Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 14, 2016 | Jun. 30, 2015 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | ROYALE ENERGY INC | ||
Document Type | 10-K | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 17,616,663 | ||
Entity Public Float | $ 13,006,018 | ||
Amendment Flag | false | ||
Entity Central Index Key | 864,839 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Well-known Seasoned Issuer | No | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Cash and Cash Equivalents | $ 3,763,819 | $ 3,061,841 |
Other Receivables, net | 381,192 | 1,760,181 |
Revenue Receivables | 147,936 | 493,295 |
Prepaid Expenses | 114,036 | 158,404 |
Total Current Assets | 4,406,983 | 5,473,721 |
Other Assets | 730,844 | 510,821 |
Oil And Gas Properties (Successful Efforts Basis), Real Property and Equipment and Fixtures, net | 6,532,478 | 7,594,666 |
Total Assets | 11,670,305 | 13,579,208 |
Current Liabilities: | ||
Accounts Payable and Accrued Expenses | 2,937,226 | 4,502,559 |
Current Portion of Long-Term Debt | 30,528 | 29,031 |
Deferred Drilling Obligations | 8,415,528 | 7,937,786 |
Total Current Liabilities | 11,383,282 | 12,469,376 |
Noncurrent Liabilities: | ||
Asset Retirement Obligation | 1,096,179 | 804,206 |
Note Payable, less current portion | 1,416,325 | 1,446,853 |
Total Noncurrent Liabilities | 2,512,504 | 2,251,059 |
Total Liabilities | 13,895,786 | 14,720,435 |
Stockholders' Deficit: | ||
Convertible Preferred Stock, Series AA, No Par Value, 147,500 Shares Authorized; 46,662 Shares Issued and Outstanding, at December 31, 2015 and 2014, Respectively | 136,149 | 136,149 |
Common Stock, No Par Value, 30,000,000 Shares Authorized; 16,396,579 and 14,945,789 Shares Issued and Outstanding, at December 31, 2015 and 2014, respectively | 38,846,751 | 38,014,730 |
Paid in Capital | 425,678 | 337,640 |
Accumulated Deficit | (41,634,059) | (39,623,243) |
Accumulated Other Comprehensive Loss | 0 | (6,503) |
Total Stockholders' Deficit | (2,225,481) | (1,141,227) |
Total Liabilities and Stockholders' Deficit | $ 11,670,305 | $ 13,579,208 |
BALANCE SHEETS (Parentheticals)
BALANCE SHEETS (Parentheticals) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Convertible Preferred Stock, Series AA, no par value (in Dollars per share) | ||
Convertible Preferred Stock, Series AA, shares authorized | 147,500 | 147,500 |
Convertible Preferred Stock, Series AA, shares issued | 46,662 | 46,662 |
Convertible preferred stock, Series AA, shares outstanding | 46,662 | 46,662 |
Common stock, no par value (in Dollars per share) | ||
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 16,396,579 | 14,945,789 |
Common Stock, shares outstanding | 16,396,579 | 14,945,789 |
STATEMENTS OF COMPREHENSIVE INC
STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues: | ||
Sale of Oil and Gas | $ 1,018,928 | $ 2,598,297 |
Supervisory Fees and Other | 694,160 | 623,201 |
Total Revenues | 1,713,088 | 3,221,498 |
Costs and Expenses: | ||
General and Administrative | 3,181,571 | 3,162,113 |
Lease Operating | 1,000,769 | 1,427,673 |
Delay Rentals | 448,313 | 616,806 |
Lease Impairment | 424,163 | 268,093 |
Well Equipment Write Down | 60,960 | 0 |
Bad Debt Expense | 536,538 | 653,133 |
Legal and Accounting | 558,471 | 401,160 |
Marketing | 326,143 | 430,779 |
Depreciation, Depletion and Amortization | 400,813 | 315,574 |
Total Costs and Expenses | 6,937,741 | 7,275,331 |
Gain on Turnkey Drilling Programs | 2,330,969 | 1,640,731 |
Gain on Sale of Assets | 968,956 | 342,851 |
Loss from Operations | (1,924,728) | (2,070,251) |
Other Expense: | ||
Interest Expense | (86,088) | (81,605) |
Loss Before Income Tax Expense | (2,010,816) | (2,151,856) |
Provision for Income Taxes | 0 | 0 |
Net Loss | $ (2,010,816) | $ (2,151,856) |
Basic Loss Per Share (in Dollars per share) | $ (0.13) | $ (0.14) |
Diluted Loss Per Share (in Dollars per share) | $ (0.13) | $ (0.14) |
Other Comprehensive Income (Loss) | ||
Unrealized Loss on Equity Securities | $ 0 | $ 16,448 |
Less: Reclassification Adjustment for Losses Included in Net Income | (6,503) | 0 |
Other Comprehensive Gain (Loss) before tax | 6,503 | (16,448) |
Other Comprehensive Gain (Loss), net of tax | 6,503 | (16,448) |
Comprehensive Loss | $ (2,004,313) | $ (2,168,304) |
STATEMENTS OF STOCKHOLDERS' EQU
STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Common Stock [Member]Private Placement [Member] | Common Stock [Member]RDO Private Placement [Member] | Common Stock [Member] | Series A Preferred Stock [Member] | Additional Paid-in Capital [Member]Private Placement [Member] | Additional Paid-in Capital [Member]RDO Private Placement [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | AOCI Attributable to Parent [Member] | Private Placement [Member] | RDO Private Placement [Member] | Total |
Balance at Dec. 31, 2013 | $ 37,996,865 | $ 154,014 | $ 303,855 | $ (37,471,387) | $ 9,945 | $ 993,292 | ||||||
Balance (in Shares) at Dec. 31, 2013 | 14,942,728 | 52,784 | ||||||||||
Series AA Conversion to Common (2 for 1) | $ 17,865 | $ (17,865) | ||||||||||
Series AA Conversion to Common (2 for 1) (in Shares) | 3,061 | (6,122) | ||||||||||
Director’s Stock Option Grant | 33,785 | 33,785 | ||||||||||
Available for Sale Securities – Unrealized Gain (Loss), net of tax | (16,448) | (16,448) | ||||||||||
Net Income (Loss) | (2,151,856) | (2,151,856) | ||||||||||
Balance at Dec. 31, 2014 | $ 38,014,730 | $ 136,149 | 337,640 | (39,623,243) | (6,503) | (1,141,227) | ||||||
Balance (in Shares) at Dec. 31, 2014 | 14,945,789 | 46,662 | ||||||||||
Common Stock Private Placement | $ 534,274 | $ 153,876 | $ (44,158) | $ 45,319 | $ 490,116 | $ 199,195 | ||||||
Common Stock Private Placement (in Shares) | 701,397 | 485,486 | ||||||||||
Common Stock Issued to Executives in lieu of Compensation | $ 143,871 | 143,871 | ||||||||||
Common Stock Issued to Executives in lieu of Compensation (in Shares) | 263,907 | |||||||||||
Director’s Stock Option Grant | 86,877 | 86,877 | ||||||||||
Available for Sale Securities – Unrealized Gain (Loss), net of tax | $ 6,503 | 6,503 | ||||||||||
Net Income (Loss) | (2,010,816) | (2,010,816) | ||||||||||
Balance at Dec. 31, 2015 | $ 38,846,751 | $ 136,149 | $ 425,678 | $ (41,634,059) | $ (2,225,481) | |||||||
Balance (in Shares) at Dec. 31, 2015 | 16,396,579 | 46,662 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net (Loss) | $ (2,010,816) | $ (2,151,856) |
Adjustments to Reconcile Net Loss to Net Cash Used by Operating Activities: | ||
Depreciation, Depletion, and Amortization | 400,813 | 315,574 |
Lease Impairment | 424,163 | 268,093 |
Gain on Sale of Assets | (968,956) | (342,851) |
Gain on Turnkey Drilling Programs | (2,330,969) | (1,640,731) |
Bad Debt Expense | 536,538 | 653,133 |
Stock-Based Compensation | 230,749 | 33,785 |
Realized Loss on Equity Securities | 6,503 | 0 |
Well Equipment and Other Assets Write Down | 60,960 | 0 |
(Increase) Decrease in: | ||
Other & Revenue Receivables | 1,187,810 | (1,225,817) |
Prepaid Expenses and Other Assets | (236,615) | 16,569 |
Increase (Decrease) in: | ||
Accounts Payable and Accrued Expenses | (1,273,360) | (887,926) |
Deferred Drilling Obligations | 477,742 | 1,811,853 |
Deferred Income Taxes | 0 | (1,775) |
Net Cash Used by Operating Activities | (3,495,438) | (3,151,949) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Expenditures for Oil And Gas Properties | (3,753,134) | (3,182,600) |
Proceeds from Turnkey Drilling Programs | 4,955,734 | 4,172,296 |
Proceeds from Sale of Assets | 2,334,537 | 369,977 |
Net Cash Provided by Investing Activities | 3,537,137 | 1,359,673 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from Long-Term Debt | 0 | 0 |
Principal Payments on Long-Term Debt | (29,031) | (24,116) |
Proceeds from Stock Options and Warrant Exercises | 0 | 0 |
Proceeds from Sale of Common Stock | 689,310 | 0 |
Net Cash Provided by (Used In) Financing Activities | 660,279 | (24,116) |
Net Increase (Decrease) in Cash and Cash Equivalents | 701,978 | (1,816,392) |
Cash & Cash Equivalents at Beginning of Year | 3,061,841 | 4,878,233 |
Cash & Cash Equivalents at End of Year | 3,763,819 | 3,061,841 |
Cash Paid for Interest | 86,088 | 81,606 |
Cash Paid for Taxes | 1,000 | 3,855 |
Supplemental Schedule of Non-Cash Investing and Financing Transactions: | ||
Conversion of Series AA Stock to Common Stock | 0 | 17,865 |
Unrealized Gain (Loss) on Available-for-Sale Securities, net of tax effect | 0 | (16,448) |
Reclassification Adjustment for Losses Included in Net Income | $ (6,503) | $ 0 |
NOTE 1 - SUMMARY OF SIGNIFICANT
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies of Royale Energy, Inc. (“Royale Energy,” “Royale,” or the “Company”) is presented to assist in understanding Royale Energy's financial statements. The financial statements and notes are representations of Royale Energy's management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements. Description of Business Royale Energy is an independent oil and gas producer which also has operations in the area of turnkey drilling. Royale Energy owns wells and leases in major geological basins located primarily in California, Texas, Alaska and Utah. Royale Energy offers fractional working interests and seeks to minimize the risks of oil and gas drilling by selling multiple well drilling projects which do not include the use of debt financing. Use of Estimates The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. As reflected in the accompanying financial statements, the Company has negative working capital, losses from operations and negative cash flows from operations. Material estimates that are particularly susceptible to significant change relate to the estimate of Company oil and gas reserves prepared by an independent engineering consultant. Such estimates are subject to numerous uncertainties inherent in the estimation of quantities of proven reserves. Estimated reserves are used in the calculation of depletion, depreciation and amortization, unevaluated property costs, impairment of oil and natural gas properties, estimated future net cash flows, taxes, and contingencies. Liquidity The primary sources of liquidity have historically been issuances of common stock and operations. Until we become cash flow positive, we anticipate that our primary sources of liquidity will be from the issuance of debt and/or equity, and the sale of oil and natural gas property participation interest. Assuming there are no further changes in expected sales and expense trends subsequent to March 14, 2016, the Company believes that its