For the Fiscal Year Ended December 31, 2012
|
Commission File No. 0-22750
|
California
|
33-0224120
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
PART I
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1
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||
Item 1
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1
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||
2
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|||
3
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|||
Item 1A
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3
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||
Item 1B
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7
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||
Item 2
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7
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||
7
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|||
7
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|||
8
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|||
9
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|||
9
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|||
Item 3
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9
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||
Item 4
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9
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||
PART II
|
10
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||
Item 5
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10
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||
10
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|||
10
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|||
10
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|||
Item 6
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11
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||
12
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|||
13
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|||
15
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|||
16
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|||
Item 7
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17
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||
Item 8
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17
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Item 9
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17
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Item 9A
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17
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||
17
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|||
17
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|||
18
|
|||
18
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|||
PART III
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19
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||
Item 10
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19
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||
Item 11
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19
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||
Item 12
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19
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Item 13
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19
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Item 14
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19
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PART IV
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20
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Item 15
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20
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||
SIGNATURES | 22 | ||
FINANCIAL STATEMENTS | F-1 |
·
|
the timing of both production and related expenses;
|
·
|
changes in consumption levels; and
|
·
|
governmental regulations or taxation.
|
Developed
|
Undeveloped
|
|||||||||||||||
Gross Acres
|
Net Acres
|
Gross Acres
|
Net Acres
|
|||||||||||||
California
|
15,120.43
|
10,550.02
|
9,054.71
|
8,164.85
|
||||||||||||
Alaska
|
0
|
0
|
91,039.59
|
91,039.59
|
||||||||||||
All Other States
|
3,595.30
|
1,284.83
|
6,090.08
|
4,064.49
|
||||||||||||
Total
|
18,715.73
|
11,834.85
|
106,184.38
|
103,268.93
|
Gross Wells
|
Net Wells
|
|||||||
Natural Gas
|
70.00 | 34.53 | ||||||
Oil
|
7.00 | 0.69 | ||||||
Total
|
77.00 | 35.22 |
Year
|
Type of Well(a)
|
Gross Wells(e)
|
Net Wells(b)
|
|||||||||||||||||||
Total
|
Producing(c)
|
Dry(d)
|
Producing(c)
|
Dry(d)
|
||||||||||||||||||
2011
|
Exploratory
|
1
|
0
|
1
|
0.0000
|
0.4965
|
||||||||||||||||
Developmental
|
6
|
4
|
2
|
2.5184
|
0.9533
|
|||||||||||||||||
2012
|
Exploratory
|
1
|
1
|
0
|
0.5022
|
0.0000
|
||||||||||||||||
Developmental
|
1
|
0
|
1
|
0.0000
|
0.4674
|
a)
|
An exploratory well is one that is drilled in search of new oil and natural gas reservoirs, or to test the boundary limits of a previously discovered reservoir. A developmental well is one drilled on a previously known productive area of an oil and natural gas reservoir with the objective of completing that reservoir.
|
b)
|
Gross wells represent the number of actual wells in which Royale Energy owns an interest. Royale Energy's interest in these wells may range from 1% to 100%.
|
c)
|
A producing well is one that produces oil and/or natural gas that is being purchased on the market.
|
d)
|
A dry well is a well that is not deemed capable of producing hydrocarbons in paying quantities.
|
e)
|
One "net well" is deemed to exist when the sum of fractional ownership working interests in gross wells or acres equals one. The number of net wells is the sum of the fractional working interests owned in gross wells expressed as a whole number or a fraction.
|
2012
|
2011
|
|||||||
Net volume
|
||||||||
Oil (BBL)
|
1,558
|
2,264
|
||||||
Gas (MCF)
|
559,590
|
1,144,469
|
||||||
MCFE
|
568,938
|
1,158,053
|
||||||
Average sales price
|
||||||||
Oil (BBL)
|
$
|
90.75
|
$
|
90.48
|
||||
Gas (MCF)
|
$
|
2.74
|
$
|
4.08
|
||||
Net production costs and taxes
|
$
|
1,139,750
|
$
|
1,517,920
|
||||
Lifting costs (per MCFE)
|
$
|
2.00
|
$
|
1.31
|
1st Qtr
|
2nd Qtr
|
3rd Qtr
|
4th Qtr
|
|||||||||||||||||||||||||||||
High
|
Low
|
High
|
Low
|
High
|
Low
|
High
|
Low
|
|||||||||||||||||||||||||
2012
|
6.59
|
4.27
|
5.21
|
2.58
|
4.32
|
1.93
|
3.89
|
2.45
|
||||||||||||||||||||||||
2011
|
7.83
|
2.08
|
5.52
|
2.56
|
3.91
|
2.08
|
5.36
|
1.90
|
2007
|
2008
|
2009
|
2010
|
2011
|
2012
|
|||||||||||||||||||
Royale Energy, Inc.
|
100 | 100 | 95 | 80 | 164 | 92 | ||||||||||||||||||
S&P 500 Stock Index
|
100 | 62 | 76 | 86 | 86 | 97 | ||||||||||||||||||
DJ US Oil & Gas Index
|
100 | 63 | 73 | 85 | 87 | 90 |
·
|
In October 2012, the Company obtained $3 million from sale of a convertible note. See, The Company’s Prospectus Supplement filed pursuant to Rule 424(b) on October 29, 2012, and the Company’s Form 8-K filed on October 29, 2012. The Company used these proceeds for general corporate purposes, including the reduction of outstanding bank debt and for capital expenditures on oil and gas development. The note may, at the Company’s option, be repaid by converting the interest and principal amounts due to common stock, thus reducing the Company’s cash needs to service its debt.
|
·
|
In February 2012, the Company entered into a sales agreement with C. K. Cooper & Company, Inc., to sell up to $10 million of common stock in an “at the market” offering as defined in Rule 415. In 2012, the Company sold approximately $4.6 million of common stock pursuant to the sales agreement. The Company expects to sell additional common stock pursuant to the sales agreement in 2013.
|
·
|
Beginning in January 2012, the Company began extensive cost cutting measures in General and Administrative, Legal and Accounting, and Marketing expense. These measures enabled us to reduce our operating expenses by approximately $1 million for 2012, compared to 2011, and expect that these measures will carry forward into 2013.
|
Total Obligations
|
2013
|
2014-2015
|
2016
|
Beyond
|
||||||||||||||||
Office lease
|
$
|
1,066,614
|
$
|
403,873
|
$
|
662,741
|
$
|
-
|
$
|
-
|
||||||||||
Revolving Line of Credit
|
350,000
|
350,000
|
-
|
-
|
-
|
|||||||||||||||
Convertible Note
|
3,333,333
|
3,333,333
|
||||||||||||||||||
Total
|
$
|
4,749,947
|
$
|
4,087,206
|
$
|
662,741
|
$
|
-
|
$
|
-
|
·
|
should not be treated as categorical statements of fact, but rather as a way of allocating the risk among the parties if those statements prove to be inaccurate;
|
·
|
have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
|
·
|
may apply standards of materiality in a way that is different from the way investors may view materiality; and
|
·
|
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.
|
1.
|
Financial Statements. See Index to Financial Statements, page F-1
|
2.
|
Schedules. Supplemental Information About Oil and Gas Producing Activities (Unaudited) begins on page F-26.
|
3.
|
Exhibits. Certain of the exhibits listed in the following index are incorporated by reference.
|
1.1
|
Placement Agent Agreement between the Company and C.K. Cooper & Company, Inc., dated October 25, 2012, incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed October 29, 2012.
|
3.1
|
Restated Articles of Incorporation of Royale Energy, Inc., incorporated by reference to Exhibit 3.1 of Royale Energy’s Form 10-Q filed August 14, 2009.
|
3.2
|
Amended and Restated Bylaws of Royale Energy, Inc., incorporated by reference to Exhibit 3.2 of Royale Energy’s Form 10-K filed March 27, 2009.
|
4.1
|
Series A-1 Warrant issued to Cranshire Capital, L.P., incorporated by reference to Exhibit 4.2 of the Company’s Form 8-K filed August 6, 2009.
|
4.2
|
Series C Warrant issued to Cranshire Capital, L.P., incorporated by reference to Exhibit 4.4 of the Company’s Form 8-K filed August 6, 2009.
|
4.3
|
Series D Warrant issued to Cranshire Capital, L.P., incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed October 21, 2009.
|
4.4
|
Series E Warrant issued to certain affiliates of Cranshire Capital, L.P., incorporated by reference to Exhibit 4.2 of the Company’s Form 8-K filed October 29, 2012.
|
4.5
|
Certificate of Determination of the Series AA Convertible Preferred Stock, incorporated by reference to Exhibit 4.2 of Royale Energy's Form 10-SB Registration Statement.
|
10.1
|
Form of Indemnification Agreement, incorporated by reference to Exhibit 10.3 of Royale Energy's Form 10-SB Registration Statement.
|
10.2
|
Amended and Restated Credit Agreement between Royale Energy and Texas Capital Bank, N.A. (February 13, 2009), incorporated by reference to Exhibit 310.2 of Royale Energy’s Form 10-K filed March 27, 2009.
