10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2013 Commission File No. 000-22750

ROYALE ENERGY, INC.

(Exact name of registrant as specified in its charter)

California	33-0224120
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

7676 Hazard Center Drive, Suite 1500

San Diego, CA 92108

(Address of principal executive offices) (Zip Code)

619-881-2800

(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 Exchange Act during the past 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  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).      Yes x     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer  (as defined in Rule 12b-2 of the Exchange Act).  Check one:

Large accelerated filer  o	Accelerated filer  o
Non-accelerated filer  o	Smaller reporting company  x

Indicate by check mark whether the registrant is a blank check company (as defined in Rule 12b-2 of the Exchange Act).       Yes  o    No  x

At June 30, 2013, a total of 14,186,907 shares of registrant’s common stock were outstanding.

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	12
Item 4.	Controls and Procedures	12
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	13
Item 1A.	Risk Factors	13
Item 6.	Exhibits	13
	Signatures	14

PART I.   FINANCIAL INFORMATION

Item 1.  Financial Statements

ROYALE ENERGY, INC.

BALANCE SHEETS

	June 30, 2013		December 31, 2012
	(Unaudited)		(Audited)
ASSETS
Current Assets
Cash and Cash Equivalents	$	3,499,489	$	1,489,930
Accounts Receivable, net		3,543,113		3,969,160
Prepaid Expenses		764,481		469,038
Available for Sale Security		6,503		0
Inventory		354,421		612,464
Total Current Assets		8,168,007		6,540,592
Other Assets		946		6,946
Oil and Gas Properties, at cost, (successful efforts basis),      Equipment and Fixtures		10,072,594		10,955,797
Total Assets	$	18,241,547	$	17,503,335

See notes to unaudited financial statements

1

ROYALE ENERGY, INC.

BALANCE SHEETS

	June 30, 2013			December 31, 2012
	(Unaudited)			(Audited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Expenses	$	4,498,964		$	4,932,468
Current Portion of Long-Term Debt, Net of Discount		401,371			2,258,668
Current Portion of Deferred Tax Liability		1,775			1,775
Deferred Revenue from Turnkey Drilling		8,575,625			8,693,743
Total Current Liabilities		13,477,735			15,886,654
Noncurrent Liabilities:
Asset Retirement Obligation		935,535			954,088
Total Noncurrent Liabilities		935,535			954,088
Total Liabilities		14,413,270			16,840,742
Stockholders' Equity:
Common Stock, no par value, 20,000,000 shares authorized,        14,186,907 and 12,545,465 shares issued and outstanding , respectively		36,668,875			33,247,571
Convertible preferred stock, Series AA, no par value,       147,500 shares authorized; 52,784 and 52,784 shares       issued and outstanding, respectively		154,014			154,014
Accumulated Deficit		(33,637,132	)		(34,186,930	)
Paid in Capital		642,520			1,447,938
Total Stockholders' Equity		3,828,277			662,593
Total Liabilities and Stockholders' Equity	$	18,241,547		$	17,503,335

See notes to unaudited financial statements

2

ROYALE ENERGY, INC.

STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012-restated			2013			2012-restated
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues:
Sale of Oil and Gas	$	457,101		$	370,950		$	787,996		$	867,844
Turnkey drilling		893,667			0			893,667			0
Supervisory Fees and Other		184,267			164,863			325,038			369,547
Total Revenues		1,535,035			535,813			2,006,701			1,237,391
Costs and Expenses:
General and Administrative		696,201			991,495			1,556,214			2,011,447
Turnkey Drilling and Development		498,700			119,758			541,843			190,158
Lease Operating		241,128			310,821			533,950			606,331
Lease Impairment		0			181,627			0			181,627
Geological and Geophysical Expense		0			63,657			0			422,686
Inventory Write Down		0			0			0			62,744
Legal and Accounting		80,833			149,572			252,464			419,875
Marketing		65,095			171,922			102,721			326,141
Depreciation, Depletion and Amortization		239,904			373,657			461,264			737,119
Total Costs and Expenses		1,821,861			2,362,509			3,448,456			4,958,128
Gain on Sale of Assets		2,294,920			430			2,294,920			1,737
Income (Loss) From Operations		2,008,094			(1,826,266	)		853,165			(3,719,000	)
Other Income (Expense):
Interest Expense		(102,499	)		(35,624	)		(303,367	)		(68,362	)
Income (Loss) Before Income Tax Expense (Benefit)		1,905,595			(1,861,890	)		549,798			(3,787,362	)
Income tax provision (benefit)		0			(545,166	)		0			(1,103,783	)
Net Income (Loss)	$	1,905,595		$	(1,316,724	)	$	549,798		$	(2,683,579	)
Basic Earnings (Loss) Per Share	$	0.14		$	(0.12	)	$	0.04		$	(0.24	)
Diluted Earnings (Loss) Per Share	$	0.14		$	(0.12	)	$	0.04		$	(0.24	)
Other Comprehensive Income
Unrealized Gain on Equity Securities	$	0		$	0		$	0		$	342
Other Comprehensive Income, before tax		0			0			0			342
Income Tax Expense Related to Items of Other Comprehensive Income		0			0			0			99
Other Comprehensive Income, net of tax		0			0			0			243
Comprehensive Income (Loss)	$	1,905,595		$	(1,316,724	)	$	549,798		$	(2,683,336	)

See notes to unaudited financial statements 

3

ROYALE ENERGY, INC.

STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2013 AND 2012

	2013			2012-Restated
	(Unaudited)			(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)	$	549,798		$	(2,683,579	)
Adjustments to Reconcile Net Income (Loss) to Net       Cash Used by Operating Activities:
Depreciation, Depletion and Amortization		461,264			737,119
Lease Impairment		0			181,627
Gain on Sale of Assets		(2,294,920	)		(1,737	)
Inventory Write Down		0			62,744
Stock-Based Compensation, net of adjustments		0			19,630
Debt Discount Amortization, net of adjustments		280,583			0
Decrease (Increase) in:
Accounts Receivable		426,047			349,529
Prepaid Expenses and Other Assets		(119,584	)		77,009
Increase (Decrease) in:
Accounts Payable and Accrued expenses		(452,057	)		(102,834	)
Deferred Revenues - DWI		(118,118	)		2,409,940
Deferred Income Tax expense (benefit)		0			(1,103,782	)
Net Cash Used by Operating Activities		(1,266,987	)		(54,334	)
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for Oil and Gas Properties and Other Capital Expenditures		(614,615	)		(379,619	)
Proceeds from Sale of Assets		3,413,155			1,737
Net Cash Provided (Used) by Investing Activities		2,798,540			(377,882	)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal Payments on Long-Term Debt		(1,183,333	)		(1,200,000	)
Proceeds from Stock Option and Warrant Exercises		639,671			1,156,635
Proceeds from Sale of Common Stock		1,021,668			0
Net Cash Provided (Used) by Financing Activities		478,006			(43,365	)
Net Increase/Decrease in Cash and Cash Equivalents		2,009,559			(475,581	)
Cash at Beginning of Year	$	1,489,930		$	2,946,131
Cash at End of Period	$	3,499,489		$	2,470,550
Cash Paid for Interest	$	22,785		$	60,485
Cash Paid for Taxes	$	800		$	800
Non-Cash Investing and Financing Transactions
Conversion of Debt to Common Stock	$	954,547		$	0

See notes to unaudited financial statements

4

ROYALE ENERGY, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOTE 1 – In the opinion of management, the accompanying unaudited financial statements include all adjustments, consisting only of normally recurring adjustments, necessary to present fairly the Company’s financial position and the results of its operations and cash flows for the periods presented.  The results of operations for the six month period are not, in management’s opinion, indicative of the results to be expected for a full year of operations.  It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in the Company’s latest annual report.