cash position together with anticipated financing activities, which include the sale of our office building and land, will be sufficient to continue operations for the foreseeable next twelve months. Revenue Recognition Royale’s primary business is oil and gas production. Natural gas flows from the wells into gathering line systems, which are equipped occasionally with compressor systems, which in turn flow into metered transportation and customer pipelines. Monthly, price data and daily production are used to invoice customers for amounts due to Royale Energy and other working interest owners. Royale Energy operates virtually all of its own wells and receives industry standard operator fees. Royale Energy generally sells crude oil and natural gas under short-term agreements at prevailing market prices. Revenues are recognized when the products are delivered, which occurs when the customer has taken title and has assumed the risks and rewards of ownership, prices are fixed or determinable and collectability is reasonably assured. Revenues from the production of oil and natural gas properties in which the Royale Energy has an interest with other producers are recognized on the basis of Royale Energy’s net working interest. Differences between actual production and net working interest volumes are not significant. Royale Energy’s financial statements include its pro rata Oil and Gas Property and Equipment Depreciation, depletion and amortization, based on cost less estimated salvage value of the asset, are primarily determined under either the unit-of-production method or the straight-line method, which is based on estimated asset service life taking obsolescence into consideration. Maintenance and repairs, including planned major maintenance, are expensed as incurred. Major renewals and improvements are capitalized and the assets replaced are retired. The project construction phase commences with the development of the detailed engineering design and ends when the constructed assets are ready for their intended use. Interest costs, to the extent they are incurred to finance expenditures during the construction phase, are included in property, plant and equipment and are depreciated over the service life of the related assets. Royale Energy uses the “successful efforts” method to account for its exploration and production activities. Under this method, Royale Energy accumulates its proportionate share of costs on a well-by-well basis with certain exploratory expenditures and exploratory dry holes being expensed as incurred, and capitalizes expenditures for productive wells. Royale Energy amortizes the costs of productive wells under the unit-of-production method. Royale Energy carries, as an asset, exploratory well costs when the well has found a sufficient quantity of reserves to justify its completion as a producing well and where Royale Energy is making sufficient progress assessing the reserves and the economic and operating viability of the project. Exploratory well costs not meeting these criteria are charged to expense. Other exploratory expenditures, including geophysical costs and annual lease rentals, are expensed as incurred. Acquisition costs of proved properties are amortized using a unit-of-production method, computed on the basis of total proved oil and gas reserves. Capitalized exploratory drilling and development costs associated with productive depletable extractive properties are amortized using unit-of-production rates based on the amount of proved developed reserves of oil and gas that are estimated to be recoverable from existing facilities using current operating methods. Under the unit-of-production method, oil and gas volumes are considered produced once they have been measured through meters at custody transfer or sales transaction points at the outlet valve on the lease or field storage tank. Production costs are expensed as incurred. Production involves lifting the oil and gas to the surface and gathering, treating, field processing and field storage of the oil and gas. The production function normally terminates at the outlet valve on the lease or field production storage tank. Production costs are those incurred to operate and maintain Royale Energy’s wells and related equipment and facilities. They become part of the cost of oil and gas produced. These costs, sometimes referred to as lifting costs, include such items as labor costs to operate the wells and related equipment; repair and maintenance costs on the wells and equipment; materials, supplies and energy costs required to operate the wells and related equipment; and administrative expenses related to the production activity. Proved oil and gas properties held and used by Royale Energy are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. Royale Energy estimates the future undiscounted cash flows of the affected properties to judge the recoverability of carrying amounts. Cash flows used in impairment evaluations are developed using annually updated evaluation assumptions for crude oil commodity prices. Annual volumes are based on field production profiles, which are also updated annually. Prices for natural gas and other products are based on assumptions developed annually for evaluation purposes. Impairment analyses are generally based on proved reserves. An asset group would be impaired if the undiscounted cash flows were less than its carrying value. Impairments are measured by the amount the carrying value exceeds fair value. During 2015 and 2014, impairment losses of $424,163 and $268,093, respectively, were recorded on various capitalized lease and land costs that were no longer viable. Significant unproved properties are assessed for impairment individually, and valuation allowances against the capitalized costs are recorded based on the estimated economic chance of success and the length of time that Royale Energy expects to hold the properties. The valuation allowances are reviewed at least annually. Upon the sale or retirement of a complete field of a proved property, Royale Energy eliminates the cost from its books, and the resultant gain or loss is recorded to Royale Energy’s Statement of Operations. Upon the sale of an entire interest in an unproved property where the property has been assessed for impairment individually, a gain or loss is recognized in Royale Energy’s Statement of Operations. If a partial interest in an unproved property is sold, any funds received are accounted for as a recovery of the cost in the interest retained with any excess funds recognized as a gain. Should Royale Energy’s turnkey drilling agreements include unproved property, total drilling costs incurred to satisfy its obligations are recovered by the total funds received under the agreements. Any excess funds are recorded as a Gain on Turnkey Drilling Programs, and any costs not recovered are capitalized and accounted for under the “successful efforts” method. Royale Energy sponsors turnkey drilling agreement arrangements in unproved properties as a pooling of assets in a joint undertaking, whereby proceeds from participants are reported as Deferred Drilling Obligations, and then reduced as costs to complete its obligations are incurred with any excess booked against its property account to reduce any basis in its own interest. Gains on Turnkey Drilling Programs represent funds received from turnkey drilling participants in excess of all costs Royale incurs during the drilling programs (e.g., lease acquisition, exploration and development costs), including costs incurred on behalf of participants and costs incurred for its own account; and are recognized only upon making this determination after Royale’s obligations have been fulfilled. The contracts require the participants pay Royale Energy the full contract price upon execution of the agreement. Royale Energy completes the drilling activities typically between 10 and 30 days after drilling begins. The participant retains an undivided or proportional beneficial interest in the property, and is also responsible for its proportionate share of operating costs. Royale Energy retains legal title to the lease. The participants purchase a working interest directly in the well bore. In these working interest arrangements, the participants are responsible for sharing in the risk of development, but also sharing in a proportional interest in rights to revenues and proportional liability for the cost of operations after drilling is completed and the interest is conveyed to the participant. A certain portion of the turnkey drilling participant’s funds received are non-refundable. The company holds all funds invested as Deferred Drilling Obligations until drilling is complete. Occasionally, drilling is delayed due to the permitting process or drilling rig availability. At December 31, 2015 and 2014, Royale Energy had Deferred Drilling Obligations of $8,415,528 and $7,937,786, respectively. If Royale Energy is unable to drill the wells, and a suitable replacement well is not found, Royale would retain the non-refundable portion of the contact and return the remaining funds to the participant. Included in cash and cash equivalents are amounts for use in completion of turnkey drilling programs in progress. Losses on properties sold are recognized when incurred or when the properties are held for sale and the fair value of the properties is less than the carrying value. Cash and Cash Equivalents Cash and cash equivalents include cash on hand and on deposit, and highly liquid debt instruments with maturities of three months or less. Other Receivables Our other receivables consists of receivables from direct working interest investors and industry partners. We provide for uncollectible accounts receivable using the allowance method of accounting for bad debts. Under this method of accounting, a provision for uncollectible accounts is charged directly to bad debt expense when it becomes probable the receivable will not be collected. The allowance account is increased or decreased based on past collection history and management’s evaluation of accounts receivable. All amounts considered uncollectible are charged against the allowance account and recoveries of previously charged off accounts are added to the allowance. At December 31, 2015 and 2014, the Company established an allowance for uncollectable accounts of $2,270,773 and $1,734,713, respectively, for receivables from direct working interest investors whose expenses on non-producing wells were unlikely to be collected from