Royale Energy Reports $681,951 Net Loss in Q1 2025, Revenue Declines 26%

Royale Energy, Inc. reported a net loss of $681,951 for the first quarter of 2025, a decrease from a loss of $770,110 in the same period of 2024. The company's total revenues fell by 26% to $487,773, down from $659,934 year-over-year. This decline was primarily attributed to a 29.1% decrease in oil and gas production revenues, which dropped to $456,106 from $643,665, largely due to lower production volumes caused by weather and equipment issues in its Texas operations. The average price per barrel of oil decreased slightly to $69.24, while the average price for natural gas rose to $2.68 per Mcf.

In terms of operational metrics, Royale Energy's net sales volume of oil and condensate decreased by 27.1%, totaling approximately 5,688 barrels, while natural gas sales volume fell by 30.3% to 22,767 Mcf. The company reported a significant reduction in oil and gas lease operating expenses, which decreased by 33.3% to $288,839, reflecting lower workover-related costs compared to the previous year. Additionally, the company recorded a gain of $105,494 from a vendor settlement related to equipment failure, which contributed to the reduced net loss.

Royale Energy's financial position showed a working capital deficit of $11,969,565 as of March 31, 2025, with total current assets of $9,717,825 against current liabilities of $21,687,390. The company had $1,850,831 in cash and $6,000,000 in restricted cash, indicating a slight decrease in liquidity compared to the previous quarter. The company’s accumulated deficit increased to $94,186,420, raising concerns about its ability to continue as a going concern without additional financing or operational improvements.

Strategically, Royale Energy has been focusing on cost control measures and plans to participate in drilling activities in the Permian Basin to enhance revenue generation. The company has also undergone significant restructuring, including the elimination of its Series B Convertible Preferred Stock in October 2024, which simplified its capital structure and reduced future dividend obligations. Management is optimistic that these strategic decisions, along with reduced capital expenditures, will help meet liquidity needs throughout the year.

Looking ahead, Royale Energy anticipates that increased revenues from drilling activities and operational improvements will support its financial stability. However, the company acknowledges the risks associated with fluctuating oil and gas prices and production levels, which could impact future performance. Management is committed to monitoring these factors closely and implementing necessary adjustments to ensure the company's viability in a challenging market environment.