NOTE 2 – EARNINGS (LOSS) PER SHARE

Basic and diluted earnings (loss) per share are calculated as follows:

	For the Six Months ended  June 30, 2013
	Earnings (Loss) (Numerator)		Shares (Denominator)		Per-Share Amount
Basic Earnings (Loss) Per Share:
Net Income available to common stock	$	549,798		13,211,602	$	0.04
Diluted Earnings (Loss) Per Share:
Effect of dilutive securities and stock options		0		296,503		0.00
Net Earnings (loss) available to common stock	$	549,798		13,508,105	$	0.04

	For the Six Months ended  June 30, 2012 - Restated
	Earnings (Loss) (Numerator)			Shares (Denominator)		Per-Share Amount
Basic Earnings (Loss) Per Share:
Net income available to common stock	$	(2,683,579	)		10,977,537	$	(0.24	)
Diluted Earning (Loss) Per Share:
Effect of dilutive securities and stock options		0			0		0.00
Net Earnings (loss) available to common stock	$	(2,683,579	)		10,977,537	$	(0.24	)

For the six months ended June 30, 2012, Royale Energy had dilutive securities of 781,304.  These securities were not included in the dilutive earnings (loss) per share due to their antidilutive nature.

5

ROYALE ENERGY, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOTE 3 – OIL AND GAS PROPERTIES, EQUIPMENT AND FIXTURES

Oil and gas properties, equipment and fixtures consist of the following:

	June 30,  2013 (Unaudited)			December 31, 2012 (Audited)
Oil and Gas
Producing properties, including drilling costs	$	24,760,832		$	24,327,806
Undeveloped properties		3,105,900			4,034,292
Lease and well equipment		9,794,395			9,724,602
		37,661,127			38,086,700
Accumulated depletion, depreciation & amortization		(28,192,241	)		(27,756,493	)
		9,468,886			10,330,207
Commercial and Other
Real estate, including furniture and fixtures	$	502,344		$	502,344
Vehicles		151,669			151,669
Furniture and equipment		1,299,300			1,299,300
		1,953,313			1,953,313
Accumulated depreciation		(1,349,605	)		(1,327,723	)
		603,708			625,590
	$	10,072,594		$	10,955,797

The guidance set forth in the Continued Capitalization of Exploratory Well Costs paragraph of the Extractive Activities Topic of the FASB Accounting Standards Codification requires that we evaluate all existing capitalized exploratory well costs and disclose the extent to which any such capitalized costs have become impaired and are expensed or reclassified during a fiscal period. We did not make any additions to capitalized exploratory well costs pending a determination of proved reserves during the periods in 2013 or 2012. 

NOTE 4 – STOCK BASED COMPENSATION

During the Board of Directors meeting held in December 2010, directors and officers of Royale Energy were each granted 50,000 stock options, a total of 400,000 options, to purchase common stock at an exercise price of $3.25 per share.  These options are to vest in two parts; the first 200,000 options vested on January 1, 2011; the remaining 200,000 options vested on January 1, 2012.  The options were granted with a legal life of five years, and a service period of two years beginning on January 1, 2011.  During the first six months of 2012 Royale recognized costs of $19,630 relating to this grant as well as $5,696 in a tax benefit relating to this grant.  No stock-based compensation was recognized during the first six months of 2013.

6

ROYALE ENERGY, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOTE 5 – FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS

Royale Energy identifies reportable segments by product. Royale Energy includes revenues from both external customers and revenues from transactions with other operating segments in its measure of segment profit or loss. Royale Energy also includes interest revenue and expense, DD&A, and other operating expenses in its measure of segment profit or loss.

Royale Energy's operations are classified into two principal industry segments. Following is a summary of segmented information for the six months ended June 30, 2013, and 2012 -Restated:

	Oil and Gas
	Producing		Turnkey
	and		Drilling
	Exploration		Services			Total
Six Months Ended June 30, 2013:
Revenues from External Customers	$	787,996		893,667			1,681,663
Supervisory Fees		307,553		0			307,553
Interest Revenue		0		17,485			17,485
Interest Expense		151,684		151,683			303,367
Operating Expenses for Segment Assets		1,601,070		1,386,122			2,987,192
Depreciation, Depletion and Amortization		438,201		23,063			461,264
Gain on Sale of Assets		2,294,920		0			2,294,920
Income Tax Benefit		0		0			0
Total Assets	$	17,329,470		912,077			18,241,547
Net Income (Loss)	$	1,199,514		(649,716	)		549,798

7

ROYALE ENERGY, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

	Oil and Gas
	Producing			Turnkey
	and			Drilling
	Exploration			Services			Total
Six Months Ended June 30, 2012 - Restated:
Revenues from External Customers	$	867,844		$	0		$	867,844
Supervisory Fees		364,763			0			364,763
Interest Revenue		0			4,784			4,784
Interest Expense		34,181			34,181			68,362
Expenditures for Segment Assets		2,526,241			1,513,141			4,039,382
Depreciation, Depletion and Amortization		700,263			36,856			737,119
Lease Impairment		90,814			90,813			181,627
Gain on Sale of Assets		1,737			0			1,737
Income Tax Benefit		(617,020	)		(486,763	)		(1,103,783	)
Total Assets	$	19,328,436		$	1,017,286		$	20,345,722
Net Loss	$	(1,500,135	)	$	(1,183,444	)	$	(2,683,579	)

8

ROYALE ENERGY, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOTE 6 – RESTATEMENT TO REFLECT CHANGE IN REVENUE RECOGNITION POLICY

The Company has restated its previously issued 2012 financial statements for the correction of an error in the method of revenue recognition.   Subsequent to the issuance of the financial statements of the Company as of December 31, 2012 and 2011, and for the years then ended, we reevaluated our policy regarding the recognition of pre-drilling and drilling service revenue.  Beginning with the fiscal year ending December 31, 2010 we have changed our revenue recognition policy to recognize all pre-drilling and drilling service revenue, provided under turnkey drilling agreements, at the time drilling of the well is completed.  Accordingly, the financial statements as of June 30, 2012, and for the periods then ended have been restated to correct an error in our method of revenue recognition to reflect changes in Deferred Revenue, Accumulated Deficit, Deferred Income Tax Asset, and Turnkey Drilling Revenue  relating to the Company’s revenue recognition method.  The effect on the Company’s issued June 30, 2012 financial statements is summarized below:

	As Previously
	Reported			As Restated
Balance sheet as of June 30, 2012:
Deferred Tax Asset-Noncurrent	$	6,986,892		$	7,159,586
Total Assets		20,173,028			20,345,722
Deferred Revenue from Turnkey Drilling		6,697,235			7,289,793
Total Current Liabilities		12,682,995			13,275,553
Total Liabilities		13,264,094			13,856,652
Accumulated Deficit		23,175,477			23,595,341
Total paid in capital and accumulated deficit		6,436,676			6,016,812
Total Stockholder’s Equity		6,908,934			6,489,070
Total Liabilities and Stockholder’s Equity		20,173,028			20,345,722
Statement of Comprehensive Loss for the period ended June 30, 2012:
Turnkey Drilling		592,558			0
Total Revenues		1,829,949			1,237,391
Loss From Operations		(3,126,442	)		(3,719,000	)
LossBefore Income Tax Benefit		(3,194,804	)		(3,787,362	)
Income Tax Benefit		(931,089	)		(1,103,783	)
Net Loss		(2,263,715	)		(2,683,579	)
Comprehensive Loss		(2,263,472	)		(2,683,336	)

9

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

In addition to historical information contained herein, this discussion contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, subject to various risks and uncertainties that could cause our actual results to differ materially from those in the "forward-looking" statements. While we believe our forward looking statements are based upon reasonable assumptions, there are factors that are difficult to predict and that are influenced by economic and other conditions beyond our control. Investors are directed to consider such risks and other uncertainties discussed in documents filed by the Company with the Securities and Exchange Commission.