revenue. Revenue Receivables Our revenue receivables consists of receivables related to the sale of our natural gas and oil. Once a production month is completed we receive payment approximately 15 to 30 days later. Equipment and Fixtures Equipment and fixtures are stated at cost and depreciated over the estimated useful lives of the assets, which range from three to seven years, using the straight-line method. Repairs and maintenance are charged to expense as incurred. When assets are sold or retired, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in income. Maintenance and repairs, which neither materially add to the value of the property nor appreciably prolong its life, are charged to expense as incurred. Gains or losses on dispositions of property and equipment, other than oil and gas, are reflected in operations. Income (Loss) Per Share Basic and diluted losses per share are calculated as follows: For the Year Ended December 31, 2015 Loss (Numerator) Shares (Denominator) Per-Share Amount Basic Loss Per Share: Net loss available to common stock $ (2,010,816 ) 15,194,534 $ (0.13 ) Loss Per Share: Effect of dilutive securities and stock options - $ - Net loss available to common stock $ (2,010,816 ) 15,194,534 $ (0.13 ) For the Year Ended December 31, 2014 Loss (Numerator) Shares (Denominator) Per-Share Amount Basic Loss Per Share: Net income available to common stock $ (2,151,856 ) 14,943,323 $ (0.14 ) Loss Per Share: Effect of dilutive securities and stock options - $ - Net loss available to common stock $ (2,151,856 ) 14,943,323 $ (0.14 ) For the years ended December 31, 2015 and 2014, Royale Energy had dilutive securities of 23,331 and 161,966, respectively. These securities were not included in the dilutive loss per share due to their antidilutive nature. Stock Based Compensation Royale Energy has a stock-based employee compensation plan, which is more fully described in Note 11. Effective January 1, 2006, the Company adopted the Compensation – Stock Compensation Topic of the FASB Accounting Standards Codification, which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. The Company uses the Black-Scholes option-pricing model to determine the fair value of stock-based awards. Income Taxes Royale utilizes the asset and liability approach to measure deferred tax assets and liabilities based on temporary differences existing at each balance sheet date using currently enacted tax rates in accordance with the Income Taxes Topic of the FASB Accounting Standards Codification. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Under the Topic, deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The provision for income taxes is based on pretax financial accounting income. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax basis of assets and liabilities and their reported net amounts. Fair Value Measurements According to Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards Codification, assets and liabilities that are measured at fair value on a recurring and nonrecurring basis in period subsequent to initial recognition, the reporting entity shall disclose information that enable users of its financial statements to assess the inputs used to develop those measurements and for recurring fair value measurements using significant unobservable inputs, the effect of the measurements on earnings for the period. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value. Carrying amounts of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate their fair values as of the balance sheet dates because of their generally short maturities. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. Level 2: Directly or indirectly observable inputs as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument. Level 3: Unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions At December 31, 2015 and 2014, Royale Energy does not have any financial assets measured and recognized at fair value on a recurring basis. The Company estimates asset retirement obligations pursuant to the provisions of FASB ASC Topic 410, " Asset Retirement and Environmental Obligations" Reclassifications Certain items in the financial statements have been reclassified to maintain consistency and comparability for all periods presented herein. Recently Issued Accounting Pronouncements The Company has reviewed the updates issued by the Financial Accounting Standards Board (FASB) during the year ended December 31, 2015. ASU 2014-15: Presentation of Financial Statements – Going Concern (Subtopic 205-40) In June 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern. Before the issuance of ASU 2014-15, there was no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. ASU 2014-15 requires management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards as specified in the guidance. ASU 2014-15 becomes effective for the annual period ending after December 15, 2016 and for annual and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the effects of adopting ASU 2014-15 on its consolidated financial statements but the adoption is not expected to have a significant impact on the Company’s consolidated financial statements. ASU 2015-14: Revenue from Contracts with Customers (Topic 606) In August 2015, the FASB issued ASU No. 2015-14, Revenue From Contracts With Customers (Topic 606)." The amendments in this ASU defer the effective date of ASU 2014-09. Public business entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is still evaluating the effect of the adoption of ASU 2014-09. ASU 2016-01: Financial Instruments – Overall – Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10) In January 2016, FASB issued ASU 2016-0,1 which requires an entity to: (i) measure equity investments at fair value through net income, with certain exceptions; (ii) present in Other Comprehensive Income the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price and; (v) assess a valuation allowance on deferred tax assets related to unrealized losses of AFS debt securities in combination with other deferred tax assets. The Update provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment and adjusted for certain observable price changes. The Update also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. The new standard becomes effective for fiscal years beginning after December 15, 2017. Early adoption is only permitted for the provision related to instrument-specific credit risk and the fair value disclosure exemption provided to nonpublic entities. The Company is currently evaluating the effects of adopting ASU 2016-01 on its consolidated financial statements but the adoption is not expected to have a significant impact on the Company’s consolidated financial statements. |
NOTE 2 - OIL AND GAS PROPERTIES
NOTE 2 - OIL AND GAS PROPERTIES, EQUIPMENT AND FIXTURES | 12 Months Ended |
Dec. 31, 2015 | |
Oil and Gas Exploration and Production Industries Disclosures [Abstract] | |
Oil and Gas Exploration and Production Industries Disclosures [Text Block] | NOTE 2 - OIL AND GAS PROPERTIES, EQUIPMENT AND FIXTURES Oil and gas properties, equipment and fixtures consist of the following at December 31: 2015 2014 Oil and Gas Producing properties, including intangible drilling costs $ 5,217,637 $ 4,920,521 Undeveloped properties 2,381,564 2,773,422 Lease and well equipment 4,339,122 4,410,120 11,938,323 12,104,063 Accumulated depletion, depreciation and amortization (7,656,731 ) (7,318,510 ) $ 4,281,592 $ 4,785,553 Commercial and Other 2015 2014 Real estate, including furniture and fixtures $ 2,266,050 $ 2,768,394 Vehicles 118,061 116,830 Furniture and equipment 1,120,760 1,114,086 3,504,871 3,999,310 Accumulated depreciation (1,253,985 ) (1,190,197 ) 2,250,886 2,809,113 $ 6,532,478 $ 7,594,666 The following sets forth costs incurred for oil and gas property acquisition and development activities, whether capitalized or expensed: 2015 2014 Acquisition - Proved $ 69,446 3,215 Acquisition- Unproved $ 113,749 84,715 Development $ 672,651 1,346,433 Exploration $ 1,845,585 2,309,105 The guidance set forth in the Continued Capitalization of Exploratory Well Costs paragraph of the Extractive Activities Topic of the FASB Accounting Standards Codification requires that we evaluate all existing capitalized exploratory well costs and disclose the extent to which any such capitalized costs have become impaired and are expensed or reclassified during a fiscal period. We did not make any additions to capitalized exploratory well costs pending a determination of proved reserves during 2015 or 2014. We did not charge any previously capitalized exploratory well costs to expense upon adoption of Topic. Undeveloped properties are not subject to depletion, depreciation or amortization. 12 Months Ended December 31, 2015 2014 Beginning balance at January 1 $ - $ - Additions to capitalized exploratory well costs pending the determination of proved reserves $ 85,640 $ 188,017 Reclassifications to wells, facilities, and equipment based on the determination of proved reserves $ (85,640 ) $ (188,017 ) Ending balance at December 31 $ - $ - Results of Operations from Oil and Gas Producing and Exploration Activities The results of operations from oil and gas producing and exploration activities (excluding corporate overhead and interest costs) for the two years ended December 31, are as follows: 2015 2014 Oil and gas sales $ 1,018,928 2,598,297 Production related costs (1,449,082 ) (2,044,479 ) Lease Impairment (424,163 ) (268,093 ) Depreciation, depletion and amortization (400,813 ) (315,574 ) Results of operations from producing and exploration activities $ (1,255,130 ) (29,849 ) Income Taxes (Benefit) - - Net Results $ (1,255,130 ) (29,849 ) |
NOTE 3 - ASSET RETIREMENT OBLIG
NOTE 3 - ASSET RETIREMENT OBLIGATION | 12 Months Ended |
Dec. 31, 2015 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Asset Retirement Obligation Disclosure [Text Block] | NOTE 3 – ASSET RETIREMENT OBLIGATION The Asset Retirement and Environmental Obligations Topic of the FASB Accounting Standards Codification requires that an asset retirement obligation (ARO) associated with the retirement of a tangible long-lived asset be recognized as a liability in the period in which it is incurred or becomes determinable (as defined by the standard), with an associated increase in the carrying amount of the related long-lived asset. The cost of the tangible asset, including the initially recognized asset retirement cost, is depreciated over the useful life of the asset. The ARO is recorded at fair value, and accretion expense will be recognized over time as the discounted liability is accreted to its expected settlement value. The fair value of the ARO is measured using expected future cash outflows discounted at the Company’s credit-adjusted risk-free interest rate. The provisions of this Topic apply to legal obligations associated with the retirement of long-lived assets that result from the acquisition, development, and operation of a long-lived asset. 2015 2014 Asset retirement obligation, Beginning of the year $ 804,206 $ 862,369 Liabilities incurred during the period 321,560 7,638 Settlements (68,360 ) (66,304 ) Accretion expense 38,773 503 Asset retirement obligation, End of year $ 1,096,179 $ 804,206 |