|
10.3
|
Form of Promissory Note between Royale Energy and Texas Capital Bank, N.A., incorporated by reference to Exhibit 10.3 of Royale Energy’s Form 10-K filed March 27, 2009.
|
10.4
|
Securities Purchase Agreement between the Company and Cranshire Capital, L.P., dated as of August 4, 2009, incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed August 6, 2009.
|
10.5
|
Registration Rights Agreement between the Company and Cranshire Capital, L.P., dated as of August 5, 2009, incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed August 6, 2009.
|
10.6
|
Securities Purchase Agreement between the Company and Cranshire Capital, L.P., dated as of October 16, 2009, incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed October 21, 2009.
|
10.7
|
Registration Rights Agreement between the Company and Cranshire Capital, L.P., dated as of October 16, 2009, incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed October 21, 2009.
|
10.8
|
Sales Agreement between the Company and C.K. Cooper & Company, Inc., dated February 17, 2012, incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed February 17, 2012.
|
10.9
|
Securities Purchase Agreement between the Company and certain buyers dated as of October 28, 2012, incorporated by reference to Exhibit 4.3 of the Company’s Form 8-K filed October 29, 2012.
|
10.10
|
Convertible Note issued to certain affiliates of Cranshire Capital, L.P., incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed October 29, 2012.
|
23.1
|
|
23.2
|
|
23.3
|
|
31.1
|
|
31.2
|
|
32.1
|
|
32.2
|
|
99.1
|
|
99.2
|
|
99.3
|
Waiver Letter from Cranshire Capital, L.P. to the Company dated October 28, 2012, incorporated by reference to Exhibit 99.1 of the Company’s Form 8-K filed October 29, 2012.
|
101.INS*
|
XBRL Instance Document
|
101.SCH*
|
XBRL Taxonomy Extension Schema
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase
|
Royale Energy, Inc.
|
||
Date:
|
April 15, 2013
|
/s/ Donald H.. Hosmer
|
Donald H.. Hosmer
|
||
Co-President and Co-Chief Executive Officer
|
Date:
|
April 15, 2013
|
/s/ Harry E. Hosmer
|
Harry E. Hosmer
|
||
Chairman of the Board of Directors
|
||
Date:
|
April 15, 2013
|
/s/ Donald H. Hosmer
|
Donald H. Hosmer
|
||
Director, Co-President, Co-Chief Executive Officer
|
||
Date:
|
April 15, 2013
|
/s/ Stephen M. Hosmer
|
Stephen M. Hosmer
|
||
Director, Co-President, Co-Chief Executive Officer, Chief Financial Officer and Secretary
|
||
Date:
|
April 15, 2013
|
/s/ Tony Hall
|
Tony Hall
|
||
Director
|
||
Date:
|
April 15, 2013
|
/s/ Oscar A. Hildebrandt
|
Oscar A. Hildebrandt
|
||
Director
|
||
Date:
|
April 15, 2013
|
/s/ Gary Grinsfelder
|
Gary Grinsfelder
|
||
Director
|
||
Date:
|
April 15, 2013
|
/s/ George M. Watters
|
George M. Watters
|
||
Director
|
F-2
|
|
F-3
|
|
F-5
|
|
F-6
|
|
F-7
|
|
F-8
|
2012
|
2011-Restated
|
|||||||
Current Assets
|
||||||||
Cash and Cash Equivalents
|
$
|
1,489,930
|
$
|
2,946,131
|
||||
Accounts Receivable, net
|
3,969,160
|
1,872,067
|
||||||
Prepaid Expenses
|
469,038
|
432,168
|
||||||
Deferred Tax Asset
|
0
|
661,645
|
||||||
Available for Sale Securities
|
0
|
31,027
|
||||||
Inventory
|
612,464
|
664,458
|
||||||
Total Current Assets
|
6,540,592
|
6,607,496
|
||||||
Other Assets
|
6,946
|
6,946
|
||||||
Deferred Tax Asset - Noncurrent
|
0
|
6,771,474
|
||||||
Oil And Gas Properties (Successful Efforts Basis) and
Equipment and Fixtures |
10,955,797
|
8,075,344
|
||||||
Total Assets
|
$
|
17,503,335
|
$
|
21,461,260
|
2012
|
2011-Restated
|
|||||||
Current Liabilities:
|
||||||||
Accounts Payable and Accrued Expenses
|
$
|
4,932,468
|
$
|
4,542,741
|
||||
Current Portion of Long-Term Debt, Net
|
2,258,668
|
0
|
||||||
Current Portion of Deferred Tax Liability
|
1,775
|
1,240
|
||||||
Deferred Revenue from Turnkey Drilling
|
8,693,743
|
6,909,666
|
||||||
Total Current Liabilities
|
15,886,654
|
11,453,647
|
||||||
Noncurrent Liabilities:
|
||||||||
Asset Retirement Obligation
|
954,088
|
575,612
|
||||||
Long-Term Debt
|
0
|
2,750,000
|
||||||
Total Noncurrent Liabilities
|
954,088
|
3,325,612
|
||||||
Total Liabilities
|
16,840,742
|
14,779,259
|
||||||
Stockholders' Equity
|
||||||||
Common Stock, No Par Value, 20,000,000 Shares Authorized; 12,545,465 and 10,823,050 Shares Issued, 12,545,465 and 10,790,431 Shares Outstanding, Respectively
|
33,247,571
|
28,298,228
|
||||||
Convertible Preferred Stock, Series AA, No Par Value, 147,500 Shares Authorized; 52,784 Shares Issued and Outstanding, Respectively
|
154,014
|
154,014
|
||||||
Accumulated (Deficit)
|
(34,186,930
|
)
|
(22,225,904
|
)
|
||||
Paid in Capital
|
1,447,938
|
632,004
|
||||||
Accumulated Other Comprehensive Income
|
0
|
3,035
|
||||||
Total Paid in Capital and Accumulated Deficit
|
662,593
|
6,861,377
|
||||||
Less Cost of Treasury Stock, 0 and 32,619 Shares, respectively
|
0
|
(179,376
|
)
|
|||||
Total Stockholders' Equity
|
662,593
|
6,682,001
|
||||||
Total Liabilities and Stockholders' Equity
|
$
|
17,503,335
|
$
|
21,461,260
|
2012
|
2011-Restated
|
|||||||
Revenues:
|
||||||||
Sale of Oil and Gas
|
$
|
1,673,538
|
$
|
4,879,397
|
||||
Turnkey Drilling
|
2,028,863
|
5,794,427
|
||||||
Supervisory Fees and Other
|
692,344
|
858,586
|
||||||
Total Revenues
|
$
|
4,394,745
|
$
|
11,532,410
|
||||
Costs and Expenses:
|
||||||||
General and Administrative
|
3,640,336
|
4,039,209
|
||||||
Turnkey Drilling & Development
|
449,536
|
3,523,372
|
||||||
Lease Operating
|
1,139,750
|
1,517,920
|
||||||
Lease Impairment
|
200,778
|
4,529,058
|
||||||
Geological and Geophysical
|
423,459
|
111,390
|
||||||
Inventory Write Down
|
62,744
|
258,043
|
||||||
Bad Debt Expense
|
263,767
|
86,294
|
||||||
Legal and Accounting
|
518,511
|
933,856
|
||||||
Marketing
|
594,118
|
713,495
|
||||||
Depreciation, Depletion and Amortization
|
1,448,002
|
2,362,065
|
||||||
Total Costs and Expenses
|
$
|
8,741,001
|
$
|
18,074,702
|
||||
Gain on Sale of Assets
|
8,100
|
759,763
|
||||||
Loss from Operations
|
(4,338,156
|
)
|
(5,782,529
|
)
|
||||
Other Income (Expense):
|
||||||||
Interest Expense
|
(195,009
|
)
|
(138,218
|
)
|
||||
Gain on sale of Marketable Securities
|
7,048
|
0
|
||||||
Income (Loss) Before Income Tax Expense
|
(4,526,117
|
)
|
(5,920,747
|
)
|
||||
Income Tax Expense (Benefit)
|
7,434,909
|
(1,732,506
|
)
|
|||||
Net Loss
|
$
|
(11,961,026
|
)
|
$
|
(4,188,241
|
)
|
||
Basic Earnings Per Share:
|
||||||||
Net Loss Available To Common Stock
|
$
|
(1.07
|
)
|
$
|
(0.39