Results of Operations

For the six months ended June 30, 2013, we had net income of $549,798 compared to a net loss of $2,683,579, during the same period in 2012, a $3,233,377 improvement.  Total revenues for the first six months of 2013 were $2,006,701, an increase of $769,310 or 62.2% from the total revenues of $1,237,391 during the same period in 2012.  For the quarter ended June 30, 2013, we had a net income of $1,905,595 compared to a net loss of $1,316,724 for the same period in 2012.  The higher net profits and revenues were primarily the result of the sale of a portion of our oil and gas leases in Alaska, see our Form 8-K filed on May 24, 2013, and increased drilling during the period in 2013, when compared to 2012.

During the first six months of 2013, revenues from oil and gas production decreased $79,848 or 9.2% to $787,996 from the 2012 six month revenues of $867,844.  This decrease was due to lower natural gas production, stemming from the natural declines of our existing wells and pipeline issues in one of our main producing fields.  During February 2013, PG&E shut in the pipeline in our Lonestar field for approximately two weeks for non-routine maintenance. The net sales volume of natural gas for the six months ended June 30, 2013, was approximately 197,462 Mcf with an average price of $3.73 per Mcf, versus 315,421 Mcf with an average price of $2.49 per Mcf for the period in 2012.  This represents a decrease in net sales volume of 117,959 Mcf or 37.4%.  The net sales volume for oil and condensate (natural gas liquids) production was 566 barrels with an average price of $92.82 per barrel for the first six months of 2013, compared to 855 barrels at an average price of $94.13 per barrel for the same period in 2012.  This represents a decrease in net sales volume of 289 barrels, or 33.8%.  For the quarter ended June 30, 2013, revenues from oil and gas production increased $86,151 or 23.2% to $457,101 from the 2012 second quarter revenues of $370,950.  During the second quarter 2013, we produced approximately 108,931 Mcf with an average price of $3.94 compared to 146,050 Mcf produced during the same period in 2012 with an average price of $2.33 per Mcf which represents a 37,118 Mcf or 25.4% decrease in net sales volume.  For the second quarter in 2013, oil and condensate production decreased approximately 41 barrels or 12.7%, from 328 barrels produced during the period in 2012 to 286 barrels produced in the same period in 2013.

Oil and natural gas lease operating expenses decreased by $72,381 or 11.9%, to $533,950 for the six months ended June 30, 2013, from $606,331 for the same period in 2012.  For the second quarter in 2013, lease operating expenses decreased $69,693 or 22.4% from the same period in 2012.  These decreases were mainly due to lower overhead, compression and transportation charges related to the lower production volumes during the period in 2013.  

For the six months ended June 30, 2013, turnkey drilling revenues were $893,667.  This was due to the drilling of one California well during the second quarter of 2013.  During first six months in 2012, we did not drill any new wells due to lower overall natural gas commodity prices.  For the six months ended June 30, 2013, turnkey drilling and development costs increased $351,685 or 185% to $541,843 in 2013 from $190,158 during the period in 2012.  The costs incurred during the periods in 2013 and 2012 were for the well drilled in 2013 along with carryover expenses from wells drilled during December 2012 and 2011.    During the second quarter in 2013, we processed permits on two wells in California, which we expect to drill during the third quarter of 2013.

The aggregate of supervisory fees and other income was $325,038 for six months ended June 30, 2013, a decrease of $44,509 or 12% from $369,547 during the period in 2012.  This decrease was the result of lower overhead rates during the period in 2013 due to lower production volumes.  During the second quarter 2013, supervisory fees and other income increased $19,404, mainly due to higher drilling overhead and interest income.

Depreciation, depletion and amortization expenses decreased to $461,264 from $737,119, a decrease of $275,855 or 37.4% for the six months ended June 30, 2013, as compared to the same period in 2012.  During the second quarter 2013, depreciation, depletion and amortization expenses decreased $133,753.  The depletion rate is calculated using production as a percentage of reserves.  This decrease in depreciation expense was mainly due to a lower depletion rate because of lower production volumes during the prior year in 2012.

10

General and administrative expenses decreased by $455,233 or 22.6% from $2,011,447 for the six months ended June 30, 2012, to $1,556,214 for the period in 2013. For the second quarter 2013, general and administrative expenses decreased $295,294 or 29.8%, when compared to the same period in 2012.  These decreases were primarily due to lower employee related compensation expenses during the period in 2013, resulting from continued cost control measures.  Marketing expense for the six months ended June 30, 2013, decreased $223,420, or 68.5%, to $102,721, compared to $326,141 for the same period in 2012.  For the second quarter 2013, marketing expenses decreased $106,827 or 62.1%, when compared to the second quarter in 2012.  Marketing expense varies from period to period according to the number of marketing events attended by personnel and their associated costs.

Legal and accounting expense decreased to $252,464 for the six months ended June 30, 2013, compared to $419,875 for the same period in 2012, a $167,411 or 39.9% decrease.  For the second quarter 2013, legal and accounting expenses decreased $68,739 or 46%, when compared to the same period in 2012.  The decreases in legal and accounting expense were a result of a litigation settlement reached during the period in 2012, resulting in lower legal fees during the period in 2013.

In the second quarter of 2013 we recorded a gain of $2,337,104 from the sale of a portion of our western block oil and gas leases in Alaska.  During the period in 2013, we also recorded a gain of $40,000 on the sale of oil and gas leases in Texas and recorded a loss of $82,184 on the sale of surface casing previously included in inventory.  During the same period in 2012, we recorded a gain of $1,737 on the sale of a non-oil and gas asset and recorded a write down of $62,744 on certain oil and gas inventory to its estimated current market value.

During 2011, we began a new seismic survey in Northern California of which a majority of the actual seismic work took place during the first quarter of 2012.  As a result we recorded Geological and Geophysical expenses of $422,686 during the first half of 2012.  There were no Geological and Geophysical expenses recorded in the first half of 2013.  

Interest expense increased to $303,367 for the six months ended June 30, 2013, from $68,362 for the same period in 2012, a $235,005, or 343.8% increase. This increase was due to the interest on a new convertible note payable obtained during the fourth quarter of 2012.  For the six months in 2013, there was no income tax benefit or expense, as the Company has recorded a full valuation allowance against all deferred tax assets at December 31, 2012. For the same period in 2012, we had an income tax benefit of $1,103,783 due to net operating loss.

Capital Resources and Liquidity

At June 30, 2013, Royale Energy had current assets totaling $8,168,007 and current liabilities totaling $13,477,735, a $5,309,728 working capital deficit.  We had cash and cash equivalents at June 30, 2013, of $3,499,489 compared to $1,489,930 at December 31, 2012.

