Royale Energy, Inc.

Royale paid $1.5 million cash - its own funds, not more insider debt - to acquire non-operated working interests in seven producing Barnett shale wells in Ector County, Texas, a genuine growth acquisition after years of distress-driven asset sales and related-party financing.

asset acquisition disposition

Royale eliminated all of its Series B Convertible Preferred Stock - originally issued to Matrix's former owners in the 2018 merger - by exchanging it for 22.2 million new common shares (a large dilution), $2.5 million of new senior notes, options on 25 million more shares at $0.10, and giving up half its Alaska oil and gas royalty interests plus its Kern County, CA real property to a holding company owned by the former preferred holders.

capital raising announcement

Royale borrowed $1.4 million (with room to draw up to $3.0 million total) under a secured term loan from Walou Investments, LP - a lender controlled by Royale's own CEO, Johnny Jordan, who also owns 14.8% of the company's stock. Disinterested directors approved the related-party loan as fair, secured by a mortgage on Texas properties, after years of going-concern doubts had made outside financing hard to come by.

debt financing

Royale's first well under its new Rio Vista drilling program with CRPC, the CRC 33-1, flowed a strong initial rate of 4.6 million cubic feet of gas per day with high reservoir pressure and found multiple pay zones - an encouraging start with six more wells planned for 2019.

drilling progress report

Royale signed a three-year, 30-well development deal with California Resources Production Corp (CRPC) to drill California's largest dry-gas field, Rio Vista - Royale earns a 60% interest in wells it drills, but must drill at least 8 wells (or spend $9 million) in year one or pay liquidated damages.

material agreement

Weeks after closing the Matrix merger, Royale contributed nearly all of its and Matrix's operating oil and gas properties into a new joint venture, RMX Resources, in exchange for only a 20% equity stake plus up to $20 million - most of which was needed to pay off Matrix's senior lender and outstanding trade payables. Its new partner, CIC RMX LP, put in $25 million cash for 80% control plus a warrant to buy 4 million Royale shares at $0.01 - a sign the combined company needed cash badly right after the merger closed.

asset acquisition disposition

Royale completed its combination with Matrix Oil Management on March 7, 2018 (shareholders had approved it back on November 16, 2017): both companies became subsidiaries of the renamed Royale Energy, Inc., with Matrix's affiliated partnerships and Matrix Oil Corporation folded in via stock and preferred-stock exchanges.

asset acquisition disposition

Royale Energy and privately held Matrix Oil Management agreed to combine under a new Delaware holding company that keeps the Royale name. Royale's California shareholders convert one for one; the Matrix group -- the operating company plus its several partnerships, each with its own allocation factor -- collectively receives a number of shares equal to Royale's own fully diluted count, so the two sides come out roughly level. Matrix brings producing oil properties in the Los Angeles and San Joaquin basins, including the Sansinena field.

business combination