|
)
|
||
Diluted Loss Per Share
|
$
|
(1.07
|
)
|
$
|
(0.39
|
)
|
||
Other Comprehensive Income
|
||||||||
Unrealized Gain on Equity Securities
|
$
|
0
|
$
|
4,275
|
||||
Less: Reclassification Adjustment for Gains Included in Net Income
|
(3,035)
|
0
|
||||||
Other Comprehensive Income , before tax
|
(3,035)
|
4,275
|
||||||
Income Tax Expense Related to Items of Other Comprehensive Income
|
0
|
1,240
|
||||||
Other Comprehensive Income (Loss), net of tax
|
(3,035)
|
3,035
|
||||||
Comprehensive Loss
|
$
|
(11,964,061
|
)
|
$
|
(4,185,206
|
)
|
Common Stock
|
Preferred Stock Series AA
|
Treasury Stock
|
||||||||||||||||||||||||||||||||||||||
Shares Issued
|
Amount
|
Shares Outstanding
|
Amount
|
Shares Acquired
|
Amount
|
Paid in Capital
|
Accumulated Deficit
|
Accumulated Other Comprehensive Income (Loss)
|
Total
|
|||||||||||||||||||||||||||||||
Balance, December 31, 2010, as previously reported
|
10,307,350 | $ | 27,246,740 | 52,784 | $ | 154,014 | 32,619 | $ | (179,376 | ) | $ | 524,406 | $ | (16,807,424 | ) | $ | 0 | $ | 10,938,360 | |||||||||||||||||||||
Prior period adjustment
|
(1,230,239 | ) | (1,230,239 | ) | ||||||||||||||||||||||||||||||||||||
Balance, December 31, 2010, as restated
|
10,307,350 | 27,246,740 | 52,784 | 154,014 | 32,619 | (179,376 | ) | 524,406 | (18,037,663 | ) | 0 | 9,708,121 | ||||||||||||||||||||||||||||
Common Stock Warrant Exercise
|
468,928 | $ | 1,051,488 | - | - | - | - | - | - | - | 1,051,488 | |||||||||||||||||||||||||||||
Directors’ Stock Option Grant
|
18,440 | - | - | - | - | - | 40,015 | - | - | 40,015 | ||||||||||||||||||||||||||||||
Directors’ Stock Grant
|
28,332 | - | - | - | - | - | 67,583 | - | - | 67,583 | ||||||||||||||||||||||||||||||
Available for Sale Securities – Unrealized Gain (Loss), net of tax
|
- | - | - | - | - | - | - | - | 3,035 | 3,035 | ||||||||||||||||||||||||||||||
Net Loss (Restated)
|
(4,188,241 | ) | (4,188,241 | ) | ||||||||||||||||||||||||||||||||||||
Balance, December 31, 2011-Restated
|
10,823,050 | $ | 28,298,228 | 52,784 | $ | 154,014 | 32,619 | $ | (179,376 | ) | $ | 632,004 | $ | (22,225,904 | ) | $ | 3,035 | $ | 6,682,001 | |||||||||||||||||||||
Common Stock Options Exercise
|
165,038 | $ | 299,500 | - | - | - | - | - | - | - | 299,500 | |||||||||||||||||||||||||||||
Directors’ Stock Options Grant
|
- | - | - | - | - | - | 39,260 | - | - | 39,260 | ||||||||||||||||||||||||||||||
Common Stock Private Placement Sale
|
1,562,352 | $ | 4,649,843 | - | - | (26,644 | ) | $ | 146,515 | (174,451 | ) | - | - | 4,621,907 | ||||||||||||||||||||||||||
Treasury Stock Retirement
|
(4,975 | ) | - | - | - | (4,975 | ) | $ | 27,361 | (173,876 | ) | - | - | (146,515 | ) | |||||||||||||||||||||||||
Discount on Warrant Value
|
- | - | - | - | - | - | 1,127,111 | - | - | 1,127,111 | ||||||||||||||||||||||||||||||
Treausry Stock Donation
|
- | - | - | - | (1,000 | ) | $ | 5,500 | (2,110 | ) | - | - | 3,390 | |||||||||||||||||||||||||||
Available for Sale Securities – Realized Gain, net of tax
|
- | - | - | - | - | - | - | - | (3,035 | ) | (3,035 | ) | ||||||||||||||||||||||||||||
Net Loss
|
- | - | - | - | (11,961,026 | ) | (11,961,026 | ) | ||||||||||||||||||||||||||||||||
Balance, December 31, 2012
|
12,545,465 | $ | 33,247,571 | 52,784 | $ | 154,014 | 0 | $ | 0 | $ | 1,447,938 | $ | (34,186,930 | ) | $ | 0 | $ | 662,593 |
2012
|
2011-Restated
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net Loss
|
$
|
(11,961,026
|
)
|
$
|
(4,188,241
|
)
|
||
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities:
|
||||||||
Depreciation, Depletion, and Amortization
|
1,448,002
|
2,362,065
|
||||||
Lease Impairment
|
200,778
|
4,529,058
|
||||||
(Gain) Loss on Sale of Assets
|
(8,100
|
)
|
(759,763
|
)
|
||||
Realized (Gain) Loss on Equity Securities
|
(7,048
|
)
|
0
|
|||||
Bad Debt Expense
|
263,767
|
86,294
|
||||||
Stock-Based Compensation
|
39,260
|
107,598
|
||||||
Debt Discount Amortization,
|
100,779
|
0
|
||||||
Inventory Write Down
|
62,744
|
258,043
|
||||||
Treasury Stock Donation
|
3,390
|
0
|
||||||
(Increase) Decrease in:
|
||||||||
Deferred Income Taxes
|
7,433,654
|
(1,735,594)
|
||||||
Accounts Receivable
|
145,333
|
492,686
|
||||||
Prepaid Expenses and Other Assets
|
(47,620
|
) |
82,202
|
|||||
Increase (Decrease) in:
|
||||||||
Accounts Payable and Accrued Expenses
|
768,203
|
(724,133
|
)
|
|||||
Deferred Revenues - DWI
|
1,784,077
|
1,152,170
|
||||||
Net Cash Provided by Operating Activities
|
226,193
|
1,662,385
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Expenditures For Oil And Gas Properties and
Other Capital Expenditures
|
(4,536,358
|
) |
(4,754,817
|
)
|
||||
Proceeds from Sale of Assets
|
14,690
|
806,353
|
||||||
Sale of Equity Securities
|
35,575
|
0
|
||||||
Net Cash Used in Investing Activities
|
(4,486,093
|
) |
(3,948,464
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds from Long-Term Debt
|
2,784,689
|
700,000
|
||||||
Principal Payments on Long-Term Debt
|
(2,400,000
|
)
|
(1,150,000
|
)
|
||||
Proceeds from Stock Options and Warrant Exercises
|
299,500
|
1,051,488
|
||||||
Proceeds from Sale of Common Stock
|
2,119,510
|
0
|
||||||
Net Cash Provided by Financing Activities
|
2,803,699
|
601,488
|
||||||
Net Decrease in Cash and Cash Equivalents
|
(1,456,201
|
)
|
(1,684,591)
|
|
||||
Cash & Cash Equivalents at Beginning of Year
|
2,946,131
|
4,630,722
|
||||||
Cash & Cash Equivalents at End of Year
|
$
|
1,489,930
|
$
|
2,946,131
|
||||
Cash Paid for Interest
|
$
|
94,229
|
138,793
|
|||||
Cash Paid for Taxes
|
$
|
800
|
3,180
|
|||||
Receivable from sale of common stock
|
$
|
2,506,023
|
0
|
|||||
Unrealized Gain on Available-for-Sale Securities, net of tax effect
|
$
|
0
|
$
|
3,035
|
For the Year Ended December 31, 2012
|
||||||||||||
Income
(Numerator)
|
Shares
(Denominator)
|
Per-Share
Amount
|
||||||||||
Basic Loss Per Share:
|
||||||||||||
Net loss available to common stock
|
$
|
(11,961,026
|
)
|
11,133,377
|
$
|
(1.07
|
)
|
|||||
Cumulative effect of accounting change
|
-
|
-
|
-
|
|||||||||
Diluted Loss Per Share:
|
||||||||||||
Effect of dilutive securities and stock options
|
||||||||||||
Net loss available to common stock
|
$
|
(11,961,026
|
)
|
11,133,377
|
$
|
(1.07
|
)
|
For the Year Ended December 31, 2011
|
||||||||||||
Income
(Numerator)
|
Shares
(Denominator)
|
Per-Share
Amount
|
||||||||||
Basic Loss Per Share:
|
||||||||||||
Net loss available to common stock
|
$
|
(4,188,241
|
)
|
10,655,258
|
$
|