In February 2009, we entered into a revolving credit agreement with Texas Capital Bank, N.A. secured by our oil and gas properties, of up to $14,250,000.  We also entered into a separate letter of credit facility with Texas Capital Bank of up to $750,000, 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 scheduled maturity date for the loan was February 13, 2013.  During January 2013, the balance of $350,000 on this credit facility was paid in full.  In February 2013, the revolving credit agreement matured.

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 April 2013, 479,589 common shares were issued in lieu of the scheduled payment of $833,333.  According to the note agreement, the note holders may elect to convert the principal balance into shares of the Company's common stock.  During the second quarter 2013, the note holders submitted conversion notices to the Company, 340,410 common shares were issued for a reduction in the note principal of $926,630. At June 30, 2013, the net outstanding balance of this note was $401,371.

At June 30, 2013, our accounts receivable totaled $3,543,113, compared to $3,969,160 at December 31, 2012, a $426,047 or 10.7% decrease.  This was due to an approximately $2,500,000 receivable, as part of the sale of common stock sold at year end December 2012, which was collected on January 4, 2013.  Additionally, at June 30, 2013, we have an approximately $1,700,000 receivable as part of our lease sale in Alaska, which we expect to collect by the end of 2013.  During the period in 2013, we also made payments of approximately $480,000 for deposits as collateral for various state and county bonds.  At June 30, 2013, our accounts payable and accrued expenses totaled $4,498,964, a decrease of $433,504 or 8.8% from the accounts payable and accrued expenses at December 31, 2012, of $4,932,468, mainly due to a decrease in payables related drilling costs for wells that were drilled during December 2012.

Ordinarily, we fund our operations and cash needs from our available credit and cash flows generated from operations.  We believe that we have sufficient liquidity for the remainder of 2013 and do not foresee any liquidity demands that cannot be met from cash flow or financing activities, such as proceeds from our Alaska acreage sale, current Form S-3 filed with the SEC, and ongoing operations, as the Company continues to increase its well inventory.

11

Operating Activities.  Net cash used by operating activities totaled $1,266,987 and $54,334 for the six month period ended June 30, 2013 and 2012, respectively.  This $1,212,653 difference in cash used was mainly due to the gain on sale of a portion of its Alaska leases of approximately $2.3 million during the period in 2013.

Investing Activities. Net cash provided by investing activities, primarily in capital acquisitions of oil and gas properties, amounted to $2,798,540 in the six month period ended June 30, 2013 and net cash used for the six month period ended June 30, 2012 was $377,882.  This difference was primarily due to the sale of a portion of our leases in Alaska, from which we received proceeds of approximately $3,400,000, during the period in 2013.  During the six month period in 2012, we received proceeds of $1,737 relating to a sale of stock.

Financing Activities.  Net cash provided by financing activities totaled $478,006 in the first half of 2013, while $43,365 was used by financing activities for the six month period ended June 30, 2012.  This difference in cash was mainly due to the proceeds received during the period in 2013 for common stock sales and warrant exercises.  During the six months ended June 30, 2013, Royale received proceeds of $1,021,668 and issued 500,000 shares of its common stock relating to its market equity offering program.  Also during the period in 2013, several warrants were exercised in exchange for shares of Royale’s common stock, and we received $639,672 and issued 321,443 shares of our common stock relating to these exercises.  These proceeds were added to working capital and used for ordinary operating expense.  During first six months of 2012, options were exercised by one director for a total of 88,692 shares of the Company’s common stock in exchange for proceeds of $299,499.  Additionally during the period, Royale received proceeds of $857,136 and issued 168,697 shares of its common stock relating to its market equity offering program.  The proceeds were added to working capital and used for ordinary operating expense.  Also during the period in 2012, five directors exchanged 195,000 options in a cashless exercise for 76,346 common shares.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Our major market risk exposure relates to pricing of oil and gas production.  The prices we receive for oil and gas are closely related to worldwide market prices for crude oil and local spot prices paid for natural gas production.  Prices have been volatile for the last several years, and we expect that volatility to continue.  Monthly average natural gas prices ranged from a low of $3.64 per Mcf to a high of $4.22 per Mcf for the first six months of 2013.  We have not entered into any hedging or derivative agreements to limit our exposure to changes in oil and gas prices or interest rates.

Item 4.  Controls and Procedures

As of June 30, 2013, an evaluation was performed under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures.  These controls and procedures are based on the definition of disclosure controls and procedures in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934.  Based on that evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective as of June 30, 2013.

No changes occurred in our internal control over financial reporting during the six months ended June 30, 2013, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

12

PART II.   OTHER INFORMATION

Item 1.  Legal Proceedings

Douglas Jones v. Royale Energy, Inc., et.al.

On July 1, 2010, Douglas Jones filed a lawsuit against the Company in the Circuit Court, 17th Judicial District, Broward County, Florida.  Mr. Jones was an independent contractor handling certain aspects of sales for the Company prior to July 2, 2008.  He asserts that he is entitled to an unspecified amount for commissions and expenses.  The Company denies that any money is owed to Mr. Jones.  On August 16, 2010, the Company, through Florida counsel Adam Hodkin, filed a motion to dismiss the lawsuit for lack of jurisdiction in the Florida courts.  The Court ruled that it wanted to have an evidentiary hearing on the motion.  A hearing to set a date for the evidentiary hearing is scheduled for September 10, 2013.  If the motion to dismiss is denied, Royale intends to answer the complaint and oppose the lawsuit vigorously. 

We are unaware of any unasserted or threatened litigation or claims.

Item 1A.  Risk Factors

Please review the risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2012.

Item 6.  Exhibits

31.1	Rule 13a-14(a)/15d-14(a) Certification
31.2	Rule 13a-14(a)/15d-14(a) Certification
32.1	18 U.S.C. § 1350 Certification
32.2	18 U.S.C. § 1350 Certification
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

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

13

Signatures

Pursuant to the requirements of Section 13 or 15(d) 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.

	ROYALE ENERGY, INC.
Date:    August 5, 2013	/s/ Donald H. Hosmer
	Donald H. Hosmer, Co-President and Co-Chief Executive Officer
Date:    August 5, 2013	/s/ Stephen M. Hosmer
	Stephen M. Hosmer, Co-President, Co-Chief Executive Officer, and Chief Financial Officer

14

EX-31.1

Exhibit 31.1

I, Donald H. Hosmer, certify that:

1. I have reviewed this report on Form 10-Q of Royale Energy, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  August 5, 2013	/s/ Donald H. Hosmer
	Donald H. Hosmer, Co-President and Co-Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Stephen M. Hosmer, certify that:

1. I have reviewed this report on Form 10-Q of Royale Energy, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions)

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  August 5, 2013	/s/ Stephen M. Hosmer
	Stephen M. Hosmer, Co-President, Co-Chief Executive Officer and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. § 1350

The undersigned, Donald H. Hosmer, Co-President and Co-Chief Executive Officer of Royale Energy, Inc., a California corporation (the "Company"), pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, hereby certifies that:

(1) the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2013 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  August 5, 2013	By:	/s/ Donald H. Hosmer
		Donald H. Hosmer, Co-President and Co Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification Pursuant to 18 U.S.C. § 1350