NOTE 4 - TURNKEY DRILLING OBLIG
NOTE 4 - TURNKEY DRILLING OBLIGATION | 12 Months Ended |
Dec. 31, 2015 | |
Deferred Revenue Disclosure [Abstract] | |
Deferred Revenue Disclosure [Text Block] | NOTE 4 - TURNKEY DRILLING OBLIGATION Royale Energy receives funds under turnkey drilling contracts, which require Royale Energy to drill oil and gas wells within a reasonable time period from the date of receipt of the funds. As of December 31, 2015 and 2014, Royale Energy had recorded deferred turnkey drilling associated with undrilled wells of $8,415,528 and $7,937,786, respectively, as a current liability. |
NOTE 5 - LONG-TERM DEBT
NOTE 5 - LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure Text Block [Abstract] | |
Long-term Debt [Text Block] | NOTE 5 - LONG-TERM DEBT 2015 2014 On December 24, 2013, Royale Energy, Inc. entered into an agreement between the Company, as buyer, and North Island Financial Credit Union as seller, for the purchase of commercial property in San Diego, California, for a purchase price of $2,000,000, of which $500,000 was paid in cash on the date of purchase, and $1,500,000 was borrowed from AmericanWest Bank, NA, with a note secured by the property being purchased. The note carries an interest rate of 5.75% until paid in full. Royale will pay this loan in 119 regular payments of $9,525 each and one balloon payment estimated at $1,150,435. Royale’s first payment was due February 1, 2014, and all subsequent payments are due on the same day of each month after that. Royale’s final payment will be due on January 1, 2024, and will be for all principal and all accrued interest not yet paid. Payments include principal and interest. Stephen M Hosmer, President, CFO is named as a personal guarantor of the loan. The loan agreement contains certain covenants that, among other things, Royale must maintain a ratio of EBITDA-Debt Service Coverage in excess of 1.50 to 1.00. At December 31, 2015, Royale was not in compliance with this covenant, but obtained a forbearance from the bank from terms of that cov enant to May 26, 2016. The Company is currently in the process of finalizing the sale of the office building and associated land, which is expected to resulting full payment of the long-term debt. However, there is no guarantee that the sale will be completed. $ 1,446,853 $ 1,475,884 Total Long Term Debt $ 1,446,853 $ 1,475,884 Less Current Maturity 30,528 $ 29,031 Long Term Debt Less Current Portion $ 1,416,325 $ 1,446,853 Maturities of long-term debt for the years subsequent to December 31, 2015 are as follows: Year Ended December 31, 2016 $ 30,528 2017 $ 32,597 2018 $ 34,549 2019 $ 36,618 Thereafter $ 1,312,561 Total $ 1,446,853 |
NOTE 6 - INCOME TAXES
NOTE 6 - INCOME TAXES | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | NOTE 6 - INCOME TAXES Deferred tax assets and liabilities reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Significant components of the Company’s deferred assets and liabilities at December 31, 2015 and 2014, respectively, are as follows: 2015 2014 Deferred Tax Assets (Liabilities): Statutory Depletion Carry Forward $ 555,093 $ 672,480 Net Operating Loss 4,651,428 4,568,737 Other 1,247,829 939,061 Share-Based Compensation 96,536 70,921 Capital Loss / AMT Credit Carry Forward 18,915 76,410 Charitable Contributions Carry Forward 21,644 16,602 Allowance for Doubtful Accounts 887,418 681,052 Oil and Gas Properties and Fixed Assets 4,980,324 4,828,214 $ 12,459,187 $ 11,853,477 Valuation Allowance (12,459,187 ) (11,853,477 ) Net Deferred Tax Asset $ - $ - Deferred Tax Assets: Current $ 150,845 $ 126,499 Non-current (150,845 ) (126,499 ) Deferred Tax Liabilities: Current Non-current Net Deferred Tax Asset $ - $ - At the end of 2014, management reviewed the realizability of the Company’s net deferred tax assets. Due to the Company’s cumulative losses in recent years, Royale and its management concluded that it is not “more-likely-than-not” its deferred tax assets will be realized. As a result, the Company recorded a full valuation allowance against the net deferred tax assets in 2014. At the end of 2015, management reviewed the reliability of the Company’s net deferred tax assets, and due to the Company’s continued cumulative losses in recent years, Royale and its management concluded it is not “more-likely-than-not” its deferred tax assets will be realized. As a result, the Company will continue to record a full valuation allowance against the deferred tax assets in 2015. The Company will assess the realizability of the deferred tax assets at least yearly and make appropriate updates as needed. The Company had statutory percentage depletion carry forwards of approximately $1.4 million at December 31, 2015. The depletion has no expiration date. The Company also has a net operating loss carry forward of approximately $11.6 million at December 31, 2015, which will begin to expire in 2027. A reconciliation of Royale Energy's provision for income taxes and the amount computed by applying the statutory income tax rates at December 31, 2014 and 2013, respectively, to pretax income is as follows: 2015 2014 Tax (benefit) computed at statutory rate of 34% $ (683,678 ) $ (731,630) Increase (decrease) in taxes resulting from: State tax / percentage depletion / other 957 - Other non-deductible expenses 1,478 1,665 Change in valuation allowance 681,243 729,965 Provision (benefit) $ - $ - The components of the Company’s tax provision are as follows: 2015 2014 Current tax provision (benefit) – federal $ - - Current tax provision (benefit) – state - - Deferred tax provision (benefit) – federal - - Deferred tax provision (benefit) – state - - Total provision (benefit) $ - - In January 2007, Royale adopted additional provisions from the Income Taxes Topic of the FASB Accounting Standards Codification, which clarified the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken or expected to be taken on a tax return. As a result of our implementation of the Topic at the time of adoption and at December 31, 2015, the Company did not recognize a liability for uncertain tax positions. Currently, the only differences between our financial statements and our income tax returns relate to normal timing differences such as depreciation, depletion and amortization, which are recorded as deferred taxes on our balance sheets. We do not expect our unrecognized tax benefits to change significantly over the next 12 months. The tax years 2011 through 2014 remain open to examination by the taxing jurisdictions in which we file income tax returns. |
NOTE 7 - SERIES AA PREFERRED ST
NOTE 7 - SERIES AA PREFERRED STOCK | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure Text Block Supplement [Abstract] | |
Preferred Stock [Text Block] | NOTE 7 - SERIES AA PREFERRED STOCK In April 1992, Royale Energy's Board of Directors authorized the sale of 147,500 shares of Series AA Convertible Preferred Stock. Holders of Series AA Convertible Preferred Stock have dividend, conversion and preference rights identical to Series A Convertible Preferred Stockholders. The Series AA Convertible Preferred Stock has a stated value of $4 per share and provides shareholders with a one-time dividend payable equal to forty cents ($0.40) per share of Series AA Convertible Preferred Stock within thirty days after the expiration of one year from the date of purchase. The dividend has been paid on all outstanding shares as of December 31, 1994. The Series AA Convertible Preferred Stock is convertible any time at the basic conversion rate of one share of common stock for two shares of Series AA Convertible Preferred Stock, subject to adjustment. Royale Energy has the option to call, at any time after six months from the issuance, the Series AA Convertible Preferred Stock at either the issue price of $4 per share plus 10%, if called within one year after issuance, or $4 per share thereafter. (Subject to the holders' conversion rights outlined above). The Series AA Convertible Preferred Stock has a liquidation preference to the common stock equal to $4 per share plus accrued dividends. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of the shares of the Series AA Convertible Preferred Stock shall be entitled to be paid out of the assets of the Corporation available for distribution to its shareholders before any payment shall be made in respect of the Corporation’s common stock, but only after payment to its creditors, an amount equal to $4.40 per share, if called within one year after issuance, or $4 per share thereafter. Holders of Series AA Convertible Preferred Stock shall have voting rights equal to the number of shares of common stock into which the Series AA Convertible Preferred Stock may be converted. The Series AA Convertible Preferred Stock does not have the right of redemption at the stockholders' option. The preferred stock is not registered under the Securities Exchange Act of 1934, and no market exists for the preferred stock. The shares of Series AA Preferred stock are convertible into shares of Royale Energy's common stock at the option of the security holder, at the rate of two shares of convertible preferred stock for each share of common stock. During the year ending December 31, 2014, there was a conversion of 6,122 Series AA Preferred shares, with a book value of $17,865, for 3,061 common shares. There were no such conversions during 2015. As of December 31, 2015 and 2014, and there were 46,662 and 46,662 shares, respectively of Series AA Preferred stock issued and outstanding. |
NOTE 8 - COMMON STOCK
NOTE 8 - COMMON STOCK | 12 Months Ended |