(0.39
|
)
|
|||||
Cumulative effect of accounting change
|
-
|
-
|
-
|
|||||||||
Diluted Loss Per Share:
|
||||||||||||
Effect of dilutive securities and stock options
|
-
|
-
|
- |
|
||||||||
Net loss available to common stock
|
$
|
(4,188,241
|
)
|
10,655,258
|
$
|
(0.39
|
)
|
Description
|
12/31/2012
|
Level 1
|
12/31/2011
|
Level 1
|
||||||||||||
Available for Sale Securities
|
$
|
0
|
$
|
0
|
$
|
31,027
|
$
|
31,027
|
2012
|
2011
|
|||||||
Oil and Gas
|
||||||||
Producing properties, including intangible drilling costs
|
$
|
24,327,806
|
$
|
23,684,048
|
||||
Undeveloped properties
|
4,034,292
|
994,687
|
||||||
Lease and well equipment
|
9,724,602
|
10,284,315
|
||||||
38,086,700
|
34,963,050
|
|||||||
Accumulated depletion, depreciation and amortization
|
(27,756,493
|
)
|
(27,553,222
|
)
|
||||
10,330,207
|
$
|
7,409,828
|
2012
|
2011
|
|||||||
Commercial and Other
|
||||||||
Real estate, including furniture and fixtures
|
$
|
502,344
|
$
|
502,344
|
||||
Vehicles
|
151,669
|
151,669
|
||||||
Furniture and equipment
|
1,299,300
|
1,307,299
|
||||||
1,953,313
|
1,961,312
|
|||||||
Accumulated depreciation
|
(1,327,723
|
)
|
(1,295,796
|
)
|
||||
625,590
|
665,516
|
|||||||
$
|
10,955,797
|
8,075,344
|
2012
|
2011
|
|||||||
Acquisition - Proved
|
$
|
24,298
|
145,746
|
|||||
Acquisition- Unproved
|
$
|
24,606
|
33,749
|
|||||
Development
|
$
|
577,708
|
6,493,013
|
|||||
Exploration
|
$
|
1,077,001
|
538,247
|
12 Months Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
Beginning balance at January 1
|
$
|
0
|
$
|
0
|
||||
Additions to capitalized exploratory well costs pending the determination of proved reserves
|
$
|
556,446
|
$
|
0
|
||||
Reclassifications to wells, facilities, and equipment based on the determination of proved reserves
|
$
|
(556,446
|
)
|
$
|
0
|
|||
Ending balance at December 31
|
$
|
0
|
$
|
0
|
2012
|
2011
|
|||||||
Oil and gas sales
|
$ | 1,673,538 | 4,879,397 | |||||
Production related costs
|
(1,139,750 | ) | (1,517,920 | ) | ||||
Lease Impairment
|
(200,778 | ) | (4,529,058 | ) | ||||
Depreciation, depletion and amortization
|
(1,448,002 | ) | (2,362,065 | ) | ||||
Results of operations from producing and
|
||||||||
exploration activities
|
$ | (1,114,992 | ) | (3,529,646 | ) | |||
Income Taxes (Benefit)
|
1,831,562 | (1,032,831 | ) | |||||
Net Results
|
$ | (2,946,554 | ) | (2,496,815 | ) |
2012
|
2011
|
|||||||
Asset retirement obligation Beginning of the year |
$
|
575,612
|
$
|
580,568
|
||||
Liabilities incurred during the period
|
347,947
|
21,173
|
||||||
Settlements
|
0
|
(24,690
|
)
|
|||||
Accretion expense
|
6,741
|
9,266
|
||||||
Revisions in estimated cash flow
|
23,788
|
(10,705
|
) | |||||
Asset retirement obligation End of year
|
$
|
954,088
|
$
|
575,612
|
Oil and Gas
Producing
and
Exploration
|
Turnkey
Drilling
Services
|
Total
|
||||||||||
Year Ended December 31, 2012
|
||||||||||||
Revenues from External Customers
|
$
|
1,673,538
|
$
|
2,028,863
|
$
|
3,702,401
|
||||||
Supervisory Fees
|
686,261
|
0
|
686,261
|
|||||||||
Interest Revenue
|
0
|
6,083
|
6,083
|
|||||||||
Interest Expense
|
97,505
|
97,504
|
195,009
|
|||||||||
Operating Expenses for Segment Assets
|
4,079,672
|
3,012,549
|
7,092,221
|
|||||||||
Depreciation, Depletion, and Amortization
|
1,375,602
|
72,400
|
1,448,002
|
|||||||||
Lease Impairment
|
100,389
|
100,389
|
200,778
|
|||||||||
Gain on Sale of Assets
|
0
|
8,100
|
8,100
|
|||||||||
Gain on Marketable Securities
|
7,048
|
0
|
7,048
|
|||||||||
Income Tax Expense
|
|
5,398,335
|
2,036,574
|
7,434,909
|
||||||||
Total Assets
|
16,628,168
|
875,167
|
17,503,335
|
|||||||||
Net Loss
|
$
|
(8,684,656
|
)
|
(3,276,370
|
)
|
(11,961,026
|
)
|
Year Ended December 31, 2011 (restated)
|
||||||||||||
Revenues from External Customers
|
$
|
4,879,397
|
$
|
5,794,427
|
$
|
10,673,824
|
||||||
Supervisory Fees
|
834,372
|
-
|
834,372
|
|||||||||
Interest Revenue
|
-
|
24,214
|
24,214
|
|||||||||
Interest Expense
|
69,109
|
69,109
|
138,218
|
|||||||||
Operating Expenses for Segment Assets
|
4,821,462
|
6,362,117
|
11,183,579
|
|||||||||
Depreciation, Depletion, and Amortization
|
2,243,962
|
118,103
|
2, 362,065
|
|||||||||
Lease Impairment
|
4,522,578
|
6,480
|
4,529,058
|
|||||||||
Gain on Sale of Assets
|
759,763
|
-
|
759,763
|
|||||||||
Income Tax (Benefit)
|
(1,516,799
|
)
|
(215,707
|
) |
(1,732,506
|
) | ||||||
Total Assets
|
20,388,197
|
1,073,063
|
21,461,260
|
|||||||||
Net Loss
|
$
|
(3,666,780
|
)
|
$
|
(521,461
|
) |
$
|
(4,188,241
|
) | |||
2012
|
2011
|
|||||||
Revolving line of credit secured by oil and gas properties, with a maximum available of $14,250,000 at December 31, 2011, issued by Texas Capital Bank, N.A. for the purposes of refinancing Royale’s existing debt and to fund development, exploration and acquisition activities as well as other general corporate purposes. The agreement was entered into on February 13, 2009. Interest is at Texas Capital Bank’s “Base Rate” plus 1.00% with an “Adjusted Base Rate” of 5.00%, resulting in a rate of 5.00% at December 31, 2012 and 2011, payable monthly with borrowing base reductions of $100,000 commencing on January 1, 2011. As part of this agreement, Texas Capital Bank has issued letters of credit in the amount of $750,000 on behalf of the Company to various agencies. At December 31, 2012, Royale’s borrowing base with Texas Capital Bank was $350,000. The revolving line of credit matured in February 2013.
|
$
|
350,000
|
$
|
2,750,000
|
||||
Note Payable convertible into shares of Royale’s Common stock and a Warrant Agreement with certain institutional investors. The Note has a face value of $3,333,333.33 and issued with an original issue discount of 10% for an aggregate purchase price of $3 million. The Note is not interest bearing unless Royale is in default of the Note, in which case the Note carries an interest rate of 18% per annum. During each calendar quarter from January 1, 2013 through December 31, 2013, the holder of the Note intends to require Royale to redeem 25% of the original principal amount each quarter. Accordingly, the note has been classified as current. Once notification is received, Royale, in its sole discretion, may satisfy its obligation either in cash or in shares of its common stock. However, at the Note’s maturity on December 31, 2014, any outstanding balance on the Note is required to be repaid in cash. Note is net of the Discount of Warrant Value in the amount of $1,229,354.
