Events/Stowe/Stowe VT 2016 07 18 Donald Hosmer
Risk Disclosure Statement No statement within the presentation should be construed as an offer to buy or sell a security. Investments in Oil & Gas involve a substantial degree of risk and are not suitable for all investors. A prospectus, private placement memorandum, or contract should be read thoroughly and understood before investing. Per Section 501 of Regulation D, Oil & Gas investments are typically suitable only for accredited investors. There are a number of tax advantages involved in purchasing Oil & Gas direct working interest. Investors considering purchasing Oil & Gas interest should consult their tax advisor and legal counsel to evaluate any tax benefits. Cash flows and returns are not guaranteed and may be lower than anticipated. Past performance is no guarantee of future results.
Brexit could be followed by: • • • • • • • • • •
Grexit Departugal Italeave Czechout Outstria Finish Slovakout Latervia Byegium ONLY Remania will stay
ROYALE ENERGY ANNOUNCES POSITIVE OPERATING INCOME FOR THE 4TH QUARTER 2015 San Diego, March 15, 2016 - Royale Energy, Inc. announced today its second consecutive quarter of positive operating income. For the 4 Quarter of 2015, Royale reported an operating profit of $70,736 compared to an operating profit of $21,372 for the 3 Quarter 2015. This th
rd
improvement quarter over quarter comes despite a 14% decline in natural gas prices during the period. Additionally, Royale improved its quarterly operating income by $1,877,674 when compared to the 4 th quarter operating loss of $1,806,938 in 2014. For the year ended December 31, 2015, Royale reported an improvement of $141,040 in its net loss from $2,151,856 in 2014 to $2,010,816 in 2015, or a $0.13 loss per share basic and diluted. Despite declining production and commodity prices, Royale was able to turn its operations around by decreasing expense, increasing turnkey drilling activities, and selling certain non-core operational assets. As Royale moves forward in this challenging oil and gas price environment, it remains focused on reducing its operating and administrative costs while continuing to strengthen its balance sheet. Management continues to pursue joint ventures that complement and expand Royale’s drilling opportunities. These joint ventures allow Royale to acquire oil and gas properties with lowcost developments and long term upside potential. Royale is currently in the process of completing a well in California’s Sacramento Basin, and it anticipates drilling an additional five wells in 2016.
Forward Looking Statements In addition to historical information contained herein, this news release 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 the company’s actual results to differ materially from those in the “forward-looking” statements. While the company believes its 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 the company’s control. Investors are directed to consider such risks and other uncertainties discussed in documents filed by the company with the Securities and Exchange Commission.
Occidental Petroleum Completes Spin-off of California Resources Corporation (CRC) HOUSTON, December 1, 2014 -Occidental (NYSE:OXY) today announced it has completed the spin-off of its subsidiary California Resources Corporation (NYSE:CRC). California Resources, which begins “regular way” trading today on the New York Stock Exchange as a stand-alone company, is an independent oil and natural gas exploration and production company focused on high-growth, high-return conventional and unconventional assets exclusively in California. ROYALE ENERGY REACHES DEVELOPMENT AGREEMENT San Diego, October 8, 2015 - Royale Energy, Inc. today announced that it has reached an agreement, with a major independent exploration and production company, to develop 1,300 acres in the Sacramento Basin Grimes Field. This agreement allows Royale to drill up to three wells targeting a 3D seismically defined amplitude. The seismic event is clearly correlated to the nearby productive natural gas horizon and shows a sizable target with multiple well follow up potential. Royale is pleased to enter into the first of what it believes to be a series of development opportunities with an industry participant of this caliber. “I am excited to have the opportunity to establish a relationship of this nature,” said Stephen Hosmer, “and look forward to the reserve and production growth for both of our companies.”
Royale Strain 11-2
Wellhead
Bloomberg Since 1984, Brent has had six major moves down. All of them were followed by a V-shaped recovery! This image cannot currently be displayed.