Dec. 31, 2015 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity Note Disclosure [Text Block] | NOTE 8 - COMMON STOCK In May 2015 and April 2014, Royale Energy entered into Sales Agreements with Roth Capital Partners, LLC (Roth), under which the Company had the ability to issue and sell shares of its common stock from time to time in an at the market equity offering program with Roth acting as the Company’s sales agent. Royale Energy sold 701,397 shares of common stock for total consideration of $556,123 under the 2015 Sales Agreement and no shares of common stock under the 2014 Sales Agreement. Both agreements have been terminated as of December 31, 2015. On November 25, 2015, Royale Energy entered into a securities purchase agreement and related agreements with a group of individual investors pursuant to a registered direct offering. Under the terms of the agreements, the investors purchased 497,948 shares of Royale’s common stock at $0.408 per share, and received warrants to purchase up to 248,973 shares (the “Warrants’) of stock at $1.00 per share for three (3) years, for a total of $203,165 in gross proceeds,. Each Warrant becomes exercisable one year from the date of issuance. Each Warrant contains customary adjustments for corporate events such as reorganizations, splits, and dividends. The fair value of each warrant was estimated on the grant date using the Black-Scholes option-pricing model. This model incorporates certain assumptions for inputs including a risk-free market interest rate, expected dividend yield of the underlying common stock, expected warrant life and expected volatility in the market value of the underlying common stock. For these warrants, the value was calculated with the following assumptions: expected volatility of 78.96%, risk-free market interest rate of 1.13%, an expected term of 1,460 days, and an exercise price of $1.00. |
NOTE 9 - OPERATING LEASES
NOTE 9 - OPERATING LEASES | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure Text Block Supplement [Abstract] | |
Commitments Disclosure [Text Block] | NOTE 9 - OPERATING LEASES Royale rents an office and yard in Woodland, CA on a month-to-month basis that currently calls for monthly payments of $500. Rental expense for the years ended December 31, 2015 and 2014 was $10,400 and $74,047 respectively. |
NOTE 10 - RELATED PARTY TRANSAC
NOTE 10 - RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | NOTE 10 - RELATED PARTY TRANSACTIONS Significant Ownership Interests As of February 23, 2016, Donald H. Hosmer, Royale Energy’s co-president and co-chief executive officer owns 8.08% of Royale Energy common stock. Donald H. Hosmer is the brother of Stephen M. Hosmer, and son of Harry E. Hosmer. Donald has participated individually in 178 wells under the 1989 policy. During 2015, Donald participated in fractional interests of two wells in the amount of $3,143 and in 2014 participated in fractional interests of four wells in the amount of $18,692. At December 31, 2015, Royale had a receivable balance of $991 due from Donald Hosmer for normal drilling and lease operating expenses. As of February 23, 2016, Stephen M. Hosmer, Royale Energy’s co-president, co-chief executive officer and chief financial officer, owns 7.89% of Royale Energy common stock. Stephen M. Hosmer is the brother of Donald H. Hosmer and son of Harry E. Hosmer. Stephen has participated individually in 178 wells under the 1989 policy. During 2015, Stephen participated in fractional interests of four wells in the amount of $4,389 and in 2014 participated in fractional interests of four wells in the amount of $7,714. At December 31, 2015, Royale had a receivable balance of $7,696 due from Stephen Hosmer for normal drilling and lease operating expenses. As of February 23, 2016, Harry E. Hosmer, Royale Energy's former president and former chief executive officer, owns 4.41% of Royale Energy common stock. Donald H. and Stephen M. Hosmer are sons of Harry E. Hosmer. Donald H. Hosmer and Stephen M. Hosmer are also officers and directors of Royale Energy. Harry Hosmer also assists Royale Energy on a consulting basis and receives $13,805 monthly for these services. During 2015, Harry Hosmer participated in fractional interests of four wells in the amount of $5,633 and in 2014 participated in fractional interests of three wells in the amount of $9,985. At December 31, 2015, Royale had a receivable balance of $4,380 due from Harry Hosmer for normal drilling and lease operating expenses. |
NOTE 11 - STOCK COMPENSATION PL
NOTE 11 - STOCK COMPENSATION PLAN | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | NOTE 11 - STOCK COMPENSATION PLAN During the Board of Directors meeting held in December 2010, directors and executive officers of Royale Energy were each granted 50,000 stock options, a total of 400,000 options, to purchase common stock at an exercise or base price of $3.25 per share. These options vested in two parts; the first 200,000 options vested on January 1, 2012; the remaining 200,000 options vested on January 1, 2013. The options were granted with a legal life of five years, and a service period of two years beginning January 1, 2012. In 2013, Royale did not recognize any compensation costs or tax effect related to this grant. During the October 10, 2014 Board of Directors meeting, directors and executive offices of Royale Energy were granted 20,000 options each, 140,000 total, to purchase common stock at an exercise price of $5.00 per share. These options were granted for a period of 3 years and will expire on December 31, 2017. These options became exercisable at 5,000 shares per period beginning October 13, 2014, January 1, 2015, April 1, 2015 and July 1 2015. During 2015 and 2014, Royale recognized compensation costs of $86,877 and $33,785, respectively, relating to this option grant. There were no stock options granted during 2015. The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model. This model incorporates certain assumptions for inputs including a risk-free market interest rate, expected dividend yield of the underlying common stock, expected option life and expected volatility in the market value of the underlying common stock. There were 0 and 140,000 options granted in the years ended December 31, 2015 and 2014, respectively. The 2014 options were granted with the following assumptions: Options 2015 2014 Expected volatility - 81.33 % Weighted-average volatility - 81.33 % Expected dividends - - Expected term (months) - 39 Risk-free rate - .57 % Since, at the time of option grant, there was currently no market for options of Royale’s common stock, expected volatilities are based on historical volatility of the Company’s common stock and other factors. The risk-free rate for the periods within the contractual life of the option is based on quoted market yields for U.S. Treasury debt securities. The expected dividend yield was zero as the Company was subject to debt covenant prohibiting the payment of dividends. Royale Energy uses historical data to estimate option exercise and board member turnover within the valuation model. Compensation expense related to stock options was recorded net of estimated forfeitures, which for options remaining at December 31, 2016, Royale expects no additional forfeitures. A summary of the status of Royale Energy's stock option plan as of December 31, 2015 and 2014, and changes during the years ending on those dates is presented below: 2015 2014 Weighted- Weighted- Average Average Exercise Exercise Shares Price Shares Price Options Outstanding and Exercisable at Beginning of Year 281,308 $ 3.47 346,308 $ 3.25 Granted or Vested 100,000 5.00 35,000 5.00 Exercised - - - - Forfeited (281,308 ) - (100,000 ) - Options Outstanding and Exercisable at Year End 100,000 $ 5.00 281,308 $ 3.47 Weighted-average Fair Value of Options Granted During the Year $ - $ - At December 31, 2015, Royale Energy’s stock price, $0.36, was less than the weighted average exercise price, and as such the outstanding and exercisable stock options had no intrinsic value. The stock options granted in 2014 have a weighted-average remaining contractual term of two years as of December 31, 2015. There were no stock options granted during 2015. A summary of the status of Royale Energy's non-vested stock options as of December 31, 2015 and 2014, and changes during the years ending on those dates is presented below: 2015 2014 Weighted- Weighted- Average Average Grant-Date Grant-Date Shares Fair Value Shares Fair Value Non-vested Stock Options Non-vested at Beginning of Year 105,000 $ 0.97 - $ - Granted - - 140,000 0.97 Reinstated - - - - Vested 90,000 0.97 35,000 0.97 Expired or Forfeited 15,000 0.97 - - Non-vested at End of Year - $ 105,000 $ 0.97 During 2015 and 2014, we recognized $86,877 and $33,785, respectively, in compensation costs for the vested stock options. |
NOTE 12 - SIMPLE IRA PLAN
NOTE 12 - SIMPLE IRA PLAN | 12 Months Ended |
Dec. 31, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Pension and Other Postretirement Benefits Disclosure [Text Block] | NOTE 12 - SIMPLE IRA PLAN In April 1998, the Company established a Simple IRA pension plan covering all employees. The Company will contribute a matching contribution to each eligible employee’s Simple IRA equal to the employee’s salary reduction contributions up to a limit of 3% of the employee’s compensation for the year. The employer contribution for the years ending December 31, 2015 and 2014, were $43,001, and $47,081 respectively. |
NOTE 13 - ENVIRONMENTAL MATTERS
NOTE 13 - ENVIRONMENTAL MATTERS | 12 Months Ended |
Dec. 31, 2015 | |
Environmental Remediation Obligations [Abstract] | |
Environmental Loss Contingency Disclosure [Text Block] | NOTE 13 - ENVIRONMENTAL MATTERS Royale Energy has established procedures for the continuing evaluation of its operations to identify potential environmental exposures and assure compliance with regulatory policies and procedures. Management monitors these laws and regulations and periodically assesses the propriety of its operational and accounting policies related to environmental issues. The nature of Royale Energy's business requires routine day-to-day compliance with environmental laws and regulations. Royale Energy incurred no material environmental investigation, compliance and remediation costs in 2015 or 2014. Royale Energy is unable to predict whether its future operations will be materially affected by these laws and regulations. It is believed that legislation and regulations relating to environmental protection will not materially affect the results of operations of Royale Energy. |
NOTE 14 - CONCENTRATIONS OF CRE
NOTE 14 - CONCENTRATIONS OF CREDIT RISK | 12 Months Ended |
Dec. 31, 2015 | |
Risks and Uncertainties [Abstract] | |
