Royale Energy, Inc. Files 2023 Annual Report on Form 10-K

TL;DR

<b>Royale Energy, Inc. filed its 2023 10-K, detailing its operations in crude petroleum and natural gas.</b>

AI Summary

Royale Energy, Inc. (ROYL) filed a Annual Report (10-K) with the SEC on April 12, 2024. Royale Energy, Inc. filed its annual report for the fiscal year ended December 31, 2023. The company is incorporated in Delaware and its principal executive offices are located in El Cajon, California. Royale Energy, Inc. is classified under SIC code 1311 for Crude Petroleum & Natural Gas. The company has not filed all reports required by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months. Royale Energy, Inc. has submitted electronically every Interactive Data File required by Rule 405 of Regulation S-T during the preceding 12 months.

Why It Matters

For investors and stakeholders tracking Royale Energy, Inc., this filing contains several important signals. This filing provides a comprehensive overview of Royale Energy's financial performance and operational status for the fiscal year 2023, crucial for investors assessing the company's health. The report's details on its SIC code classification (1311) and business address offer specific context for its industry and operational base.

Risk Assessment

Risk Level: low — Royale Energy, Inc. shows low risk based on this filing. The filing indicates that Royale Energy, Inc. has not filed all required reports for the past 12 months, which could signal potential compliance issues or operational disruptions.

Analyst Insight

Investors should review the full 10-K filing for detailed financial statements and operational disclosures to understand Royale Energy's performance and any potential compliance concerns.

Key Numbers

• 2023 — Fiscal Year End (Fiscal year ended December 31, 2023)
• 1311 — SIC Code (Crude Petroleum & Natural Gas)
• 000-55912 — Commission File Number (SEC File Number)
• 619-383-6600 — Registrant's telephone number (Contact number)

Key Players & Entities

• Royale Energy, Inc. (company) — Filer name
• Delaware (jurisdiction) — State of incorporation
• El Cajon, California (location) — Address of principal executive offices
• 1311 (industry_code) — Standard Industrial Classification for Crude Petroleum & Natural Gas
• 2023 (date) — Fiscal Year Ended
• December 31 (date) — Fiscal Year Ended
• 000-55912 (filing_id) — Commission File Number
• 1530 Hilton Head Road #205 (address) — Business address

FAQ

Risk Factors

• Filing Requirements [medium — regulatory]: The registrant has not filed all reports required by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months.
• Interactive Data File Submission [low — operational]: The registrant has submitted electronically every Interactive Data File required by Rule 405 of Regulation S-T during the preceding 12 months.

Key Dates

• 2023-12-31: Fiscal Year End — End of the reporting period for the 10-K filing.
• 2024-04-12: Filing Date — Date the 10-K report was filed with the SEC.

Key Financial Figures

• $10.7 million — undeveloped reserves was approximately $10.7 million at December 31, 2023, based on the aver
• $2.637 — nry Hub natural gas price spot price of $2.637 per MCF and for oil volumes, the averag
• $78.21 — verage West Texas Intermediate price of $78.21 per barrel as applied on a field-by-fie
• $4,471,896 — December 31, 2023, was estimated to be $4,471,896. This figure was calculated by subtract
• $2,107,500 — urnkey contract" basis in the amount of $2,107,500 for the year ended December 31, 2023. F
• $1,726,414 — in on turnkey drilling in the amount of $1,726,414. In addition to Royale's own staff, Ro
• $2,114,026 — roduction of its wells in the amount of $2,114,026. In 2022, this amount was $2,611,222, w
• $2,611,222 — of $2,114,026. In 2022, this amount was $2,611,222, which represented 98.8% of Royale's to
• $401,233 — operation of the wells in the amount of $401,233 for the year, which were an offset to g
• $355,681 — ative expenses. In 2022, the amount was $355,681. At December 31, 2023, Royale operated