We expect the supply response to be faster today than in previous cycles as the world is more dependent on oil from shale wells, which have a higher base decline rate than conventional oil wells. We have already seen the oil rig count fall by 24% (386 rigs) from the Q4 highs. We saw a similar move in 2008 when the oil rig count fell 23% in three months, but that was when the peak was 442 rigs compared to over 1,600 rigs in October 2014.
This image cannot currently be displayed.
2008-A 92.5% Return Currently Producing
1993-A 324.14% Return Currently Producing
2001-C 255.03% Return Currently Producing 1999-A 360.28% Return
2016-A 1.6% 3 wells
U.S. Natural Gas Supply Balance and Forecast Based on supply and demand data, the EIA is projecting a sharp increase in the price of natural gas which will be well above $3 in 2017. This is an increase of 66% from the current price levels. Their data shows that the U.S. will have a supply deficit in the last quarter of 2016 as shown in the chart.
U.S. Rig Count • Historic Decline Only 89 Rigs Left There are only 89 rigs operating today compared to 900 about five years ago. This is the first dip below 100 rigs in three decades. For the first time in at least three decades, fewer than 100 rigs are drilling for the fuel. The EIA's latest monthly drilling report suggests the natural gas rig count could fall even further. Just imagine the impact that this will have on natural gas production. This can be the opportunity of a lifetime for bullish gas traders. The resulting decline in production will be deep enough to shrink output from shale formations and eat into the biggest supply surplus in four years.
Rising US Natural Gas Demand by Sector
U.S. Natural Gas Pipeline Exports to Mexico: “Mexico is a very fast growing Natural Gas market, and imports from the U.S. could reach 8-10% of current U.S. Production much faster than most realize.”
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Occidental Petroleum Completes Spin-off of California Resources Corporation (CRC) HOUSTON, December 1, 2014 -Occidental (NYSE:OXY) today announced it has completed the spin-off of its subsidiary California Resources Corporation (NYSE:CRC). California Resources, which begins “regular way” trading today on the New York Stock Exchange as a stand-alone company, is an independent oil and natural gas exploration and production company focused on high-growth, high-return conventional and unconventional assets exclusively in California. ROYALE ENERGY REACHES DEVELOPMENT AGREEMENT San Diego, October 8, 2015 - Royale Energy, Inc. today announced that it has reached an agreement, with a major independent exploration and production company, to develop 1,300 acres in the Sacramento Basin Grimes Field. This agreement allows Royale to drill up to three wells targeting a 3D seismically defined amplitude. The seismic event is clearly correlated to the nearby productive natural gas horizon and shows a sizable target with multiple well follow up potential. Royale is pleased to enter into the first of what it believes to be a series of development opportunities with an industry participant of this caliber. “I am excited to have the opportunity to establish a relationship of this nature,” said Stephen Hosmer, “and look forward to the reserve and production growth for both of our companies.”
Royale Strain 11-2
Wellhead
2016-A
2016-A • 3 well Drilling Project Natural Gas wells located in Sacramento Basin • 3.125 Million Dollar Project • 31.25 Units, $100,000 per unit • 1.60% ownership in each well per unit • $25,000 / ¼ Unit Minimum
2016-A
West Grimes Gas Field • Prospects • Base Map
Royale Strain 11-3 The Royale Strain 11-3 prospect is located between the West Grimes and Buckeye gas field in Colusa County, California. The Royale Strain 11-3 targets an untested amplitude 3D seismic anomaly at the northwest corner of the Buckeye Gas field. The target horizon is a prolific channelized sandstone in the middle Forbes formation that is productive in several wells located one mile north and south of the prospect. Channel sandstone plunge southward and the target anomaly is fault separated from productive intervals to the north and south. Prospect risk is considered low to moderate in consideration of the near perfect correlation between production and seismic amplitude in the West Grimes extension.
