245	$21,174,812
	Total Recipts less Total Costs	$363,885	$417,957	-$2,116,612	-$1,334,771
	Percentage of Lease Costs of Total Costs	0.31%	1.96%	0.97%	1.12%

Turnkey Agreement Sale Analysis – Drilled Property Description

Royale Energy, Inc.

For the three years ended December 31, 2011

 Table 3

				Original Property Description			Drilled Property Description
Project/Wells		Contracts Date Range	Date Drilled	Location	Reserve Status	Substitution of Original Location	Location	Reserve Status	Successful Well
Project - 2008B		Jul '08 - Sept '09
	Well #1		12/18/2009	Colusa County, CA	Unproved	YES	Colusa County, CA	Unproved	Dry Hole
	Well #2		10/28/2009	Colusa County, CA	Unproved	NO			Proved
	Well #3		9/1/2010	Kern County, CA	Unproved	NO			Dry Hole
	Well #4		5/31/2010	To be determined	Unknown	N/A	Sacramento County, CA	Unproved	Dry Hole
Project - 2009A		Apr '09 - Dec '09
	Well #1		4/16/2010	Colusa County, CA	Unproved	NO			Proved
	Well #2		7/28/2010	Colusa County, CA	Unproved	NO			Proved
	Well #3		9/4/2011	San Joaquin County, CA	Unproved	NO			Proved
	Well #4		7/23/2010	To be determined	Unknown	N/A	Tehema County, CA		Proved
Project - 2009B		Dec '09 - Aug '10
	Well #1		11/11/2010	Colusa County, CA	Unproved	NO			Proved
	Well #2		9/9/2010	Tehama County, CA	Unproved	NO			Dry Hole
	Well #3		3/4/2011	Colusa County, CA	Unproved	YES	Colusa, County, CA	Unproved	Dry Hole
	Well #4		6/19/2011	To be determined	Unknown	N/A	Colusa, County, CA	Unproved	Dry Hole
Project - 2010A		Jul '10 - Feb '11
	Well #1		11/20/2011	Colusa County, CA	Unproved	YES	Colusa, County, CA	Unproved	Dry Hole
	Well #2		To be drilled	Tehama County, CA	Unproved	N/A
	Well #3		9/27/2011	Colusa County, CA	Unproved	NO			Proved
	Well #4		12/2/2012	To be determined	Unknown	N/A	Colusa, County, CA	Unproved	Dry Hole
Project - 2010B		Oct '10 - Nov '10
	Well #1		11/30/2010	Colusa County, CA	Proved	NO			Proved
	Well #2		1/29/2011	Colusa County, CA	Proved	NO			Proved
Project - 2010C		Dec '10 - Jul '11
	Well #1		10/31/2011	Colusa County, CA	Unproved	No
	Well #2		12/31/2012	Colusa County, CA	Unproved	YES	Colusa, County, CA	Unproved	Proved
	Well #3		To be drilled	Solana County, CA	Unproved	N/A
	Well #4		To be drilled	To be determined	Unknown	N/A
Project - 2011A		Jul '11 - Aug '12
	Well #1		To be drilled	Colusa County, CA	Unproved	N/A
	Well #2		To be drilled	Colusa County, CA	Unproved	N/A
	Well #3		To be drilled	Colusa County, CA	Unproved	N/A
	Well #4		To be drilled	Colusa County, CA	Unproved	N/A
	Well #5		To be drilled	Solana County, CA	Unproved	N/A