Royale Energy Inc. Reports Operating Results (10-Q)

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Nov 13, 2012
Royale Energy Inc. (ROYL, Financial) filed Quarterly Report for the period ended 2012-09-30.

Royale Energy, Inc. has a market cap of $31.9 million; its shares were traded at around $2.9 with and P/S ratio of 2.7.

Highlight of Business Operations:

For the nine months ended September 30, 2012, we had a net loss of $3,028,789, a $2,954,756 increase compared to the net loss of $74,033 during the first nine months of 2011. Total revenues for the first nine months of 2012 were $2,467,187, a decrease of $6,318,842 or 71.9% from the total revenues of $8,786,029 received during the period in 2011. For the quarter ended September 30, 2012, our net loss was $765,074, a $354,841 increase compared to the net loss of $410,233 achieved during the same period in 2011. The lower net profits and revenues during the periods were the result of decreases in both natural gas production and price received and lower turnkey drilling revenues due to a decrease in drilling activity during the period in 2012.

For the nine months ended September 30, 2012, we had a net loss of $3,028,789, a $2,954,756 increase compared to the net loss of $74,033 during the first nine months of 2011. Total revenues for the first nine months of 2012 were $2,467,187, a decrease of $6,318,842 or 71.9% from the total revenues of $8,786,029 received during the period in 2011. For the quarter ended September 30, 2012, our net loss was $765,074, a $354,841 increase compared to the net loss of $410,233 achieved during the same period in 2011. The lower net profits and revenues during the periods were the result of decreases in both natural gas production and price received and lower turnkey drilling revenues due to a decrease in drilling activity during the period in 2012.

In the first nine months of 2012, revenues from oil and gas production decreased $3,004,071 or 70.5% to $1,255,321 from 2011 revenues of $4,259,392. This decrease was due to lower natural gas and oil production, stemming from the natural declines of our existing wells and lower commodity prices received during the period in 2012. The net sales volume of natural gas for the nine months ended September 30, 2012, was approximately 444,723 Mcf with an average price of $2.58 per Mcf, versus 977,190 Mcf with an average price of $4.19 per Mcf for the first nine months of 2011. This represents a decrease in net sales volume of 532,467 Mcf or 54.5%. For the quarter ended September 30, 2012, revenues from oil and gas decreased to $387,477 from $957,318 received during the same period in 2011. During the third quarter in 2012, we produced 129,303 Mcf with an average price of $2.80 per Mcf versus 217,795 Mcf produced during the same quarter in 2011 with an average price of $4.17 per Mcf, which represents an 88,492 Mcf or 40.6% decrease in net sales volume. For the first nine months of 2012, revenues from oil and condensate (natural gas liquids) decreased $53,930 or 33.9% to $105,293 from 2011 nine month revenues of $159,223. The net sales volume for the nine month period in 2012 was 1,151 barrels with an average price of $91.46 per barrel, compared to 1,789 barrels with an average price of $89.00 per barrel for the period in 2011. This represents a decrease in net sales volume of 638 barrels, or 35.7%. For the third quarter of 2012, oil and condensate production decreased 261 barrels, or 46.9%, from 557 barrels produced in 2011 to 296 barrels produced in the same period in 2012.

For the nine months ended September 30, 2012, turnkey drilling revenues were $676,149, a $3,172,188 or 82.4% decrease compared to revenues of $3,848,337 for the same period in 2011. We also had a $2,259,660 or 107.3% decrease in turnkey drilling and development costs to ($153,549) in 2012 from $2,106,111 in 2011. During the first nine months of 2012 we did not drill any wells, due to the lower overall natural gas commodity prices, while during the same period in 2011 we drilled five wells in California. However during the period in 2012, we did have an adjustment to previously expensed drilling and development costs due to lower than anticipated completion costs for wells that commenced drilling prior to 2012. We anticipate drilling activity to resume in the next quarter as we have processed permits for several new wells, and expect to drill approximately two California wells during the fourth quarter of 2012.

At September 30, 2012, our accounts receivable totaled $1,653,237, compared to $1,872,067 at December 31, 2011, a $218,830 or 11.7% decrease. This was primarily due to lower oil and gas receivables due to a decline in natural gas production and prices at September 30, 2012 when compared to the year-end at December 31, 2011. At September 30, 2012, our accounts payable and accrued expenses totaled $4,201,486, a decrease of $341,255 or 7.5% from the accounts payable at December 31, 2011, of $4,542,741, mainly due to a decrease in revenues payable from the lower oil and gas production and revenues.

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