Concentration Risk Disclosure [Text Block] | NOTE 14 - CONCENTRATIONS OF CREDIT RISK The Company bids its gas sales on a month to month basis and generally sells to a single customer without commitment to future gas sales to any particular customer. The Company normally sells approximately 87% of its monthly natural gas production to one customer on a month to month basis. Since we are able to sell our natural gas to other readily available customers, the loss of any one customer would not have an adverse effect on our overall sales operations. The Company maintains cash in depository institutions that are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per institution for our interest bearing accounts in the years ended December 31, 2015, and 2014. At December 31, 2015, and 2014, the Company’s non-interest bearing accounts were fully insured by the FDIC. At December 31, 2015 and 2014, cash in banks exceeded the FDIC limits by approximately $3.4 million and $2.8 million, respectively. The Company has not experienced any losses on deposits. |
NOTE 15 - COMMITMENTS AND CONTI
NOTE 15 - COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | NOTE 15 - COMMITMENTS AND CONTINGENCIES The Company may become involved from time to time in litigation on various matters, which are routine to the conduct of its business. The Company believes that none of these actions, individually or in the aggregate, will have a material adverse effect on its financial position or results of operations, though any adverse decision in these cases or the costs of defending or settling such claims could have a material effect on its business. |
NOTE 16 - SUBSEQUENT EVENTS
NOTE 16 - SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | NOTE 16 – SUBSEQUENT EVENTS On February 11, 2016, Royale Energy, Inc. entered into a purchase and sale agreement for the sale of its corporate headquarters building located in El Cajon, California for $2.5 million. The buyer is currently conducting its due diligence process. Pursuant to the Form S-8 filed with the Securities and Exchange Commission on December 15, 2015 (File No. 333-208555), Royale Energy, Inc. has issued 1,220,084 shares of Royale Energy, Inc. common stock valued at $163,437 to its directors and offices as a portion of their compensation from January 2016 through the date of filing. The shares were valued at the closing market price on the date of grant, and were instead of their cash compensation. Since the Form S-8 was filed in December 2015, Royale has issued 1,405,821 shares of Royale Energy, Inc. common stock valued at $251,805 to it directors and officer under this registration statement. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. As reflected in the accompanying financial statements, the Company has negative working capital, losses from operations and negative cash flows from operations. Material estimates that are particularly susceptible to significant change relate to the estimate of Company oil and gas reserves prepared by an independent engineering consultant. Such estimates are subject to numerous uncertainties inherent in the estimation of quantities of proven reserves. Estimated reserves are used in the calculation of depletion, depreciation and amortization, unevaluated property costs, impairment of oil and natural gas properties, estimated future net cash flows, taxes, and contingencies. |
Liquidity Disclosure [Policy Text Block] (Deprecated 2015-01-31) | Liquidity The primary sources of liquidity have historically been issuances of common stock and operations. Until we become cash flow positive, we anticipate that our primary sources of liquidity will be from the issuance of debt and/or equity, and the sale of oil and natural gas property participation interest. Assuming there are no further changes in expected sales and expense trends subsequent to March 14, 2016, the Company believes that its cash position together with anticipated financing activities, which include the sale of our office building and land, will be sufficient to continue operations for the foreseeable next twelve months. |
Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition Royale’s primary business is oil and gas production. Natural gas flows from the wells into gathering line systems, which are equipped occasionally with compressor systems, which in turn flow into metered transportation and customer pipelines. Monthly, price data and daily production are used to invoice customers for amounts due to Royale Energy and other working interest owners. Royale Energy operates virtually all of its own wells and receives industry standard operator fees. Royale Energy generally sells crude oil and natural gas under short-term agreements at prevailing market prices. Revenues are recognized when the products are delivered, which occurs when the customer has taken title and has assumed the risks and rewards of ownership, prices are fixed or determinable and collectability is reasonably assured. Revenues from the production of oil and natural gas properties in which the Royale Energy has an interest with other producers are recognized on the basis of Royale Energy’s net working interest. Differences between actual production and net working interest volumes are not significant. Royale Energy’s financial statements include its pro rata |
Oil and Gas Properties Policy [Policy Text Block] | Oil and Gas Property and Equipment Depreciation, depletion and amortization, based on cost less estimated salvage value of the asset, are primarily determined under either the unit-of-production method or the straight-line method, which is based on estimated asset service life taking obsolescence into consideration. Maintenance and repairs, including planned major maintenance, are expensed as incurred. Major renewals and improvements are capitalized and the assets replaced are retired. The project construction phase commences with the development of the detailed engineering design and ends when the constructed assets are ready for their intended use. Interest costs, to the extent they are incurred to finance expenditures during the construction phase, are included in property, plant and equipment and are depreciated over the service life of the related assets. Royale Energy uses the “successful efforts” method to account for its exploration and production activities. Under this method, Royale Energy accumulates its proportionate share of costs on a well-by-well basis with certain exploratory expenditures and exploratory dry holes being expensed as incurred, and capitalizes expenditures for productive wells. Royale Energy amortizes the costs of productive wells under the unit-of-production method. Royale Energy carries, as an asset, exploratory well costs when the well has found a sufficient quantity of reserves to justify its completion as a producing well and where Royale Energy is making sufficient progress assessing the reserves and the economic and operating viability of the project. Exploratory well costs not meeting these criteria are charged to expense. Other exploratory expenditures, including geophysical costs and annual lease rentals, are expensed as incurred. Acquisition costs of proved properties are amortized using a unit-of-production method, computed on the basis of total proved oil and gas reserves. Capitalized exploratory drilling and development costs associated with productive depletable extractive properties are amortized using unit-of-production rates based on the amount of proved developed reserves of oil and gas that are estimated to be recoverable from existing facilities using current operating methods. Under the unit-of-production method, oil and gas volumes are considered produced once they have been measured through meters at custody transfer or sales transaction points at the outlet valve on the lease or field storage tank. Production costs are expensed as incurred. Production involves lifting the oil and gas to the surface and gathering, treating, field processing and field storage of the oil and gas. The production function normally terminates at the outlet valve on the lease or field production storage tank. Production costs are those incurred to operate and maintain Royale Energy’s wells and related equipment and facilities. They become part of the cost of oil and gas produced. These costs, sometimes referred to as lifting costs, include such items as labor costs to operate the wells and related equipment; repair and maintenance costs on the wells and equipment; materials, supplies and energy costs required to operate the wells and related equipment; and administrative expenses related to the production activity. Proved oil and gas properties held and used by Royale Energy are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. Royale Energy estimates the future undiscounted cash flows of the affected properties to judge the recoverability of carrying amounts. Cash flows used in impairment evaluations are developed using annually updated evaluation assumptions for crude oil commodity prices. Annual volumes are based on field production profiles, which are also updated annually. Prices for natural gas and other products are based on assumptions developed annually for evaluation purposes. Impairment analyses are generally based on proved reserves. An asset group would be impaired if the undiscounted cash flows were less than its carrying value. Impairments are measured by the amount the carrying value exceeds fair value. During 2015 and 2014, impairment losses of $424,163 and $268,093, respectively, were recorded on various capitalized lease and land costs that were no longer viable. Significant unproved properties are assessed for impairment individually, and valuation allowances against the capitalized costs are recorded based on the estimated economic chance of success and the length of time that Royale Energy expects to hold the properties. The valuation allowances are reviewed at least annually. Upon the sale or retirement of a complete field of a proved property, Royale Energy eliminates the cost from its books, and the resultant gain or loss is recorded to Royale Energy’s Statement of Operations. Upon the sale of an entire interest in an unproved property where the property has been assessed for impairment individually, a gain or loss is recognized in Royale Energy’s Statement of Operations. If a partial interest in an unproved property is sold, any funds received are accounted for as a recovery of the cost in the interest retained with any excess funds recognized as a