The undersigned, Stephen M. Hosmer, Co-President, Co-Chief Executive Officer and Chief Financial Officer of Royale Energy, Inc., a California corporation (the "Company"), pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, hereby certifies that:

(1) the Company's Annual Report on Form 10-Q for the period ended June 30, 2013 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  August 5, 2013	By:	/s/ Stephen M. Hosmer
		Stephen M. Hosmer, Co-President, Co-Chief Executive Officer and Chief Financial Officer

XML

NOTE 2 - EARNINGS (LOSS) PER SHARE (Details) - Schedule of Earnings Per Share, Basic and Diluted (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Basic Earnings (Loss) Per Share:
Net Income available to common stock (in Dollars per share)	$ 0.14	$ (0.12)	$ 0.04	$ (0.24)
Diluted Earnings (Loss) Per Share:
Net Earnings (loss) available to common stock (in Dollars per share)	$ 0.14	$ (0.12)	$ 0.04	$ (0.24)
Income (Numerator) [Member]
Basic Earnings (Loss) Per Share:
Net Income available to common stock			$ 549,798	$ (2,683,579)
Diluted Earnings (Loss) Per Share:
Effect of dilutive securities and stock options			0	0
Net Earnings (loss) available to common stock			549,798	(2,683,579)
Shares (denominator) [Member]
Basic Earnings (Loss) Per Share:
Net Income available to common stock (in Shares)			13,211,602	10,977,537
Diluted Earnings (Loss) Per Share:
Effect of dilutive securities and stock options (in Shares)			296,503	0
Net Earnings (loss) available to common stock (in Shares)			13,508,105	10,977,537
Per-share amount [Member]
Basic Earnings (Loss) Per Share:
Net Income available to common stock (in Dollars per share)			$ 0.04	$ (0.24)
Diluted Earnings (Loss) Per Share:
Effect of dilutive securities and stock options			$ 0.00	$ 0.00
Net Earnings (loss) available to common stock (in Dollars per share)			$ 0.04	$ (0.24)

XML

STATEMENTS OF OPERATIONS (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Revenues:
Sale of Oil and Gas	$ 457,101	$ 370,950	$ 787,996	$ 867,844
Turnkey drilling	893,667	0	893,667	0
Supervisory Fees and Other	184,267	164,863	325,038	369,547
Total Revenues	1,535,035	535,813	2,006,701	1,237,391
Costs and Expenses:
General and Administrative	696,201	991,495	1,556,214	2,011,447
Turnkey Drilling and Development	498,700	119,758	541,843	190,158
Lease Operating	241,128	310,821	533,950	606,331
Lease Impairment	0	181,627	0	181,627
Geological and Geophysical Expense	0	63,657	0	422,686
Inventory Write Down	0	0	0	62,744
Legal and Accounting	80,833	149,572	252,464	419,875
Marketing	65,095	171,922	102,721	326,141
Depreciation, Depletion and Amortization	239,904	373,657	461,264	737,119
Total Costs and Expenses	1,821,861	2,362,509	3,448,456	4,958,128
Gain on Sale of Assets	2,294,920	430	2,294,920	1,737
Income (Loss) From Operations	2,008,094	(1,826,266)	853,165	(3,719,000)
Other Income (Expense):
Interest Expense	(102,499)	(35,624)	(303,367)	(68,362)
Income (Loss) Before Income Tax Expense (Benefit)	1,905,595	(1,861,890)	549,798	(3,787,362)
Income tax provision (benefit)	0	(545,166)	0	(1,103,783)
Net Income (Loss)	1,905,595	(1,316,724)	549,798	(2,683,579)
Basic Earnings (Loss) Per Share (in Dollars per share)	$ 0.14	$ (0.12)	$ 0.04	$ (0.24)
Diluted Earnings (Loss) Per Share (in Dollars per share)	$ 0.14	$ (0.12)	$ 0.04	$ (0.24)
Other Comprehensive Income
Unrealized Gain on Equity Securities	0	0	0	342
Other Comprehensive Income, before tax	0	0	0	342
Income Tax Expense Related to Items of Other Comprehensive Income	0	0	0	99
Other Comprehensive Income, net of tax	0	0	0	243
Comprehensive Income (Loss)	$ 1,905,595	$ (1,316,724)	$ 549,798	$ (2,683,336)

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NOTE 5 - FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS

6 Months Ended

Jun. 30, 2013

Segment Reporting Disclosure [Text Block]

Segment Reporting Disclosure [Text Block]

NOTE 5 – FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS

Royale Energy identifies reportable segments by product. Royale Energy includes revenues from both external customers and revenues from transactions with other operating segments in its measure of segment profit or loss. Royale Energy also includes interest revenue and expense, DD&A, and other operating expenses in its measure of segment profit or loss.

Royale Energy's operations are classified into two principal industry segments. Following is a summary of segmented information for the six months ended June 30, 2013, and 2012 -Restated:

	Oil and Gas
	Producing		Turnkey
	and		Drilling
	Exploration		Services			Total
Six Months Ended June 30, 2013:
Revenues from External Customers	$	787,996		893,667			1,681,663
Supervisory Fees		307,553		0			307,553
Interest Revenue		0		17,485			17,485
Interest Expense		151,684		151,683			303,367
Operating Expenses for Segment Assets		1,601,070		1,386,122			2,987,192
Depreciation, Depletion and Amortization		438,201		23,063			461,264
Gain on Sale of Assets		2,294,920		0			2,294,920
Income Tax Benefit		0		0			0
Total Assets	$	17,329,470		912,077			18,241,547
Net Income (Loss)	$	1,199,514		(649,716	)		549,798

	Oil and Gas
	Producing			Turnkey
	and			Drilling
	Exploration			Services			Total
Six Months Ended June 30, 2012 - Restated:
Revenues from External Customers	$	867,844		$	0		$	867,844
Supervisory Fees		364,763			0			364,763
Interest Revenue		0			4,784			4,784
Interest Expense		34,181			34,181			68,362
Expenditures for Segment Assets		2,526,241			1,513,141			4,039,382
Depreciation, Depletion and Amortization		700,263			36,856			737,119
Lease Impairment		90,814			90,813			181,627
Gain on Sale of Assets		1,737			0			1,737
Income Tax Benefit		(617,020	)		(486,763	)		(1,103,783	)
Total Assets	$	19,328,436		$	1,017,286		$	20,345,722
Net Loss	$	(1,500,135	)	$	(1,183,444	)	$	(2,683,579	)

XML

NOTE 3 - OIL AND GAS PROPERTIES, EQUIPMENT AND FIXTURES (Details) - Schedule of oil and gas properties, equipment and fixtures (USD $)	Jun. 30, 2013	Dec. 31, 2012
Oil and Gas
Producing properties, including drilling costs	$ 24,760,832	$ 24,327,806
Undeveloped properties	3,105,900	4,034,292
Lease and well equipment	9,794,395	9,724,602
	37,661,127	38,086,700
Accumulated depletion, depreciation & amortization	(28,192,241)	(27,756,493)
	9,468,886	10,330,207
Commercial and Other
Real estate, including furniture and fixtures	502,344	502,344
Vehicles	151,669	151,669
Furniture and equipment	1,299,300	1,299,300
	1,953,313	1,953,313
Accumulated depreciation	(1,349,605)	(1,327,723)
	603,708	625,590
	$ 10,072,594	$ 10,955,797

XML

NOTE 1

6 Months Ended

Jun. 30, 2013

Disclosure Text Block [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE 1 – In the opinion of management, the accompanying unaudited financial statements include all adjustments, consisting only of normally recurring adjustments, necessary to present fairly the Company’s financial position and the results of its operations and cash flows for the periods presented.  The results of operations for the six month period are not, in management’s opinion, indicative of the results to be expected for a full year of operations.  It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in the Company’s latest annual report.