|
1,908,668
|
-
|
||||||
Total Long Term Debt
|
$
|
2,258,668
|
$
|
2,750,000
|
||||
Less Current Maturity
|
2,258,668
|
$
|
-
|
|||||
Long Term Debt Less Current Portion
|
$
|
-
|
$
|
2,750,000
|
2012
|
2011
|
|||||||
Deferred Tax Assets (Liabilities):
|
||||||||
Statutory Depletion Carry Forward
|
$
|
776,534
|
$
|
839,572
|
||||
Net Operating Loss
|
4,951,344
|
2,860,706
|
||||||
Other
|
212,798
|
375,881
|
||||||
Share-Based Compensation
|
58,558
|
42,321
|
||||||
Mark to Market Securities
|
-
|
(1,240
|
)
|
|||||
Capital Loss / AMT Credit Carry Forward
|
76,410
|
76,410
|
||||||
Charitable Contributions Carry Forward
|
16,022
|
14,416
|
||||||
Allowance for Doubtful Accounts
|
372,772
|
263,966
|
||||||
Oil and Gas Properties and Fixed Assets
|
3,711,789
|
3,799,419
|
||||||
$
|
10,176,227
|
$
|
8,271,451
|
|||||
Valuation Allowance
|
(10,176,227
|
)
|
(839,572
|
)
|
||||
Net Deferred Tax Asset
|
$
|
-
|
$
|
7,431,879
|
||||
Deferred Tax Assets:
|
||||||||
Current
|
$
|
107,563
|
$
|
661,645
|
||||
Non-current
|
(107,563
|
)
|
6,771,474
|
|||||
Deferred Tax Liabilities:
|
||||||||
Current
|
(1,240
|
)
|
||||||
Non-current
|
-
|
|||||||
Net Deferred Tax Asset
|
$
|
-
|
$
|
7,431,879
|
2012
|
2011
|
|||||||
Tax (benefit) computed at statutory rate of 34%
|
$
|
(1,538,880
|
)
|
$
|
(2,013,054
|
)
|
||
Increase (decrease) in taxes resulting from:
|
||||||||
State tax / percentage depletion / other
|
1,128,788
|
(263,772
|
)
|
|||||
Other non-deductible expenses
|
2,888
|
2,942
|
||||||
Change in valuation allowance
|
7,842,113
|
541,378
|
||||||
Provision (benefit)
|
$
|
7,434,909
|
$
|
(1,732,506
|
)
|
2012
|
2011
|
|||||||
Current tax provision (benefit) – federal
|
$ | - | - | |||||
Current tax provision (benefit) – state
|
1,790 | 3,090 | ||||||
Deferred tax provision (benefit) – federal
|
6,265,479 | (1,409,034 | ) | |||||
Deferred tax provision (benefit) – state
|
1,167,640 | (326,562 | ) | |||||
Total provision (benefit)
|
$ | 7,434,909 | (1,732,506 | ) |
Year Ended
|
||||
December 31,
|
||||
2013
|
$
|
403,873
|
||
2014
|
$
|
415,842
|
||
2015
|
$
|
246,900
|
||
Thereafter
|
$
|
-
|
||
Total
|
$
|
1,066,615
|
2012
|
2011
|
|||||||||||||||
Weighted-
|
Weighted-
|
|||||||||||||||
Average
|
Average
|
|||||||||||||||
Exercise
|
Exercise
|
|||||||||||||||
Shares
|
Price
|
Shares
|
Price
|
|||||||||||||
Options
|
||||||||||||||||
Outstanding at Beginning of Year
|
675,000 | $ | 3.36 | 320,000 | $ | 3.50 | ||||||||||
Granted
|
- | $ | 400,000 | 3.25 | ||||||||||||
Exercised
|
(283,692 | ) | $ | 3.46 | (45,000 | ) | 3.44 | |||||||||
Expired or Ineligible
|
(45,000 | ) | 3.50 | - | ||||||||||||
Outstanding at End of Year
|
346,308 | $ | 3.25 | 675,000 | $ | 3.36 | ||||||||||
Options Exercisable at Year End
|
346,308 | $ | 3.25 | 475,000 | $ | 3.40 | ||||||||||
Weighted-average Fair Value of Options
Granted During the Year |
$ | - | - | $ | 0.21 |
2012
|
2011
|
|||||||||||||||
Weighted-
|
Weighted-
|
|||||||||||||||
Average
|
Average
|
|||||||||||||||
Grant-Date
|
Grant-Date
|
|||||||||||||||
Shares
|
Fair Value
|
Shares
|
Fair Value
|
|||||||||||||
Non-vested Shares
|
||||||||||||||||
Non-vested at Beginning of Year
|
- | $ | - | 31,670 | $ | 3.31 | ||||||||||
Granted
|
- | - | ||||||||||||||
Reinstated
|
- | - | ||||||||||||||
Vested
|
- | 31,670 | $ | 3.31 | ||||||||||||
Expired or Ineligible
|
- | $ | - | |||||||||||||
Non-vested at End of Year
|
- | - | $ | 3.31 |
As Previously
|
||||||||
Reported
|
As Restated
|
|||||||
Balance sheet as of December 31, 2010:
|
||||||||
Accumulated deficit
|
(16,807,424
|
)
|
(18,037,663
|
)
|
||||
Balance sheet as of December 31, 2011:
|
||||||||
Deferred Tax Asset
|
6,055,803
|
6,771,474
|
||||||
Total Assets
|
20,745,589
|
21,461,260
|
||||||
Deferred Revenue from Turnkey Drilling
|
4,879,853
|
6,909,666
|
||||||
Total Current Liabilities
|
9,423,834
|
11,453,647
|
||||||
Total Liabilities
|
12,749,446
|
14,779,259
|
||||||
Accumulated Deficit
|
20,911,762
|
22,225,904
|
||||||
Total paid in capital and accumulated deficit
|
7,543,515
|
6,861,377
|
||||||
Total Stockholder’s Equity
|
7,996,143
|
6,682,001
|
||||||
Total Liabilities and Stockholder’s Equity
|
20,745,589
|
21,461,260
|
||||||
Statement of Operations for the year ended December 31, 2011:
|
||||||||
Turnkey Drilling
|
5,933,065
|
5,794,427
|
||||||
Total Revenues
|
11,671,048
|
11,532,410
|
||||||
Income From Operations
|
(5,643,891
|
) |
(5,782,529
|
) | ||||
Income Before Income Tax Expense
|
(5,782,109
|
) |
(5,920,747
|
) | ||||
Income Tax Provision (Benefit)
|
(1,677,771
|
) |
(1,732,506
|
) | ||||
Net Income (Loss)
|
(4,104,338
|
) |
(4,188,241
|
) | ||||
Comprehensive Income (Loss)
|
(4,101,303
|
) |
(4,185,206
|
) |
2012
|
2011
|
|||||||||||||||
Oil (BBL)
|
Gas (MCF)
|
Oil (BBL)
|
Gas (MCF)
|
|||||||||||||
Proved developed and undeveloped reserves:
|
||||||||||||||||
Beginning of period
|
4,900
|
4,569,850
|
16,830
|
5,733,873
|
||||||||||||
Revisions of previous estimates
|
(2,658
|
) |
(436,443
|
)
|
2,205
|
(1,044,000
|
) | |||||||||
Production
|
(1,558
|
)
|
(559,590
|
)
|
(2,264
|
)
|
(1,144,469
|
) | ||||||||
Extensions, discoveries and improved recovery
|
63,200
|
892,990
|
1,024,446
|
|||||||||||||
Purchase of minerals in place
|
16
|
31,162
|
||||||||||||||
Sales of minerals in place
|
(11,871
|
) | ||||||||||||||
Proved reserves end of period
|
63,900
|
4,497,970
|
4,900
|
4,569,850
|
2012
|
2011
|
|||||||||||||||
Oil (BBL)
|
Gas (MCF)
|
Oil (BBL)
|
Gas (MCF)
|
|||||||||||||
Proved developed reserves:
|
||||||||||||||||
Beginning of period
|
4,900
|
4,174,050
|
16,830
|
5,041,179
|
||||||||||||
End of period
|
700
|
3,188,390
|
4,900
|
4,174,050
|
2012
|
2011
|
|||||||||||||||
Oil (BBL)
|
Gas (MCF)
|
Oil (BBL)
|
Gas (MCF)
|
|||||||||||||
Proved undeveloped reserves:
|
||||||||||||||||
Beginning of period
|
-
|
395,800
|
-
|
692,694
|
||||||||||||
End of period
|
63,200
|
1,309,580
|
-
|
395,800
|
•
|
Estimates are made of quantities of proved reserves and the future periods during which they are expected to be produced based on year-end economic conditions.
|
•
|
The estimated future production of proved reserves is priced on the basis of year-end prices.
|
•
|
The resulting future gross revenue streams are reduced by estimated future costs to develop and to produce proved reserves, based on year-end estimates. Estimated future development costs by year are as follows:
|
2013
|
$
|
2,311,210
|
||
2014
|
1,455,100
|
|||
2015
|
22,000
|
|||
Thereafter
|
167,200
|
|||
Total
|
$
|
3,955,510
|
2012
|
2011
|
|||||||
Future cash inflows
|
$
|
18,248,440
|
19.133,280
|
|||||
Future production costs
|
(6,661,330
|
)
|
(7,698,630
|
) | ||||
Future development costs
|
(3,955,510
|
)
|
(1,181,010
|
) | ||||
Future income tax expense
|
(2,289,480
|
)
|
(3,076,065
|
) | ||||
Future net cash flows
|
5,342,120
|
7,177,575
|
||||||
10% annual discount for estimated timing of cash flows
|
(1,404,499
|
)
|
(1,619,267
|
) | ||||
Standardized measure of discounted future net cash flows
|
$
|
3,937,621
|
5,558,308
|
|||||
Sales of oil and gas produced, net of production costs
|
$
|
(344,130
|
)
|
(1,130,540
|
) | |||
Revisions of previous quantity estimates
|
(2,813,520
|
)
|
(4,115,420
|
) | ||||
Net changes in prices and production costs
|
(1,158,708
|
)
|
(1,068,429
|
) | ||||
Sales of minerals in place
|
-
|
(307,644
|
) | |||||
Purchases of minerals in place
|
-
|
-
|
||||||
Extensions, discoveries and improved recovery
|
1,480,350
|
1,459,973
|
||||||
Accretion of discount
|
520,741
|
688,468
|
||||||
Net change in income tax
|
694,580
|
1,342,077
|
||||||
Net decrease
|
$
|
(1,620,687
|
)
|
(3,131,515
|
) |
Future development cost of:
|
2013
|
2014
|
2015
|
|||||||||
Proved developed reserves
|
$
|
14,010
|
$
|
-
|
$
|
-
|
||||||
Proved non-producing reserves
|
57,100
|
55,100
|
22,000
|
|||||||||
Proved undeveloped reserves
|
2,240,100
|
1,400,000
|
-
|
|||||||||
Total
|
$
|
2,311,210
|
$
|
1,455,100
|
$
|
22,000
|
2012
|
$
|
0
|
||
2011
|
$
|
1,560,735
|
||
2010
|
$
|
0
|
Source Energy Corp
|
||
By: /s/ James Frimodig
|
||
Title: President
|
Date: April 15, 2013
|
/s/ Donald H. Hosmer | |
Donald H. Hosmer, Co-President and Co-Chief Executive Officer
|
Date: April 15, 2013
|
/s/ Stephen M. Hosmer | |
Stephen M. Hosmer, Co-President, Co-Chief Executive Officer and Chief Financial Officer
|
Date: April 15, 2013
|
By:
|
/s/ Donald H. Hosmer | |
Donald H. Hosmer, Co-President and Co Chief Executive Officer
|
Date: April 15, 2013
|
By:
|
/s/ Stephen M. Hosmer | |
Stephen M. Hosmer, Co-President, Co-Chief Executive Officer and Chief Financial Officer
|
Net Reserves
|
Future Net Revenue (M$)
|
|||||||||||||||
Oil
|
Gas
|
Present Worth
|
||||||||||||||
Category
|
(MBBL)
|
(MMCF)
|
Total
|
at 10%
|
||||||||||||
Proved Developed Producing
|
0.7 | 796.1 | 856.2 | 720.6 | ||||||||||||
Proved Developed Non-Producing
|
0.0 | 1,914.5 | 3,406.8 | 2,063.6 | ||||||||||||
Proved Undeveloped
|
63.2 | 1,309.6 | 2,493.3 | 1,684.1 | ||||||||||||
Total Proved
|
63.9 | 4,020.2 | 6,756.3 | 4,468.4 |
Net Reserves
|
Future Net Revenue
|
|||||||||||
Category
|
Gas (MCF)
|
Total
|
Present Worth @10%
|
|||||||||
Proved Developed
Producing
|
434,990
|
$
|
841,720
|
$
|
710,160
|
|||||||
Proved Developed
Non-Producing
|
42,790
|
$
|
33,570
|
$
|
28,850
|
|||||||
Total Proved