2016-A
2016-A
West Grimes Gas Field • Royale Strain 11-3
2016-A
3D Seismic Amplitude • Royale Strain 11-3
Royale Strain 11-1 The Royale Strain 11-1 prospect is located north of the Royale Strain 11-2 and Royale Strain 11-3 and targets a deeper seismic anomaly. The prospect was developed from analysis of a 3D seismic survey and is part of Royale’s recently announced joint development agreement. This prospect targets an untested high-amplitude 3D seismic anomaly at the northern extension of the Buckeye Gas field. The target horizon is a channelized middle Forbes Formation sandstone approximately 500 ft. below the prolific Strain sand. The anomaly has an elongated channel like geometry and is bounded on the north and south by faults.
2016-A
2016-A
3D Seismic Amplitude • Royale Strain 11-1
2016-A
TBD- To Be Designated Well Location
Direct Working Interest Structure þ Royale Energy owns up to 50% in each well þ All Prospects are 3-D Seismically defined and drilled in Proven Developed Fields þ Turnkey Investment drills, completes and establishes production in 3 wells
Direct Working Interest Structure þ No General & Administrative fees and No Back-ins after payout þ Royale Energy purchases insurance for unit holders and indemnifies all investors þ Monthly Income upon establishment of production paid on the 25th of every month þ Owners receive 1099 on or before Jan 31st of following year from income, No K1s
Tax Advantaged Investing: þ
80% of each investment is categorized as Intangible Drilling Costs (IDC) and can be deducted 100% against any form of income.
þ
20% of each investment is categorized as Tangible Drilling Costs (TDC) and can be depreciated, upon individual circumstances, within the first year or over several years.
þ
The "Depletion Deduction” allows 15% of the Gross Income from an oil-and gas-producing property to be tax free.
Example of Tax Savings 2016-A Project 1 Unit Drilling Investment
$100,000.00
Less:
Federal Tax Deduction (Maximum Tax Rate 35%)
$35,000.00
Less:
State Tax Deduction (where applicable) (State Tax 10%) Investment after Federal & State Tax
$10,000.00
$55,000.000
3 Independent Targets þ The 2016-A Project has 3 natural gas prospects. þ Two wells are identified: Royale Strain 11-3 and Royale Strain 11-1. þ Royale Strain 11-3 has one (PUD) Proven Undeveloped Target. þ Royale Strain 11-1 has one independent large target. þ TBD prospect will has at least one target.
3777 Willow Glen Drive El Cajon, CA 92019 (800) 447-8505 www.ROYL.com [email protected]
Brexit could be followed by: • • • • • • • • • •
Grexit Departugal Italeave Czechout Outstria Finish Slovakout Latervia Byegium ONLY Remania will stay
ROYALE ENERGY ANNOUNCES POSITIVE OPERATING INCOME FOR THE 4TH QUARTER 2015 San Diego, March 15, 2016 - Royale Energy, Inc. announced today its second consecutive quarter of positive operating income. For the 4 Quarter of 2015, Royale reported an operating profit of $70,736 compared to an operating profit of $21,372 for the 3 Quarter 2015. This th
rd
improvement quarter over quarter comes despite a 14% decline in natural gas prices during the period. Additionally, Royale improved its quarterly operating income by $1,877,674 when compared to the 4 th quarter operating loss of $1,806,938 in 2014. For the year ended December 31, 2015, Royale reported an improvement of $141,040 in its net loss from $2,151,856 in 2014 to $2,010,816 in 2015, or a $0.13 loss per share basic and diluted. Despite declining production and commodity prices, Royale was able to turn its operations around by decreasing expense, increasing turnkey drilling activities, and selling certain non-core operational assets. As Royale moves forward in this challenging oil and gas price environment, it remains focused on reducing its operating and administrative costs while continuing to strengthen its balance sheet. Management continues to pursue joint ventures that complement and expand Royale’s drilling opportunities. These joint ventures allow Royale to acquire oil and gas properties with lowcost developments and long term upside potential. Royale is currently in the process of completing a well in California’s Sacramento Basin, and it anticipates drilling an additional five wells in 2016.