XML

NOTE 3 - OIL AND GAS PROPERTIES, EQUIPMENT AND FIXTURES

6 Months Ended

Jun. 30, 2013

Oil and Gas Exploration and Production Industries Disclosures [Text Block]

Oil and Gas Exploration and Production Industries Disclosures [Text Block]

NOTE 3 – OIL AND GAS PROPERTIES, EQUIPMENT AND FIXTURES

Oil and gas properties, equipment and fixtures consist of the following:

	June 30,  2013 (Unaudited)			December 31, 2012 (Audited)
Oil and Gas
Producing properties, including drilling costs	$	24,760,832		$	24,327,806
Undeveloped properties		3,105,900			4,034,292
Lease and well equipment		9,794,395			9,724,602
		37,661,127			38,086,700
Accumulated depletion, depreciation & amortization		(28,192,241	)		(27,756,493	)
		9,468,886			10,330,207
Commercial and Other
Real estate, including furniture and fixtures	$	502,344		$	502,344
Vehicles		151,669			151,669
Furniture and equipment		1,299,300			1,299,300
		1,953,313			1,953,313
Accumulated depreciation		(1,349,605	)		(1,327,723	)
		603,708			625,590
	$	10,072,594		$	10,955,797

The guidance set forth in the Continued Capitalization of Exploratory Well Costs paragraph of the Extractive Activities Topic of the FASB Accounting Standards Codification requires that we evaluate all existing capitalized exploratory well costs and disclose the extent to which any such capitalized costs have become impaired and are expensed or reclassified during a fiscal period. We did not make any additions to capitalized exploratory well costs pending a determination of proved reserves during the periods in 2013 or 2012. 

XML

NOTE 6 - RESTATEMENT TO REFLECT CHANGE IN REVENUE RECOGNITION POLICY

6 Months Ended

Jun. 30, 2013

Accounting Changes and Error Corrections [Text Block]

Accounting Changes and Error Corrections [Text Block]

NOTE 6 – RESTATEMENT TO REFLECT CHANGE IN REVENUE RECOGNITION POLICY

The Company has restated its previously issued 2012 financial statements for the correction of an error in the method of revenue recognition.   Subsequent to the issuance of the financial statements of the Company as of December 31, 2012 and 2011, and for the years then ended, we reevaluated our policy regarding the recognition of pre-drilling and drilling service revenue.  Beginning with the fiscal year ending December 31, 2010 we have changed our revenue recognition policy to recognize all pre-drilling and drilling service revenue, provided under turnkey drilling agreements, at the time drilling of the well is completed.  Accordingly, the financial statements as of June 30, 2012, and for the periods then ended have been restated to correct an error in our method of revenue recognition to reflect changes in Deferred Revenue, Accumulated Deficit, Deferred Income Tax Asset, and Turnkey Drilling Revenue  relating to the Company’s revenue recognition method.  The effect on the Company’s issued June 30, 2012 financial statements is summarized below:

	As Previously
	Reported			As Restated
Balance sheet as of June 30, 2012:
Deferred Tax Asset-Noncurrent	$	6,986,892		$	7,159,586
Total Assets		20,173,028			20,345,722
Deferred Revenue from Turnkey Drilling		6,697,235			7,289,793
Total Current Liabilities		12,682,995			13,275,553
Total Liabilities		13,264,094			13,856,652
Accumulated Deficit		23,175,477			23,595,341
Total paid in capital and accumulated deficit		6,436,676			6,016,812
Total Stockholder’s Equity		6,908,934			6,489,070
Total Liabilities and Stockholder’s Equity		20,173,028			20,345,722
Statement of Comprehensive Loss for the period ended June 30, 2012:
Turnkey Drilling		592,558			0
Total Revenues		1,829,949			1,237,391
Loss From Operations		(3,126,442	)		(3,719,000	)
LossBefore Income Tax Benefit		(3,194,804	)		(3,787,362	)
Income Tax Benefit		(931,089	)		(1,103,783	)
Net Loss		(2,263,715	)		(2,683,579	)
Comprehensive Loss		(2,263,472	)		(2,683,336	)

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NOTE 4 - STOCK BASED COMPENSATION

6 Months Ended

Jun. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 4 – STOCK BASED COMPENSATION

During the Board of Directors meeting held in December 2010, directors and officers of Royale Energy were each granted 50,000 stock options, a total of 400,000 options, to purchase common stock at an exercise price of $3.25 per share.  These options are to vest in two parts; the first 200,000 options vested on January 1, 2011; the remaining 200,000 options vested on January 1, 2012.  The options were granted with a legal life of five years, and a service period of two years beginning on January 1, 2011.  During the first six months of 2012 Royale recognized costs of $19,630 relating to this grant as well as $5,696 in a tax benefit relating to this grant.  No stock-based compensation was recognized during the first six months of 2013.

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BALANCE SHEETS (Parentheticals) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Common stock, shares authorized (in Shares)	20,000,000	20,000,000
Common stock, shares issued (in Shares)	14,186,907	12,545,465
Common stock, shares outstanding (in Shares)	14,186,907	12,545,465
Common Stock, no par value (in Dollars per share)
Convertible Preferred Stock, shares authorized (in Shares)	147,500	147,500
Convertible Preferred Stock, shares issued (in Shares)	52,784	52,784
Convertible Preferred Stock, shares outstanding (in Shares)	52,784	52,784
Convertible preferred stock, Series AA, no par value (in Dollars per share)

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NOTE 5 - FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS (Tables)

6 Months Ended

Jun. 30, 2013

Segment Reporting Disclosure [Text Block]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

Royale Energy's operations are classified into two principal industry segments. Following is a summary of segmented information for the six months ended June 30, 2013, and 2012 -Restated:

	Oil and Gas
	Producing		Turnkey
	and		Drilling
	Exploration		Services			Total
Six Months Ended June 30, 2013:
Revenues from External Customers	$	787,996		893,667			1,681,663
Supervisory Fees		307,553		0			307,553
Interest Revenue		0		17,485			17,485
Interest Expense		151,684		151,683			303,367
Operating Expenses for Segment Assets		1,601,070		1,386,122			2,987,192
Depreciation, Depletion and Amortization		438,201		23,063			461,264
Gain on Sale of Assets		2,294,920		0			2,294,920
Income Tax Benefit		0		0			0
Total Assets	$	17,329,470		912,077			18,241,547
Net Income (Loss)	$	1,199,514		(649,716	)		549,798

	Oil and Gas
	Producing			Turnkey
	and			Drilling
	Exploration			Services			Total
Six Months Ended June 30, 2012 - Restated:
Revenues from External Customers	$	867,844		$	0		$	867,844
Supervisory Fees		364,763			0			364,763
Interest Revenue		0			4,784			4,784
Interest Expense		34,181			34,181			68,362
Expenditures for Segment Assets		2,526,241			1,513,141			4,039,382
Depreciation, Depletion and Amortization		700,263			36,856			737,119
Lease Impairment		90,814			90,813			181,627
Gain on Sale of Assets		1,737			0			1,737
Income Tax Benefit		(617,020	)		(486,763	)		(1,103,783	)
Total Assets	$	19,328,436		$	1,017,286		$	20,345,722
Net Loss	$	(1,500,135	)	$	(1,183,444	)	$	(2,683,579	)