|
477,780
|
$
|
875,290
|
$
|
739,010
|
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M2^\&21>?'KR:E;R:8T9;9O%P&,6W=\N=V,\=:`/X/=/T+4YK^!+6SO3
NOTE 2 - OIL AND GAS PROPERTIES, EQUIPMENT AND FIXTURES (Detail) - Cost Incurred in Oil and Gas Property Acquisition, Exploration, and Development Activities Disclosure (USD $)
|
12 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Acquisition - Proved | $ 24,298 | $ 145,746 |
Acquisition- Unproved | 24,606 | 33,749 |
Development | 577,708 | 6,493,013 |
Exploration | $ 1,077,001 | $ 538,247 |
NOTE 8 - SERIES AA PREFERRED STOCK (Detail)
|
Dec. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Preferred Stock, Shares Issued | 52,784 | 52,784 |
Preferred Stock, Shares Outstanding | 52,784 | 52,784 |
NOTE 6 - LONG-TERM DEBT (Detail) - Schedule of Debt (Parentheticals) (USD $)
|
12 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Note Payable, original issue discount | 10.00% | |
Note Payable, aggregate purchase price (in Dollars) | $ 2,784,689 | $ 700,000 |
Convertible Note Payable [Member]
|
||
Long Term Debt, interest rate terms | not interest bearing unless Royale is in default of the Note, in which case the Note carries an interest rate of 18% per annum | not interest bearing unless Royale is in default of the Note, in which case the Note carries an interest rate of 18% per annum |
Note Payable, face value (in Dollars) | 3,333,333.33 | 3,333,333.33 |
Note Payable, original issue discount | 10.00% | 10.00% |
Debt Instrument, Call Feature | During each calendar quarter from January 1, 2013 through December 31, 2014, the holder of the Note may require Royale to redeem up to 25% of the original principal amount each quarter. Once notification is received, Royale, in its sole discretion, may satisfy its obligation either in cash or in shares of its common stock. However, at the Note's maturity on December 31, 2014, any outstanding balance on the Note is required to be repaid in cash. | During each calendar quarter from January 1, 2013 through December 31, 2014, the holder of the Note may require Royale to redeem up to 25% of the original principal amount each quarter. Once notification is received, Royale, in its sole discretion, may satisfy its obligation either in cash or in shares of its common stock. However, at the Note's maturity on December 31, 2014, any outstanding balance on the Note is required to be repaid in cash. |
Note Payable, discount (in Dollars) | 1,229,354 | 1,229,354 |
Line of Credit [Member]
|
||
Revolving line of credit, Collateral | secured by oil and gas properties | secured by oil and gas properties |
Revolving line of credit, maximum borrowing capacity (in Dollars) | 14,250,000 | 14,250,000 |
Revolving line of credit, issuance date | Feb. 13, 2009 | Feb. 13, 2009 |
Long Term Debt, interest rate terms | Texas Capital Bank's "Base Rate" plus 1.00% with an "Adjusted Base Rate" of 5.00%, resulting in a rate of 5.00% | Texas Capital Bank's "Base Rate" plus 1.00% with an "Adjusted Base Rate" of 5.00%, resulting in a rate of 5.00% |
Revolving line of credit, date of payment commencement | Jan. 01, 2011 | Jan. 01, 2011 |
Revolving line of credit, current borrowing base (in Dollars) | 350,000 | 350,000 |
Revolving line of credit, letters of credit (in Dollars) | $ 750,000 | $ 750,000 |
Revolving line of credit, maturity date | Feb. 28, 2013 | Feb. 28, 2013 |
Debt Instrument, Interest Rate at Period End | 5.00% | 5.00% |
NOTE 9 - COMMON STOCK (Detail) (USD $)
|
12 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2009
Series A Warrants [Member]
Securities Purchase Agreement, Cranshire Capital, August 2009 [Member]
|
Dec. 31, 2009
Series A-1 Warrants [Member]
Securities Purchase Agreement, Cranshire Capital, August 2009 [Member]
|
Dec. 31, 2009
Series B Warrants [Member]
Securities Purchase Agreement, Cranshire Capital, August 2009 [Member]
|
Dec. 31, 2009
Series C Warrants [Member]
Securities Purchase Agreement, Cranshire Capital, August 2009 [Member]
|
Dec. 31, 2011
Series A warrants exercised March and April 2011 [Member]
Securities Purchase Agreement, Cranshire Capital, August 2009 [Member]
|
Dec. 31, 2012
Securities Purchase Agreement, C. K. Cooper & Company, Inc. [Member]
|
Dec. 31, 2011
Securities Purchase Agreement, Cranshire Capital, June 2008 [Member]
|
Dec. 31, 2008
Securities Purchase Agreement, Cranshire Capital, June 2008 [Member]
|
Dec. 31, 2009
Securities Purchase Agreement, Cranshire Capital, June 2008 [Member]
|
Dec. 31, 2011
Securities Purchase Agreement, Cranshire Capital, August 2009 [Member]
|
Dec. 31, 2009
Securities Purchase Agreement, Cranshire Capital, August 2009 [Member]
|
Dec. 31, 2009
Private Placement [Member]
|
|
Stock Issued During Period, Shares, Issued for Cash | 10,000,000 | 547,945 | 552,764 | |||||||||||
Stock issuance, commission fee percentage | 3.50% | |||||||||||||
Stock Issued During Period, Value, Issued for Cash (in Dollars) | $ 4,621,907 | $ 4,000,000 | ||||||||||||
Sale of Stock, Price Per Share (in Dollars per share) | $ 1.99 | $ 7.30 | $ 1.99 | |||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 329,850 | 1,808 | 511,628 | 306,977 | 191,781 | |||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per Item) | 2.19 | 2.19 | 2.15 | 2.19 | 7.30 | 1.99 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award | The exercise price of the Series B Warrants is also subject to increases if the market price of the common stock equals or exceeds $2.40, in which case the exercise price of such Series B warrant will be increased to 90% of the closing sale price of the common stock on the trading day immediately preceding the date of exercise thereof | The $7.30 per share price was negotiated as a 15% discount from the 10 day dollar volume weighted average price of the Company's Common Stock on the NASDAQ Global Market | immediately exercisable for a period of 5 years | |||||||||||
Stock Issued During Period, Shares, Other | 511,628 | 329,850 | 71,918 | 67,160 | ||||||||||
Proceeds from Warrant Exercises (in Dollars) | 143,117 | 185,999 | 1,080,650 | |||||||||||
Warrant Term | 5 years | 1 year | 5 years | |||||||||||
Proceeds from Issuance of Warrants (in Dollars) | $ 299,500 | $ 1,051,488 | $ 722,372 |
NOTE 6 - LONG-TERM DEBT (Detail) (USD $)
|
12 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2012
Harry E. Hosmer, former president and former chief executive officer [Member]
Stephen M. Hosmer, co-president, co-chief executive officer and chief financial officer [Member]
Line of Credit [Member]
|
Dec. 31, 2012
Number of shares to be authorized [Member]
|
Dec. 31, 2012
Convertible Note Payable [Member]
|
Dec. 31, 2012
Line of Credit [Member]
|
|
Line of Credit Facility, Covenant Terms | the Company will have a tangible net worth not less than $5,424,014 as of December 31, 2008, plus 75% of positive quarterly net income thereafter, an interest coverage ratio not less than 3.00:1, and a bank defined current ratio not less than 1:1 | |||||
Guarantor Obligations, Current Carrying Value (in Dollars) | $ 750,000 | |||||
Guarantor Obligations, Collateral Held Directly or by Third Parties | Guarantors will be required to collectively maintain unencumbered liquidity in the form of cash or marketable securities equal to 150% of the line amount | |||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares) | 500,000 | |||||
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per Item) | 3.00 | |||||
Warrant Term | 3 years | |||||
Class of Warrant or Right, Date from which Warrants or Rights Exercisable | Apr. 29, 2013 | |||||
Fair Value Assumptions, Exercise Price (in Dollars per share) | $ 3.00 | |||||
Fair Value Assumptions, Expected Term | 3 years | |||||
Fair Value Assumptions, Risk Free Interest Rate | 0.8805% | |||||
Fair Value Assumptions, Expected Volatility Rate | 107.70% | |||||
Class of Warrant or Rights, fair value, per share (in Dollars per share) | $ 1.9536 | |||||
Debt Instrument, Restrictive Covenants | In addition to the Note and Warrant Agreement, Royale also agreed to (i) not issue any securities for each period commencing on the date of receipt of an optional redemption notice and ending 20 trading days following the redemption required by such optional redemption notice, subject to certain limited exceptions, (ii) not to enter into a variable rate transaction at any time until the earlier of two years from the closing date or the date on which none of the Notes or Warrants are outstanding, and (iii) to allow the investors to participate in future issuances of securities, subject to certain exceptions, for a period of one year from the date hereof | |||||
Capital Units, Authorized (in Shares) | 51,000,000 | |||||
Common Stock, Shares Authorized (in Shares) | 20,000,000 | 20,000,000 | 50,000,000 | |||
Preferred Stock, Shares Authorized (in Shares) | 147,500 | 147,500 | 1,000,000 |
NOTE 12 - STOCK BASED COMPENSATION (Tables)
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Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | A summary of the status of Royale Energy's stock option plan as of December 31, 2012 and 2011, and changes during the years ending on those dates is presented below:
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Schedule of Nonvested Restricted Stock Units Activity [Table Text Block] | A summary of the status of Royale Energy's restricted stock grant plans as of December 31, 2012 and 2011, and changes during the years ending on those dates is presented below:
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NOTE 10 - OPERATING LEASES (Detail) - Schedule of Future Minimum Rental Payments for Operating Leases (USD $)
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Dec. 31, 2012
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2013 | $ 403,873 |
2014 | 415,842 |
2015 | 246,900 |
Thereafter | |
Total | $ 1,066,615 |
Accounting Policies, by Policy (Policies)
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Dec. 31, 2012
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Basis of Accounting, Policy [Policy Text Block] | Description
of Business
Royale
Energy is an independent oil and gas producer which also has
operations in the area of turnkey drilling. Royale
Energy owns wells and leases in major geological basins
located primarily in California, Texas, and Utah. Royale
Energy offers fractional working interests and seeks to
minimize the risks of oil and gas drilling by selling
multiple well drilling projects which do not include the use
of debt financing |
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Use of Estimates, Policy [Policy Text Block] | Use of
Estimates
The
preparation of financial statements in conformity with
accounting principles generally accepted in the United States
of America requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
Material
estimates that are particularly susceptible to significant
change relate to the estimate of Company oil and gas reserves
prepared by an independent engineering
consultant. Such estimates are subject to numerous
uncertainties inherent in the estimation of quantities of
proven reserves. Estimated reserves are used in the
calculation of depletion, depreciation and amortization,
unevaluated property costs, impairment of oil and natural gas
properties, estimated future net cash flows, taxes, and
contingencies |
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Equity Method Investments, Policy [Policy Text Block] | Joint
Ventures
The
accompanying financial statements as of December 31, 2012 and
2011 include the accounts of Royale Energy and its
proportionate share of the assets, liabilities and results of
operations as described in FASB ASC
932-323. Royale Energy generally retains an
ownership interest of approximately 50% in wells it drills
with its joint venture projects. Royale Energy is
the operator of the majority of properties in which it has an
ownership interest. In connection with the drilling and
operation of wells, the Company receives industry standard
COPAS fees, which are recorded as supervisory fee
income |
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Revenue Recognition, Policy [Policy Text Block] | Revenue
Recognition
Royale
Energy recognizes revenues from the sales of oil and
natural gas upon transfer of title, net of royalties, in
the period of delivery. Settlements for oil and
natural gas sales can occur up to two months after the end
of the month in which the oil and natural gas were
produced. We estimate and accrue for the value
of these sales using information available to us at the
time our financial statements are generated.
Royale
Energy recognizes revenues from the sale of natural gas in
which the Company has an interest with other producers
using the entitlements method of
accounting. Under this method we recognize
revenue based on our entitled ownership percentage of sales
of natural gas delivered to purchasers. Gas
imbalances occur when we sell more or less than our
entitled ownership percentage of total natural gas
production. When we receive more than our
entitled share, a liability is recorded. Gas
imbalances on our production at December 31, 2012 and 2011
were not significant.
Upon
the sale or retirement of a complete field of a proved
property, the Company eliminates the cost from its books,
and the resultant gain or loss is recorded to Royale
Energy’s Statement of Operations. Upon the
sale of an entire interest in an unproved property where
the property has been assessed for impairment individually,
a gain or loss is recognized in Royale Energy’s
Statement of Operations. If a partial interest
in an unproved property is sold, any funds received are
accounted for as a reduction of the cost in the interest
retained.
Royale
Energy enters into turnkey drilling agreements with
investors to develop leasehold acreage it has acquired. In
these arrangements, Royale Energy acquires a working
interest in a prospect pursuant to an oil and gas lease,
and then sells a portion of a well’s working interest
on the acquired lease to investors with a turnkey drilling
agreement. Title to the lease property is not
conveyed to the investor. The investor
purchases a working interest directly in the well
bore. The working interest purchased in the
turnkey drilling agreements is an ownership interest in
which the working interest holder is responsible to bear
the cost of drilling, testing completing, equipping and
operating the well. Royale Energy typically retains 50% of
the working interest and acts as operator of the projects
in which it sells working interests to investors.
In
a turnkey drilling agreement, Royale Energy agrees to sell
a percentage of the well’s working interest to
investors and to pay for all costs of identifying,
acquiring mineral rights to, drilling, testing, completing
and equipping the well for initial production at a fixed
price. If the actual costs of these activities
exceed the turnkey price Royale charged to the investors,
Royale is responsible to pay the excess cost. If
the actual costs are less than the turnkey price, Royale
retains the excess of the turnkey price over actual
costs. Royale bears 100% of the risk should
actual costs exceed estimated costs of a project for both
Royale’s working interest and the working interest
sold to investors in a well. When the well is
completed as a commercially productive well, Royale Energy
and the investors bear the cost of operating the well
according to each party’s proportionate working
interest percentage.
When
Royale Energy sponsors a turnkey drilling project for sale,
investors enter into a signed contract with Royale Energy.
In this agreement, the investor agrees to share in the
pre-drilling costs, which are non-refundable, and drilling
costs. Pre-drilling costs include geophysical
& geographical costs, selling costs, spoilage costs,
third party broker commission fees, and other costs as
required so the drilling of the project can
proceed. Drilling costs are those costs to lease
the mineral rights, build the drilling location, drill, and
log the well, and if the wells is successful, to complete
and test the well. The investment is held
and reported by Royale Energy as deferred revenue from
turnkey drilling. Once drilling begins, it is generally
completed within 10-30 days.
Royale
Energy bases the price at which it sells working interests
under the turnkey drilling agreement on its estimates of
the costs, described above, and is based upon the
historical cost to complete those
activities. Revenues covering the pre-drilling
and drilling costs are recognized in the period in which a
well is drilled and logged.
Since
the investor’s interest in the prospect is limited to
the well, and not the lease, the investor does not have a
legal right to participate in additional wells drilled
within the same lease. However, it is the
Company’s policy to offer to investors in a
successful well the right to participate in subsequent
wells at the same percentage level as their working
interest investment in the prior successful well with
similar turnkey drilling agreement terms.
If
Royale Energy is unable to drill the wells, and a suitable
replacement well is not found, Royale would retain the
non-refundable portion of the contact and return the
remaining funds to the investors. Included in
cash and cash equivalents are amounts for use in completion
of turnkey drilling programs in progress |
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Oil and Gas Properties Policy [Policy Text Block] | Oil
and Gas Property and Equipment (Successful
Efforts)
Royale
Energy accounts for its oil and gas exploration and
development costs using the successful efforts method.
Leasehold acquisition costs are capitalized. If proved
reserves are found on an undeveloped property, leasehold
cost is transferred to proved properties. Significant
undeveloped leases are reviewed periodically and a
valuation allowance is provided for any estimated decline
in value. Cost of other undeveloped leases is expensed over
the estimated average life of the leases. Cost of
exploratory drilling is initially capitalized. In the
absence of a determination that proved reserves are found,
the costs of drilling such exploratory wells are charged to
expense. Royale Energy makes this determination within one
year following the completion of drilling. Other
exploratory costs are charged to expense as incurred.
Development costs, including unsuccessful development
wells, are capitalized. Depletion, depreciation and
amortization of oil and gas producing properties are
computed on an aggregate basis using the
units-of-production method.