gain. Should Royale Energy’s turnkey drilling agreements include unproved property, total drilling costs incurred to satisfy its obligations are recovered by the total funds received under the agreements. Any excess funds are recorded as a Gain on Turnkey Drilling Programs, and any costs not recovered are capitalized and accounted for under the “successful efforts” method. Royale Energy sponsors turnkey drilling agreement arrangements in unproved properties as a pooling of assets in a joint undertaking, whereby proceeds from participants are reported as Deferred Drilling Obligations, and then reduced as costs to complete its obligations are incurred with any excess booked against its property account to reduce any basis in its own interest. Gains on Turnkey Drilling Programs represent funds received from turnkey drilling participants in excess of all costs Royale incurs during the drilling programs (e.g., lease acquisition, exploration and development costs), including costs incurred on behalf of participants and costs incurred for its own account; and are recognized only upon making this determination after Royale’s obligations have been fulfilled. The contracts require the participants pay Royale Energy the full contract price upon execution of the agreement. Royale Energy completes the drilling activities typically between 10 and 30 days after drilling begins. The participant retains an undivided or proportional beneficial interest in the property, and is also responsible for its proportionate share of operating costs. Royale Energy retains legal title to the lease. The participants purchase a working interest directly in the well bore. In these working interest arrangements, the participants are responsible for sharing in the risk of development, but also sharing in a proportional interest in rights to revenues and proportional liability for the cost of operations after drilling is completed and the interest is conveyed to the participant. A certain portion of the turnkey drilling participant’s funds received are non-refundable. The company holds all funds invested as Deferred Drilling Obligations until drilling is complete. Occasionally, drilling is delayed due to the permitting process or drilling rig availability. At December 31, 2015 and 2014, Royale Energy had Deferred Drilling Obligations of $8,415,528 and $7,937,786, respectively. If Royale Energy is unable to drill the wells, and a suitable replacement well is not found, Royale would retain the non-refundable portion of the contact and return the remaining funds to the participant. Included in cash and cash equivalents are amounts for use in completion of turnkey drilling programs in progress. Losses on properties sold are recognized when incurred or when the properties are held for sale and the fair value of the properties is less than the carrying value. |
Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and Cash Equivalents Cash and cash equivalents include cash on hand and on deposit, and highly liquid debt instruments with maturities of three months or less. |
Receivables, Policy [Policy Text Block] | Other Receivables Our other receivables consists of receivables from direct working interest investors and industry partners. We provide for uncollectible accounts receivable using the allowance method of accounting for bad debts. Under this method of accounting, a provision for uncollectible accounts is charged directly to bad debt expense when it becomes probable the receivable will not be collected. The allowance account is increased or decreased based on past collection history and management’s evaluation of accounts receivable. All amounts considered uncollectible are charged against the allowance account and recoveries of previously charged off accounts are added to the allowance. At December 31, 2015 and 2014, the Company established an allowance for uncollectable accounts of $2,270,773 and $1,734,713, respectively, for receivables from direct working interest investors whose expenses on non-producing wells were unlikely to be collected from revenue. |
Trade and Other Accounts Receivable, Policy [Policy Text Block] | Revenue Receivables Our revenue receivables consists of receivables related to the sale of our natural gas and oil. Once a production month is completed we receive payment approximately 15 to 30 days later. |
Property, Plant and Equipment, Policy [Policy Text Block] | Equipment and Fixtures Equipment and fixtures are stated at cost and depreciated over the estimated useful lives of the assets, which range from three to seven years, using the straight-line method. Repairs and maintenance are charged to expense as incurred. When assets are sold or retired, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in income. Maintenance and repairs, which neither materially add to the value of the property nor appreciably prolong its life, are charged to expense as incurred. Gains or losses on dispositions of property and equipment, other than oil and gas, are reflected in operations. |
Earnings Per Share, Policy [Policy Text Block] | Income (Loss) Per Share Basic and diluted losses per share are calculated as follows: For the Year Ended December 31, 2015 Loss (Numerator) Shares (Denominator) Per-Share Amount Basic Loss Per Share: Net loss available to common stock $ (2,010,816 ) 15,194,534 $ (0.13 ) Loss Per Share: Effect of dilutive securities and stock options - $ - Net loss available to common stock $ (2,010,816 ) 15,194,534 $ (0.13 ) For the Year Ended December 31, 2014 Loss (Numerator) Shares (Denominator) Per-Share Amount Basic Loss Per Share: Net income available to common stock $ (2,151,856 ) 14,943,323 $ (0.14 ) Loss Per Share: Effect of dilutive securities and stock options - $ - Net loss available to common stock $ (2,151,856 ) 14,943,323 $ (0.14 ) For the years ended December 31, 2015 and 2014, Royale Energy had dilutive securities of 23,331 and 161,966, respectively. These securities were not included in the dilutive loss per share due to their antidilutive nature. |
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | Stock Based Compensation Royale Energy has a stock-based employee compensation plan, which is more fully described in Note 11. Effective January 1, 2006, the Company adopted the Compensation – Stock Compensation Topic of the FASB Accounting Standards Codification, which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. The Company uses the Black-Scholes option-pricing model to determine the fair value of stock-based awards. |
Income Tax, Policy [Policy Text Block] | Income Taxes Royale utilizes the asset and liability approach to measure deferred tax assets and liabilities based on temporary differences existing at each balance sheet date using currently enacted tax rates in accordance with the Income Taxes Topic of the FASB Accounting Standards Codification. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Under the Topic, deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The provision for income taxes is based on pretax financial accounting income. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax basis of assets and liabilities and their reported net amounts. |
Fair Value Measurement, Policy [Policy Text Block] | Fair Value Measurements According to Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards Codification, assets and liabilities that are measured at fair value on a recurring and nonrecurring basis in period subsequent to initial recognition, the reporting entity shall disclose information that enable users of its financial statements to assess the inputs used to develop those measurements and for recurring fair value measurements using significant unobservable inputs, the effect of the measurements on earnings for the period. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value. Carrying amounts of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate their fair values as of the balance sheet dates because of their generally short maturities. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. Level 2: Directly or indirectly observable inputs as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument. Level 3: Unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions At December 31, 2015 and 2014, Royale Energy does not have any financial assets measured and recognized at fair value on a recurring basis. The Company estimates asset retirement obligations pursuant to the provisions of FASB ASC Topic 410, " Asset Retirement and Environmental Obligations" |
Reclassification, Policy [Policy Text Block] | Reclassifications Certain items in the financial statements have been reclassified to maintain consistency and comparability for all periods presented herein. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recently Issued Accounting Pronouncements The Company has reviewed the updates issued by the Financial Accounting Standards Board (FASB) during the year ended December 31, 2015. ASU 2014-15: Presentation of Financial Statements – Going Concern (Subtopic 205-40) In June 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern. Before the issuance of ASU 2014-15, there was no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. ASU 2014-15 requires management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards as specified in the guidance. ASU 2014-15 becomes effective for the annual period ending after December 15, 2016 and for annual and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the effects of adopting ASU 2014-15 on its consolidated financial statements but the adoption is not expected to have a significant impact on the Company’s consolidated financial statements. ASU 2015-14: Revenue from Contracts with Customers (Topic 606) In August 2015, the FASB issued ASU No. 2015-14, Revenue From Contracts With Customers (Topic 606)." The amendments in this ASU defer the effective date of ASU 2014-09. Public business entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is still evaluating the effect of the adoption of ASU 2014-09. ASU 2016-01: Financial Instruments – Overall – Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10) In January 2016, FASB issued ASU 2016-0,1 which requires an entity to: (i) measure equity investments at fair value through net income, with certain exceptions; (ii) present in Other Comprehensive Income the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price and; (v) assess a valuation allowance on deferred tax assets related to unrealized losses of AFS debt securities in combination with other deferred tax assets. The Update provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment and adjusted for certain observable price changes. The Update also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. The new standard becomes effective for fiscal years beginning after December 15, 2017. Early adoption is only permitted for the provision related to instrument-specific credit risk and the fair value disclosure exemption provided to nonpublic entities. The Company is currently evaluating the effects of adopting ASU 2016-01 on its consolidated financial statements but the adoption is not expected to have a significant impact on the Company’s consolidated financial statements. |