Filing Documents

• royaleinc20231231_10k.htm (10-K) — 1359KB
• ex_644957.htm (EX-21.1) — 2KB
• ex_644962.htm (EX-23.1) — 3KB
• ex_644963.htm (EX-23.2) — 4KB
• ex_644964.htm (EX-31.1) — 8KB
• ex_644965.htm (EX-31.2) — 8KB
• ex_644966.htm (EX-32.1) — 5KB
• ex_644967.htm (EX-32.2) — 5KB
• ex_644968.htm (EX-99.1) — 93KB
• ex99_footer1.jpg (GRAPHIC) — 10KB
• ex99_header1.jpg (GRAPHIC) — 18KB
• nsai_logo1.jpg (GRAPHIC) — 4KB
• 0001185185-24-000374.txt (&nbsp;) — 7076KB
• royl-20231231.xsd (EX-101.SCH) — 60KB
• royl-20231231_cal.xml (EX-101.CAL) — 61KB
• royl-20231231_def.xml (EX-101.DEF) — 267KB
• royl-20231231_lab.xml (EX-101.LAB) — 527KB
• royl-20231231_pre.xml (EX-101.PRE) — 279KB
• royaleinc20231231_10k_htm.xml (XML) — 1092KB

Description of Business

Item 1 Description of Business 4 Royale Business 4 Plan of Business 5 Competition, Markets and Regulation 6

Risk Factors

Item 1A Risk Factors 7

Unresolved Staff Comments

Item 1B Unresolved Staff Comments 7

Cybersecurity

Item 1C Cybersecurity 7

Description of Property

Item 2 Description of Property 7 California 8 Texas 8 Developed and Undeveloped Leasehold Acreage 8 Gross and Net Productive Wells 8 Drilling Activities 8 Production 9 Reserve Estimates 9 Net Proved Oil and Natural Gas Reserves 10

Legal Proceedings

Item 3 Legal Proceedings 10

Mine Safety Disclosures

Item 4 Mine Safety Disclosures 10 PART II 11

Market for Common Equity and Related Stockholder Matters

Item 5 Market for Common Equity and Related Stockholder Matters 11 Transfer Agent 11 Dividends 11 Recent Sales of Unregistered Securities 11

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Overview 11 Critical Accounting Policies 11 Results of Operations for the Year Ended December 31, 2021, as Compared to the Year Ended December 31, 2020 14 Capital Resources and Liquidity 15 Changes in Reserve Estimates 16

Qualitative and Quantitative Disclosures About Market Risk

Item 7A Qualitative and Quantitative Disclosures About Market Risk 16

Financial Statements and Supplementary Data

Item 8 Financial Statements and Supplementary Data 16

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 16

Controls and Procedures

Item 9A Controls and Procedures 17 Management's Report on Internal Control Over Financial Reporting 17 Material Weakness and Remediation 17 Attestation Report of the Independent Registered Public Accounting Firm. 17 Changes in Internal Control over Financial Reporting 17 PART III 18

Directors and Executive Officers of the Registrant

Item 10 Directors and Executive Officers of the Registrant 18 Audit Committee 20 Code of Business Conduct and Ethics 20 Compliance with Section 16(a) of the Exchange Act 20

Executive Compensation

Item 11 Executive Compensation 21 Stock Options and Equity Compensation; Outstanding Equity Awards at Fiscal Year End 21 Compensation Committee Report 21 Compensation Discussion and Analysis 22 Compensation of Directors 23