As
required by the Extractive Activities Topic of the
Financial Accounting Standards Board (FASB), long-lived
assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. It establishes
guidelines for determining recoverability based on future
net cash flows from the use of the asset and for the
measurement of the impairment loss. Impairment loss under
the Topic is calculated as the difference between the
carrying amount of the asset and its fair value. Any
impairment loss is recorded in the current period in which
the recognition criteria are first applied and met. Under
the successful efforts method of accounting for oil and gas
operations, Royale Energy periodically assessed its proved
properties for impairments by comparing the aggregate net
book carrying amount of all proved properties with their
aggregate future net cash flows. The statement requires
that the impairment review be performed on the lowest level
of asset groupings for which there are identifiable cash
flows.
Royale
Energy performs a periodic review for impairment of proved
properties on a field-by-field basis. Unamortized capital
costs are measured on a field basis and are reduced to fair
value if it is determined that the sum of expected future
net cash flows are less than the net book value. Royale
Energy determines if impairment has occurred through either
adverse changes or as a result of its periodic review for
impairment. Impairment is measured on a 10% discounted cash
flows basis. Impairment losses of $200,778, and $4,529,058,
were recorded in 2012 and 2011, respectively.
Upon
the sale of oil and gas reserves in place, costs and
accumulated amortization of such property are removed from
the accounts and resulting gain or loss on sale is
reflected in operations. Impairment of unproved properties
is assessed periodically on a property-by-property basis,
and any impairment in value is currently charged to
expense. In addition, capitalized costs of unproved
properties are assessed periodically to determine whether
their value has been impaired below the capitalized costs.
Loss is recognized to the extent that such impairment is
indicated. In making these assessments, factors such as
exploratory drilling results, future drilling plans, and
lease expiration terms are considered. When an entire
interest in an unproved property is sold, gain or loss is
recognized, taking into consideration any recorded
impairment. When a partial interest in an unproved property
is sold, funds received are accounted for as a reduction of
the costs in the interest retained. Upon
abandonment of properties, the reserves are deemed fully
depleted and any unamortized costs are recorded in the
statement of operations under impairment expense.
During
2012, impairment losses of $200,778 were recorded in wells
or fields where year-end reserve values were less than the
net book values of wells or where lease and land costs were
no longer viable. In 2012, one Utah well and two
California wells were impaired by $ 11,276 and $ 60,789,
respectively. These impairments were due to
lower proved developed reserves than current book values
due to the natural declines of the wells. Also
in 2012, we recorded lease impairments of $119,322 on
various capitalized lease and land costs that were no
longer viable.
In
2011, Royale Energy recorded an impairment of $4,516,098 in
fields where year-end reserve values no longer supported
net book values of the related wells in those
fields. Royale had impairments in its Lone Star
and Bowerbank fields in the amounts of $3,776,385, and
$28,566, respectively. The impairments were the
result of natural declines and lower natural gas
prices. Additionally, an impairment of $710,124 was
recognized for our Moon Ridge field in Utah, where recently
reduced gas prices and a reevaluation of the reservoir
significantly lowered proved reserves than originally
estimated. Moreover, 2011 impairments also include
impairments of nonviable geological lease and land costs of
$12,959 |
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Cash and Cash Equivalents, Policy [Policy Text Block] | Cash
and Cash Equivalents
Cash
and cash equivalents include cash on hand and on deposit,
and highly liquid debt instruments with maturities of three
months or less |
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Inventory, Policy [Policy Text Block] | Inventory
Inventory
consists of well supplies, pipeline and spare parts and is
carried at lower of cost or market. During 2012, we had a
write down of $62,744 on certain oil and gas inventory and
in 2011 we had a write down of $258,043 on certain oil and
gas pipeline inventory to its estimated current market
value |
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Receivables, Policy [Policy Text Block] | Accounts
Receivable
The
Company provides for uncollectible accounts receivable
using the allowance method of accounting for bad
debts. Under this method of accounting, a
provision for uncollectible accounts is charged to
earnings. The allowance account is increased or
decreased based on past collection history and
management’s evaluation of accounts
receivable. All amounts considered uncollectible
are charged against the allowance account and recoveries of
previously charged off accounts are added to the
allowance. At December 31, 2012 and 2011, net
accounts receivable was $3,969,160 and $1,872,067
respectively. Approximately $2,500,000 of the receivable
reported for the year ended 2012 related to the sale of
Royale’s common stock. The receivable was
collected on January 4, 2013. At December 31,
2012 and 2011, the Company established an allowance for
uncollectable accounts of $934,876 and $671,109,
respectively for receivables from direct working interest
investors whose expenses on non-producing wells were
unlikely to be collected from revenue |
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Property, Plant and Equipment, Policy [Policy Text Block] | Equipment
and Fixtures
Equipment
and fixtures are stated at cost and depreciated over the
estimated useful lives of the assets, which range from three
to seven years, using the straight-line method. Repairs and
maintenance are charged to expense as incurred. When assets
are sold or retired, the cost and related accumulated
depreciation are removed from the accounts and any resulting
gain or loss is included in income. Maintenance and repairs,
which neither materially add to the value of the property nor
appreciably prolong its life, are charged to expense as
incurred. Gains or losses on dispositions of property and
equipment, other than oil and gas, are reflected in
operations |
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Earnings Per Share, Policy [Policy Text Block] | Loss
Per Share
Basic
and diluted losses per share are calculated as
follows:
For
the years ended December 31, 2012 and 2011, Royale Energy had
dilutive securities of 1,104,314 and 842,859
respectively. These securities were not included
in the dilutive earnings per share due to their anti-dilutive
nature |
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Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | Stock
Based Compensation
Royale
Energy has a stock-based employee compensation plan, which
is more fully described in Note 13. Effective
January 1, 2006, the Company adopted the Compensation
– Stock Compensation Topic of the FASB Accounting
Standards Codification, which addresses the accounting for
stock-based payment transactions in which an enterprise
receives employee services in exchange for (a) equity
instruments of the enterprise or (b) liabilities that are
based on the fair value of the enterprise’s equity
instruments or that may be settled by the issuance of such
equity instruments. The Company uses the Black-Scholes
option-pricing model to determine the fair value of
stock-based awards, consistent with that used for pro forma
disclosures under the Topic..
During
the year ended December 31, 2008, the Board of Directors
authorized approximately 550,000 shares to be issued for
equity awards through a stock grant plan adopted in November
2008 and stock option grant plan adopted in March
2008 |
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Income Tax, Policy [Policy Text Block] | Income
Taxes
Royale
utilizes the asset and liability approach to measure deferred
tax assets and liabilities based on temporary differences
existing at each balance sheet date using currently enacted
tax rates in accordance with the Income Taxes Topic of the
FASB Accounting Standards Codification. Deferred tax assets
and liabilities are adjusted for the effects of changes in
tax laws and rates on the date of enactment. Under the Topic,
deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will
not be realized.
The
provision for income taxes is based on pretax financial
accounting income. Deferred tax assets and liabilities are
recognized for the expected tax consequences of temporary
differences between the tax basis of assets and liabilities
and their reported net amounts |
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Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair
Values of Financial Instruments
Disclosure
of the estimated fair value of financial instruments is
required under the Fair Value Measurements and Disclosures
Topic of the FASB Accounting Standards
Codification. The fair value estimates are made at
discrete points in time based on relevant market information
and information about the financial instruments. These
estimates may be subjective in nature and involve
uncertainties and significant judgment and therefore cannot
be determined with precision.
Royale
Energy includes fair value in the notes to financial
statements when the fair value of its financial instruments
is different from the book value. Royale Energy assumes that
the book value of financial instruments that are classified
as current approximate fair value because of the short
maturity of these instruments. For noncurrent financial
instruments, Royale Energy uses quoted market prices or, to
the extent that there are no available quoted market prices,
market prices for similar instruments |
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Fair Value Measurement, Policy [Policy Text Block] | Fair
Value Measurements
According
to Fair Value Measurements and Disclosures Topic of the
FASB Accounting Standards Codification, assets and
liabilities that are measured at fair value on a recurring
and nonrecurring basis in period subsequent to initial
recognition, the reporting entity shall disclose
information that enable users of its financial statements
to assess the inputs used to develop those measurements and
for recurring fair value measurements using significant
unobservable inputs, the effect of the measurements on
earnings for the period.
At
December 31, 2011, Royale Energy reported the fair value of
$31,027 in available for sale securities. The
fair value was determined using the number of shares owned
as of December 31, 2011, multiplied by the market price of
those securities on December 31, 2011. These
securities were sold during the fourth quarter in
2012.
The
table below summarizes Royale’s fair value
measurements and the level within the fair value hierarchy
in which the fair value measurements fall. At
December 31, 2011, Royale Energy quoted prices in active
markets for identical assets when determining the fair
value measurements at the reporting date.
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Stockholders' Equity, Policy [Policy Text Block] | Treasury
Stock
The
Company records acquisition of its capital stock for treasury
at cost. Differences between proceeds for reissuance of
treasury stock and average cost are charged to retained
earnings or credited thereto to the extent of prior charges
and thereafter to capital in excess of par value |
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New Accounting Pronouncements, Policy [Policy Text Block] | Recently
Issued Accounting Pronouncements
The
Company has reviewed the updates issued by the Financial
Accounting Standards Board (FASB) during the year ended
December 31, 2012, and have determined that the updates are
not applicable to the Company |
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