Forward Looking Statements In addition to historical information contained herein, this news release 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 the company’s actual results to differ materially from those in the “forward-looking” statements. While the company believes its 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 the company’s control. Investors are directed to consider such risks and other uncertainties discussed in documents filed by the company with the Securities and Exchange Commission.
Occidental Petroleum Completes Spin-off of California Resources Corporation (CRC) HOUSTON, December 1, 2014 -Occidental (NYSE:OXY) today announced it has completed the spin-off of its subsidiary California Resources Corporation (NYSE:CRC). California Resources, which begins “regular way” trading today on the New York Stock Exchange as a stand-alone company, is an independent oil and natural gas exploration and production company focused on high-growth, high-return conventional and unconventional assets exclusively in California. ROYALE ENERGY REACHES DEVELOPMENT AGREEMENT San Diego, October 8, 2015 - Royale Energy, Inc. today announced that it has reached an agreement, with a major independent exploration and production company, to develop 1,300 acres in the Sacramento Basin Grimes Field. This agreement allows Royale to drill up to three wells targeting a 3D seismically defined amplitude. The seismic event is clearly correlated to the nearby productive natural gas horizon and shows a sizable target with multiple well follow up potential. Royale is pleased to enter into the first of what it believes to be a series of development opportunities with an industry participant of this caliber. “I am excited to have the opportunity to establish a relationship of this nature,” said Stephen Hosmer, “and look forward to the reserve and production growth for both of our companies.”
Royale Strain 11-2
Wellhead
Bloomberg Since 1984, Brent has had six major moves down. All of them were followed by a V-shaped recovery! This image cannot currently be displayed.
We expect the supply response to be faster today than in previous cycles as the world is more dependent on oil from shale wells, which have a higher base decline rate than conventional oil wells. We have already seen the oil rig count fall by 24% (386 rigs) from the Q4 highs. We saw a similar move in 2008 when the oil rig count fell 23% in three months, but that was when the peak was 442 rigs compared to over 1,600 rigs in October 2014.
This image cannot currently be displayed.
2008-A 92.5% Return Currently Producing
1993-A 324.14% Return Currently Producing
2001-C 255.03% Return Currently Producing 1999-A 360.28% Return
2016-A 1.6% 3 wells
U.S. Natural Gas Supply Balance and Forecast Based on supply and demand data, the EIA is projecting a sharp increase in the price of natural gas which will be well above $3 in 2017. This is an increase of 66% from the current price levels. Their data shows that the U.S. will have a supply deficit in the last quarter of 2016 as shown in the chart.
U.S. Rig Count • Historic Decline Only 89 Rigs Left There are only 89 rigs operating today compared to 900 about five years ago. This is the first dip below 100 rigs in three decades. For the first time in at least three decades, fewer than 100 rigs are drilling for the fuel. The EIA's latest monthly drilling report suggests the natural gas rig count could fall even further. Just imagine the impact that this will have on natural gas production. This can be the opportunity of a lifetime for bullish gas traders. The resulting decline in production will be deep enough to shrink output from shale formations and eat into the biggest supply surplus in four years.
Rising US Natural Gas Demand by Sector
U.S. Natural Gas Pipeline Exports to Mexico: “Mexico is a very fast growing Natural Gas market, and imports from the U.S. could reach 8-10% of current U.S. Production much faster than most realize.”
platts
platts
platts
platts
platts
platts
platts
Occidental Petroleum Completes Spin-off of California Resources Corporation (CRC) HOUSTON, December 1, 2014 -Occidental (NYSE:OXY) today announced it has completed the spin-off of its subsidiary California Resources Corporation (NYSE:CRC). California Resources, which begins “regular way” trading today on the New York Stock Exchange as a stand-alone company, is an independent oil and natural gas exploration and production company focused on high-growth, high-return conventional and unconventional assets exclusively in California. ROYALE ENERGY REACHES DEVELOPMENT AGREEMENT San Diego, October 8, 2015 - Royale Energy, Inc. today announced that it has reached an agreement, with a major independent exploration and production company, to develop 1,300 acres in the Sacramento Basin Grimes Field. This agreement allows Royale to drill up to three wells targeting a 3D seismically defined amplitude. The seismic event is clearly correlated to the nearby productive natural gas horizon and shows a sizable target with multiple well follow up potential. Royale is pleased to enter into the first of what it believes to be a series of development opportunities with an industry participant of this caliber. “I am excited to have the opportunity to establish a relationship of this nature,” said Stephen Hosmer, “and look forward to the reserve and production growth for both of our companies.”