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STATEMENTS OF CASH FLOWS (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)	$ 549,798	$ (2,683,579)
Adjustments to Reconcile Net Income (Loss) to Net Cash Used by Operating Activities:
Depreciation, Depletion and Amortization	461,264	737,119
Lease Impairment	0	181,627
Gain on Sale of Assets	(2,294,920)	(1,737)
Inventory Write Down	0	62,744
Stock-Based Compensation, net of adjustments	0	19,630
Debt Discount Amortization, net of adjustments	280,583	0
Decrease (Increase) in:
Accounts Receivable	426,047	349,529
Prepaid Expenses and Other Assets	(119,584)	77,009
Increase (Decrease) in:
Accounts Payable and Accrued expenses	(452,057)	(102,834)
Deferred Revenues - DWI	(118,118)	2,409,940
Deferred Income Tax expense (benefit)	0	(1,103,782)
Net Cash Used by Operating Activities	(1,266,987)	(54,334)
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for Oil and Gas Properties and Other Capital Expenditures	(614,615)	(379,619)
Proceeds from Sale of Assets	3,413,155	1,737
Net Cash Provided (Used) by Investing Activities	2,798,540	(377,882)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal Payments on Long-Term Debt	(1,183,333)	(1,200,000)
Proceeds from Stock Option and Warrant Exercises	639,671	1,156,635
Proceeds from Sale of Common Stock	1,021,668	0
Net Cash Provided (Used) by Financing Activities	478,006	(43,365)
Net Increase/Decrease in Cash and Cash Equivalents	2,009,559	(475,581)
Cash at Beginning of Year	1,489,930	2,946,131
Cash at End of Period	3,499,489	2,470,550
Cash Paid for Interest	22,785	60,485
Cash Paid for Taxes	800	800
Non-Cash Investing and Financing Transactions
Conversion of Debt to Common Stock	$ 954,547	$ 0

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BALANCE SHEETS (USD $)	Jun. 30, 2013	Dec. 31, 2012
Current Assets
Cash and Cash Equivalents	$ 3,499,489	$ 1,489,930
Accounts Receivable, net	3,543,113	3,969,160
Prepaid Expenses	764,481	469,038
Available for Sale Security	6,503	0
Inventory	354,421	612,464
Total Current Assets	8,168,007	6,540,592
Other Assets	946	6,946
Oil and Gas Properties, at cost, (successful efforts basis), Equipment and Fixtures	10,072,594	10,955,797
Total Assets	18,241,547	17,503,335
Current Liabilities:
Accounts Payable and Accrued Expenses	4,498,964	4,932,468
Current Portion of Long-Term Debt, Net of Discount	401,371	2,258,668
Current Portion of Deferred Tax Liability	1,775	1,775
Deferred Revenue from Turnkey Drilling	8,575,625	8,693,743
Total Current Liabilities	13,477,735	15,886,654
Noncurrent Liabilities:
Asset Retirement Obligation	935,535	954,088
Total Noncurrent Liabilities	935,535	954,088
Total Liabilities	14,413,270	16,840,742
Stockholders' Equity:
Common Stock, no par value, 20,000,000 shares authorized, 14,186,907 and 12,545,465 shares issued and outstanding , respectively	36,668,875	33,247,571
Convertible preferred stock, Series AA, no par value, 147,500 shares authorized; 52,784 and 52,784 shares issued and outstanding, respectively	154,014	154,014
Accumulated Deficit	(33,637,132)	(34,186,930)
Paid in Capital	642,520	1,447,938
Total Stockholders' Equity	3,828,277	662,593
Total Liabilities and Stockholders' Equity	$ 18,241,547	$ 17,503,335

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NOTE 3 - OIL AND GAS PROPERTIES, EQUIPMENT AND FIXTURES (Tables)

6 Months Ended

Jun. 30, 2013

Oil and Gas Exploration and Production Industries Disclosures [Text Block]

Schedule of oil and gas properties, equipment and fixtures [Table Text Block]

Oil and gas properties, equipment and fixtures consist of the following:

	June 30,  2013 (Unaudited)			December 31, 2012 (Audited)
Oil and Gas
Producing properties, including drilling costs	$	24,760,832		$	24,327,806
Undeveloped properties		3,105,900			4,034,292
Lease and well equipment		9,794,395			9,724,602
		37,661,127			38,086,700
Accumulated depletion, depreciation & amortization		(28,192,241	)		(27,756,493	)
		9,468,886			10,330,207
Commercial and Other
Real estate, including furniture and fixtures	$	502,344		$	502,344
Vehicles		151,669			151,669
Furniture and equipment		1,299,300			1,299,300
		1,953,313			1,953,313
Accumulated depreciation		(1,349,605	)		(1,327,723	)
		603,708			625,590
	$	10,072,594		$	10,955,797

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NOTE 2 - EARNINGS (LOSS) PER SHARE (Details)	6 Months Ended
	Jun. 30, 2012
Earnings Per Share [Text Block]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	781,304

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NOTE 2 - EARNINGS (LOSS) PER SHARE (Tables)

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Text Block]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

Basic and diluted earnings (loss) per share are calculated as follows:

	For the Six Months ended  June 30, 2013
	Earnings (Loss) (Numerator)		Shares (Denominator)		Per-Share Amount
Basic Earnings (Loss) Per Share:
Net Income available to common stock	$	549,798		13,211,602	$	0.04
Diluted Earnings (Loss) Per Share:
Effect of dilutive securities and stock options		0		296,503		0.00
Net Earnings (loss) available to common stock	$	549,798		13,508,105	$	0.04

	For the Six Months ended  June 30, 2012 - Restated
	Earnings (Loss) (Numerator)			Shares (Denominator)		Per-Share Amount
Basic Earnings (Loss) Per Share:
Net income available to common stock	$	(2,683,579	)		10,977,537	$	(0.24	)
Diluted Earning (Loss) Per Share:
Effect of dilutive securities and stock options		0			0		0.00
Net Earnings (loss) available to common stock	$	(2,683,579	)		10,977,537	$	(0.24	)

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NOTE 2 - EARNINGS (LOSS) PER SHARE

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Text Block]

Earnings Per Share [Text Block]

NOTE 2 – EARNINGS (LOSS) PER SHARE

Basic and diluted earnings (loss) per share are calculated as follows:

	For the Six Months ended  June 30, 2013
	Earnings (Loss) (Numerator)		Shares (Denominator)		Per-Share Amount
Basic Earnings (Loss) Per Share:
Net Income available to common stock	$	549,798		13,211,602	$	0.04
Diluted Earnings (Loss) Per Share:
Effect of dilutive securities and stock options		0		296,503		0.00
Net Earnings (loss) available to common stock	$	549,798		13,508,105	$	0.04

	For the Six Months ended  June 30, 2012 - Restated
	Earnings (Loss) (Numerator)			Shares (Denominator)		Per-Share Amount
Basic Earnings (Loss) Per Share:
Net income available to common stock	$	(2,683,579	)		10,977,537	$	(0.24	)
Diluted Earning (Loss) Per Share:
Effect of dilutive securities and stock options		0			0		0.00
Net Earnings (loss) available to common stock	$	(2,683,579	)		10,977,537	$	(0.24	)

For the six months ended June 30, 2012, Royale Energy had dilutive securities of 781,304.  These securities were not included in the dilutive earnings (loss) per share due to their antidilutive nature.