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 23 Common Stock 23

Certain Relationships and Related Transactions

Item 13 Certain Relationships and Related Transactions 24

Principal Accountant Fees and Services

Item 14 Principal Accountant Fees and Services 24 PART IV 25

Exhibits and Financial Statement Schedules

Item 15 Exhibits and Financial Statement Schedules 25

SIGNATURES

SIGNATURES 26 ROYALE ENERGY, INC. PART I

Description of Business

Item 1 Description of Business Royale Energy, Inc. ("Royale" or the "Company") is an independent oil and natural gas producer incorporated under the laws of Delaware. Royale's principal lines of business are the production and sale of oil and natural gas, acquisition of oil and gas lease interests and proved reserves, drilling of both exploratory and development wells, and sales of fractional working interests in wells to be drilled by Royale. Royale was incorporated in Delaware in 2017 and is the successor by merger (as described below) to Royale Energy Funds, Inc., a California corporation formed in 1983. On December 31, 2023, Royale and its consolidated subsidiaries had 10 full time employees. Royale Business Royale and its subsidiaries own wells, leases, and proved and non-proved reserves of oil and gas located mainly in Mitchell County and Ector County, Texas and in the Sacramento Basin and San Joaquin Basin in California, as well as in, Oklahoma. Royale also owns an overriding royalty interest in a discovery in Alaska. Royale usually sells a portion of the working interest in each well it drills or participates in to third-party participants and retains a portion of the prospect for its own account. Selling part of the working interest to others allows Royale to reduce its drilling risk by owning a diversified inventory of properties with less of its own funds invested in each drilling prospect, than if Royale owned all the working interest and paid all drilling and development costs of each prospect itself. Royale generally sells working interests in its prospects to accredited investors in exempt securities offerings. The prospects are typically bundled into multi-well investments, which permit the third-party investors to diversify their investments by investing in several wells at once instead of investing in single well prospects. During its fiscal year ended December 31, 2023, Royale continued to explore and develop oil and natural gas properties w

Risk Factors

Item 1A Risk Factors As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, Royale is not required to provide the information required by this Item.

Unresolved Staff Comments

Item 1B Unresolved Staff Comments None.

Cybersecurity

Item 1C Cybersecurity Risk Management and Strategy The Company's cybersecurity environment is led by our information technology (IT) contractor, which, in addition to cybersecurity matters, oversees the Company's IT infrastructure. The IT contractor is responsible for monitoring and managing the security of the Company's corporate network and enterprise systems, including technical controls, and safety protocols and responding to security threats. The Company maintains a cybersecurity risk management program that establishes safeguards for protecting the confidentiality, integrity, and availability of our data, technology, and information systems. The program includes general controls for managing changes in and access to the Company's IT environment, cybersecurity awareness and training to help employees identify and mitigate against cybersecurity threats, cybersecurity incident response plans and third-party incident response retainers to help expedite the Company's response in the event of a cybersecurity incident. The Company's IT contractor is primarily responsible for the day-to-day operation of the Company's cybersecurity program and for identifying cybersecurity threats and incidents and managing the material risks associated with the cybersecurity threats. The Company's IT contractor engages third-party vendors and cybersecurity consortiums periodically for cybersecurity-related guidance and certifications. In the event of a cybersecurity incident, the Company's process calls for the IT contractor, Chief Executive Officer and Chief Financial Officer, work to assess and respond to the incident and provide briefings to the Audit Committee of the Board of Directors. The Audit Committee is responsible for providing oversight over management's processes to identify and evaluate cybersecurity risks to which the Company is exposed and to implement processes and programs to manage cybersecurity risks and mitigate any incidents. The Audit Committee also repor

Description of Property

Item 2 Description of Property Since 1993, Royale had concentrated on development of properties in the Sacramento Basin and the San Joaquin Basin of Northern and Central California. In the last few years it has moved its focus to Mitchell County and Ector County, Texas. In 2023, Royale drilled one developmental oil well in Texas and participated in the drilling of two successful oil wells in Texas and one dry hole in southern California. Following industry standards, Royale generally acquires oil and natural gas acreage without warranty of title except as to claims made by, though, or under the transferor. In these cases, Royale attempts to conduct due diligence as to title before the acquisition, but it cannot assure that there will be no losses resulting from title defects or from defects in the assignment of leasehold rights. Title to property most often carries encumbrances, such as royalties, overriding royalties, carried and other similar interests, and contractual obligations, all of which are customary within the oil and natural gas industry. Following is a discussion of Royale's significant oil and natural gas properties. Reserves at December 31, 2023, for each property discussed below, have been determined by Netherland, Sewell & Associates, Inc., registered professional petroleum engineers, in accordance with reports submitted to Royale on February 12, 2024. 7 Table of Contents California Royale owns interests in nine gas fields with locations ranging throughout the Sacramento Basin in California. At December 31, 2023, Royale operated 12 wells and owns interests in 13 non-operated gas wells in Northern California and 8 non-operated oil wells in Southern and Central California. Our California estimated total proven, developed, and undeveloped net reserves are approximately 0.350 BCFE, according to Royale's independently prepared reserve report as of December 31, 2023. Texas At December 31, 2023, Royale owned and operated interests in 26 oil we