Royale Strain 11-2
Wellhead
2016-A
2016-A • 3 well Drilling Project Natural Gas wells located in Sacramento Basin • 3.125 Million Dollar Project • 31.25 Units, $100,000 per unit • 1.60% ownership in each well per unit • $25,000 / ¼ Unit Minimum
2016-A
West Grimes Gas Field • Prospects • Base Map
Royale Strain 11-3 The Royale Strain 11-3 prospect is located between the West Grimes and Buckeye gas field in Colusa County, California. The Royale Strain 11-3 targets an untested amplitude 3D seismic anomaly at the northwest corner of the Buckeye Gas field. The target horizon is a prolific channelized sandstone in the middle Forbes formation that is productive in several wells located one mile north and south of the prospect. Channel sandstone plunge southward and the target anomaly is fault separated from productive intervals to the north and south. Prospect risk is considered low to moderate in consideration of the near perfect correlation between production and seismic amplitude in the West Grimes extension.
2016-A
2016-A
West Grimes Gas Field • Royale Strain 11-3
2016-A
3D Seismic Amplitude • Royale Strain 11-3
Royale Strain 11-1 The Royale Strain 11-1 prospect is located north of the Royale Strain 11-2 and Royale Strain 11-3 and targets a deeper seismic anomaly. The prospect was developed from analysis of a 3D seismic survey and is part of Royale’s recently announced joint development agreement. This prospect targets an untested high-amplitude 3D seismic anomaly at the northern extension of the Buckeye Gas field. The target horizon is a channelized middle Forbes Formation sandstone approximately 500 ft. below the prolific Strain sand. The anomaly has an elongated channel like geometry and is bounded on the north and south by faults.
2016-A
2016-A
3D Seismic Amplitude • Royale Strain 11-1
2016-A
TBD- To Be Designated Well Location
Direct Working Interest Structure þ Royale Energy owns up to 50% in each well þ All Prospects are 3-D Seismically defined and drilled in Proven Developed Fields þ Turnkey Investment drills, completes and establishes production in 3 wells
Direct Working Interest Structure þ No General & Administrative fees and No Back-ins after payout þ Royale Energy purchases insurance for unit holders and indemnifies all investors þ Monthly Income upon establishment of production paid on the 25th of every month þ Owners receive 1099 on or before Jan 31st of following year from income, No K1s
Tax Advantaged Investing: þ
80% of each investment is categorized as Intangible Drilling Costs (IDC) and can be deducted 100% against any form of income.
þ
20% of each investment is categorized as Tangible Drilling Costs (TDC) and can be depreciated, upon individual circumstances, within the first year or over several years.
þ
The "Depletion Deduction” allows 15% of the Gross Income from an oil-and gas-producing property to be tax free.
Example of Tax Savings 2016-A Project 1 Unit Drilling Investment
$100,000.00
Less:
Federal Tax Deduction (Maximum Tax Rate 35%)
$35,000.00
Less:
State Tax Deduction (where applicable) (State Tax 10%) Investment after Federal & State Tax
$10,000.00
$55,000.000
3 Independent Targets þ The 2016-A Project has 3 natural gas prospects. þ Two wells are identified: Royale Strain 11-3 and Royale Strain 11-1. þ Royale Strain 11-3 has one (PUD) Proven Undeveloped Target. þ Royale Strain 11-1 has one independent large target. þ TBD prospect will has at least one target.
3777 Willow Glen Drive El Cajon, CA 92019 (800) 447-8505 www.ROYL.com [email protected]