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NOTE 4 - STOCK BASED COMPENSATION (Details) (Employee Stock Option [Member], USD $)	6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2010
NOTE 4 - STOCK BASED COMPENSATION (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in Shares)			400,000
Share-based Compensation by Share-based Payment Award, Options, Exercise Price of Options (in Dollars per share)			$ 3.25
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights			vest in two parts; the first 200,000 options vested on January 1, 2011; the remaining 200,000 options vested on January 1, 2012
Share-based Compensation by Share-based Payment Award, Options, Term of Options			5 years
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period			2 years
Allocated Share-based Compensation Expense		$ 19,630
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense	$ 0	$ 5,696
Options granted to each director and executive officer [Member]
NOTE 4 - STOCK BASED COMPENSATION (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in Shares)			50,000

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NOTE 6 - RESTATEMENT TO REFLECT CHANGE IN REVENUE RECOGNITION POLICY (Tables)

6 Months Ended

Jun. 30, 2013

Accounting Changes and Error Corrections [Text Block]

Schedule of Error Corrections and Prior Period Adjustments [Table Text Block]

The effect on the Company’s issued June 30, 2012 financial statements is summarized below:

	As Previously
	Reported			As Restated
Balance sheet as of June 30, 2012:
Deferred Tax Asset-Noncurrent	$	6,986,892		$	7,159,586
Total Assets		20,173,028			20,345,722
Deferred Revenue from Turnkey Drilling		6,697,235			7,289,793
Total Current Liabilities		12,682,995			13,275,553
Total Liabilities		13,264,094			13,856,652
Accumulated Deficit		23,175,477			23,595,341
Total paid in capital and accumulated deficit		6,436,676			6,016,812
Total Stockholder’s Equity		6,908,934			6,489,070
Total Liabilities and Stockholder’s Equity		20,173,028			20,345,722
Statement of Comprehensive Loss for the period ended June 30, 2012:
Turnkey Drilling		592,558			0
Total Revenues		1,829,949			1,237,391
Loss From Operations		(3,126,442	)		(3,719,000	)
LossBefore Income Tax Benefit		(3,194,804	)		(3,787,362	)
Income Tax Benefit		(931,089	)		(1,103,783	)
Net Loss		(2,263,715	)		(2,683,579	)
Comprehensive Loss		(2,263,472	)		(2,683,336	)

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NOTE 6 - RESTATEMENT TO REFLECT CHANGE IN REVENUE RECOGNITION POLICY (Details) - Schedule of Error Corrections and Prior Period Adjustments (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Deferred Tax Asset-Noncurrent		$ 7,159,586		$ 7,159,586
Total Assets	18,241,547	20,345,722	18,241,547	20,345,722	17,503,335
Deferred Revenue from Turnkey Drilling		7,289,793		7,289,793
Total Current Liabilities	13,477,735	13,275,553	13,477,735	13,275,553	15,886,654
Total Liabilities	14,413,270	13,856,652	14,413,270	13,856,652	16,840,742
Accumulated Deficit	(33,637,132)	23,595,341	(33,637,132)	23,595,341	(34,186,930)
Total paid in capital and accumulated deficit		6,016,812		6,016,812
Total Stockholder’s Equity	3,828,277	6,489,070	3,828,277	6,489,070	662,593
Total Liabilities and Stockholder’s Equity	18,241,547	20,345,722	18,241,547	20,345,722	17,503,335
Turnkey Drilling	893,667	0	893,667	0
Total Revenues	1,535,035	535,813	2,006,701	1,237,391
Loss From Operations	2,008,094	(1,826,266)	853,165	(3,719,000)
LossBefore Income Tax Benefit	1,905,595	(1,861,890)	549,798	(3,787,362)
Income Tax Benefit	0	(545,166)	0	(1,103,783)
Net Loss	1,905,595	(1,316,724)	549,798	(2,683,579)
Comprehensive Loss	1,905,595	(1,316,724)	549,798	(2,683,336)
Scenario, Previously Reported [Member]
Deferred Tax Asset-Noncurrent		6,986,892		6,986,892
Total Assets		20,173,028		20,173,028
Deferred Revenue from Turnkey Drilling		6,697,235		6,697,235
Total Current Liabilities		12,682,995		12,682,995
Total Liabilities		13,264,094		13,264,094
Accumulated Deficit		23,175,477		23,175,477
Total paid in capital and accumulated deficit		6,436,676		6,436,676
Total Stockholder’s Equity		6,908,934		6,908,934
Total Liabilities and Stockholder’s Equity		20,173,028		20,173,028
Turnkey Drilling				592,558
Total Revenues				1,829,949
Loss From Operations				(3,126,442)
LossBefore Income Tax Benefit				(3,194,804)
Income Tax Benefit				(931,089)
Net Loss				(2,263,715)
Comprehensive Loss				$ (2,263,472)

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NOTE 5 - FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS (Details)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Segment Reporting Disclosure [Text Block]
Number of Operating Segments	2	2

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Document And Entity Information	6 Months Ended
	Jun. 30, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	ROYALE ENERGY INC
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding	14,186,907
Amendment Flag	false
Entity Central Index Key	0000864839
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2

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NOTE 5 - FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS (Details) - Schedule of segment reporting information, by segment (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Segment Reporting Information [Line Items]
Revenues from External Customers			$ 1,681,663	$ 867,844
Supervisory Fees			307,553	364,763
Interest Revenue			17,485	4,784
Interest Expense	102,499	35,624	303,367	68,362
Operating Expenses for Segment Assets			2,987,192	4,039,382
Depreciation, Depletion, and Amortization			461,264	737,119
Lease Impairment	0	181,627	0	181,627
Gain on Sale of Assets			2,294,920	1,737
Income Tax (Benefit)	0	(545,166)	0	(1,103,783)
Total Assets	18,241,547	20,345,722	18,241,547	20,345,722	17,503,335
Net Income (Loss)	1,905,595	(1,316,724)	549,798	(2,683,579)
Oil and gas producing and exploration [Member]
Segment Reporting Information [Line Items]
Revenues from External Customers			787,996	867,844
Supervisory Fees			307,553	364,763
Interest Revenue			0	0
Interest Expense			151,684	34,181
Operating Expenses for Segment Assets			1,601,070	2,526,241
Depreciation, Depletion, and Amortization			438,201	700,263
Lease Impairment				90,814
Gain on Sale of Assets			2,294,920	1,737
Income Tax (Benefit)			0	(617,020)
Total Assets	17,329,470	19,328,436	17,329,470	19,328,436
Net Income (Loss)			1,199,514	(1,500,135)
Turnkey drilling services [Member]
Segment Reporting Information [Line Items]
Revenues from External Customers			893,667	0
Supervisory Fees			0	0
Interest Revenue			17,485	4,784
Interest Expense			151,683	34,181
Operating Expenses for Segment Assets			1,386,122	1,513,141
Depreciation, Depletion, and Amortization			23,063	36,856
Lease Impairment				90,813
Gain on Sale of Assets			0	0
Income Tax (Benefit)			0	(486,763)
Total Assets	912,077	1,017,286	912,077	1,017,286
Net Income (Loss)			$ (649,716)	$ (1,183,444)