Royale Energy Inc

At December 31, 2023, Royale had current assets totaling $9,669,618 and current liabilities totaling $16,853,936, a $7,184,318 working capital deficit. We had cash and cash equivalents at December 31, 2023 of $2,202,521 and restricted cash of $3,325,000 compared to cash and cash equivalents of $1,650,507 and restricted cash of $2,249,627 at December 31, 2022.

Ordinarily, we fund our operations and cash needs from our available credit and cash flows generated from operations. We believe there is some doubt that the Company has the ability to meet liquidity demands through cash-flow from operations. In that event, the Company will seek alternative capital sources through additional sales of equity or debt securities, or the sale of property, which may not be available at all, or on terms we deem reasonable. We have plans to increase oil and gas revenue with commitments to participate in the drilling and completion of several non-operated wells in the Permian Basin in Texas.

At December 31, 2023, our other receivables net, which consists of joint interest billing receivables from direct working interest participants and industry partners, totaled $1,036,401, compared to $943,633 at December 31, 2022, a $92,768 increase. This increase was mainly due higher accounts receivables from direct working interest owners for lease operating expenses to increase production volumes mainly in our Texas Jameson field. At December 31, 2023, revenue receivable was $878,378, an increase of $176,441, compared to $701,937 at December 31, 2022, due to higher production volumes as two new non-operated wells came online at year end 2023. At December 31, 2023, our accounts payable and accrued expenses totaled $5,482,074, a decrease of $46,755 from the accounts payable at December 31, 2022 of $5,528,829, mainly due to payments on accounts payable at year end 2023.

We have not engaged in hedging activities nor do we use derivative instruments to manage market risks.

Operating Activities. For the years ended December 31, 2023 and 2022, cash used in operating activities totaled $769,919 and $2,809,788, respectively. This $2,039,869 decrease in cash used was primarily due to a decrease in prepaid drilling costs during the period in 2023 due to participating in the drilling of four non-operated Texas oil wells which were prepaid in 2022 and drilled and completed in 2023.

Investing Activities. Net cash provided by investing activities totaled $2,409,291 and $2,608,871 for the years ended December 31, 2023 and 2022, respectively. The difference was due to cash receipts of approximately $7.9 million in 2023 and $7.3 million in 2022 in direct working interest turnkey investments. During 2023, our turnkey drilling expenditures were approximately $5.5 million as we drilled and completed one oil well in our Texas Jameson field and participated in the drilling and completion of two Texas oil wells in the Permian basin and the drilling one California oil well. During 2022, our turnkey drilling expenditures were approximately $4.7 million as we drilled and completed five oil wells in Texas and participated in the drilling of two California oil wells.

Financing Activities. Net cash used in financing activities totaled $11,985 and $121,753 for the years ended December 31, 2023 and 2022, respectively. During 2023 we had financing lease payments of $11,985. During 2022, we had note payable and financing lease payments of $121,753.