NOTE 1 - SUMMARY OF SIGNIFICA24
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | Basic and diluted losses per share are calculated as follows: For the Year Ended December 31, 2015 Loss (Numerator) Shares (Denominator) Per-Share Amount Basic Loss Per Share: Net loss available to common stock $ (2,010,816 ) 15,194,534 $ (0.13 ) Loss Per Share: Effect of dilutive securities and stock options - $ - Net loss available to common stock $ (2,010,816 ) 15,194,534 $ (0.13 ) For the Year Ended December 31, 2014 Loss (Numerator) Shares (Denominator) Per-Share Amount Basic Loss Per Share: Net income available to common stock $ (2,151,856 ) 14,943,323 $ (0.14 ) Loss Per Share: Effect of dilutive securities and stock options - $ - Net loss available to common stock $ (2,151,856 ) 14,943,323 $ (0.14 ) |
NOTE 2 - OIL AND GAS PROPERTI25
NOTE 2 - OIL AND GAS PROPERTIES, EQUIPMENT AND FIXTURES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Oil and Gas Exploration and Production Industries Disclosures [Abstract] | |
Property, Plant and Equipment [Table Text Block] | Oil and gas properties, equipment and fixtures consist of the following at December 31: 2015 2014 Oil and Gas Producing properties, including intangible drilling costs $ 5,217,637 $ 4,920,521 Undeveloped properties 2,381,564 2,773,422 Lease and well equipment 4,339,122 4,410,120 11,938,323 12,104,063 Accumulated depletion, depreciation and amortization (7,656,731 ) (7,318,510 ) $ 4,281,592 $ 4,785,553 Commercial and Other 2015 2014 Real estate, including furniture and fixtures $ 2,266,050 $ 2,768,394 Vehicles 118,061 116,830 Furniture and equipment 1,120,760 1,114,086 3,504,871 3,999,310 Accumulated depreciation (1,253,985 ) (1,190,197 ) 2,250,886 2,809,113 $ 6,532,478 $ 7,594,666 |
Cost Incurred in Oil and Gas Property Acquisition, Exploration, and Development Activities Disclosure [Table Text Block] | The following sets forth costs incurred for oil and gas property acquisition and development activities, whether capitalized or expensed: 2015 2014 Acquisition - Proved $ 69,446 3,215 Acquisition- Unproved $ 113,749 84,715 Development $ 672,651 1,346,433 Exploration $ 1,845,585 2,309,105 |
Capitalized Exploratory Well Costs, Roll Forward [Table Text Block] | The guidance set forth in the Continued Capitalization of Exploratory Well Costs paragraph of the Extractive Activities Topic of the FASB Accounting Standards Codification requires that we evaluate all existing capitalized exploratory well costs and disclose the extent to which any such capitalized costs have become impaired and are expensed or reclassified during a fiscal period. We did not make any additions to capitalized exploratory well costs pending a determination of proved reserves during 2015 or 2014. We did not charge any previously capitalized exploratory well costs to expense upon adoption of Topic. Undeveloped properties are not subject to depletion, depreciation or amortization. 12 Months Ended December 31, 2015 2014 Beginning balance at January 1 $ - $ - Additions to capitalized exploratory well costs pending the determination of proved reserves $ 85,640 $ 188,017 Reclassifications to wells, facilities, and equipment based on the determination of proved reserves $ (85,640 ) $ (188,017 ) Ending balance at December 31 $ - $ - |
Results of Operations for Oil and Gas Producing Activities Disclosure [Table Text Block] | The results of operations from oil and gas producing and exploration activities (excluding corporate overhead and interest costs) for the two years ended December 31, are as follows: 2015 2014 Oil and gas sales $ 1,018,928 2,598,297 Production related costs (1,449,082 ) (2,044,479 ) Lease Impairment (424,163 ) (268,093 ) Depreciation, depletion and amortization (400,813 ) (315,574 ) Results of operations from producing and exploration activities $ (1,255,130 ) (29,849 ) Income Taxes (Benefit) - - Net Results $ (1,255,130 ) (29,849 ) |
NOTE 3 - ASSET RETIREMENT OBL26
NOTE 3 - ASSET RETIREMENT OBLIGATION (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Schedule of Change in Asset Retirement Obligation [Table Text Block] | 2015 2014 Asset retirement obligation, Beginning of the year $ 804,206 $ 862,369 Liabilities incurred during the period 321,560 7,638 Settlements (68,360 ) (66,304 ) Accretion expense 38,773 503 Asset retirement obligation, End of year $ 1,096,179 $ 804,206 |
NOTE 5 - LONG-TERM DEBT (Tables
NOTE 5 - LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure Text Block [Abstract] | |
Schedule of Long-term Debt Instruments [Table Text Block] | 2015 2014 On December 24, 2013, Royale Energy, Inc. entered into an agreement between the Company, as buyer, and North Island Financial Credit Union as seller, for the purchase of commercial property in San Diego, California, for a purchase price of $2,000,000, of which $500,000 was paid in cash on the date of purchase, and $1,500,000 was borrowed from AmericanWest Bank, NA, with a note secured by the property being purchased. The note carries an interest rate of 5.75% until paid in full. Royale will pay this loan in 119 regular payments of $9,525 each and one balloon payment estimated at $1,150,435. Royale’s first payment was due February 1, 2014, and all subsequent payments are due on the same day of each month after that. Royale’s final payment will be due on January 1, 2024, and will be for all principal and all accrued interest not yet paid. Payments include principal and interest. Stephen M Hosmer, President, CFO is named as a personal guarantor of the loan. The loan agreement contains certain covenants that, among other things, Royale must maintain a ratio of EBITDA-Debt Service Coverage in excess of 1.50 to 1.00. At December 31, 2015, Royale was not in compliance with this covenant, but obtained a forbearance from the bank from terms of that cov enant to May 26, 2016. The Company is currently in the process of finalizing the sale of the office building and associated land, which is expected to resulting full payment of the long-term debt. However, there is no guarantee that the sale will be completed. $ 1,446,853 $ 1,475,884 Total Long Term Debt $ 1,446,853 $ 1,475,884 Less Current Maturity 30,528 $ 29,031 Long Term Debt Less Current Portion $ 1,416,325 $ 1,446,853 |
Schedule of Maturities of Long-term Debt [Table Text Block] | Maturities of long-term debt for the years subsequent to December 31, 2015 are as follows: Year Ended December 31, 2016 $ 30,528 2017 $ 32,597 2018 $ 34,549 2019 $ 36,618 Thereafter $ 1,312,561 Total $ 1,446,853 |
NOTE 6 - INCOME TAXES (Tables)
NOTE 6 - INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | Significant components of the Company’s deferred assets and liabilities at December 31, 2015 and 2014, respectively, are as follows: 2015 2014 Deferred Tax Assets (Liabilities): Statutory Depletion Carry Forward $ 555,093 $ 672,480 Net Operating Loss 4,651,428 4,568,737 Other 1,247,829 939,061 Share-Based Compensation 96,536 70,921 Capital Loss / AMT Credit Carry Forward 18,915 76,410 Charitable Contributions Carry Forward 21,644 16,602 Allowance for Doubtful Accounts 887,418 681,052 Oil and Gas Properties and Fixed Assets 4,980,324 4,828,214 $ 12,459,187 $ 11,853,477 Valuation Allowance (12,459,187 ) (11,853,477 ) Net Deferred Tax Asset $ - $ - Deferred Tax Assets: Current $ 150,845 $ 126,499 Non-current (150,845 ) (126,499 ) Deferred Tax Liabilities: Current Non-current Net Deferred Tax Asset $ - $ - |
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | A reconciliation of Royale Energy's provision for income taxes and the amount computed by applying the statutory income tax rates at December 31, 2014 and 2013, respectively, to pretax income is as follows: 2015 2014 Tax (benefit) computed at statutory rate of 34% $ (683,678 ) $ (731,630) Increase (decrease) in taxes resulting from: State tax / percentage depletion / other 957 - Other non-deductible expenses 1,478 1,665 Change in valuation allowance 681,243 729,965 Provision (benefit) $ - $ - |
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] | The components of the Company’s tax provision are as follows: 2015 2014 Current tax provision (benefit) – federal $ - - Current tax provision (benefit) – state - - Deferred tax provision (benefit) – federal - - Deferred tax provision (benefit) – state - - Total provision (benefit) $ - - |
NOTE 11 - STOCK COMPENSATION 29
NOTE 11 - STOCK COMPENSATION PLAN (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | The 2014 options were granted with the following assumptions: Options 2015 2014 Expected volatility - 81.33 % Weighted-average volatility - 81.33 % Expected dividends - - Expected term (months) - 39 Risk-free rate - .57 % |
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | A summary of the status of Royale Energy's stock option plan as of December 31, 2015 and 2014, and changes during the years ending on those dates is presented below: 2015 2014 Weighted- Weighted- Average Average Exercise Exercise Shares Price Shares Price Options Outstanding and Exercisable at Beginning of Year 281,308 $ 3.47 346,308 $ 3.25 Granted or Vested 100,000 5.00 35,000 5.00 Exercised - - - - Forfeited (281,308 ) - (100,000 ) - Options Outstanding and Exercisable at Year End 100,000 $ 5.00 281,308 $ 3.47 Weighted-average Fair Value of Options Granted During the Year $ - $ - |
Schedule of Nonvested Restricted Stock Units Activity [Table Text Block] | A summary of the status of Royale Energy's non-vested stock options as of December 31, 2015 and 2014, and changes during the years ending on those dates is presented below: 2015 2014 Weighted- Weighted- Average Average Grant-Date Grant-Date Shares Fair Value Shares Fair Value Non-vested Stock Options Non-vested at Beginning of Year 105,000 $ 0.97 - $ - Granted - - 140,000 0.97 Reinstated - - - - Vested 90,000 0.97 35,000 0.97 Expired or Forfeited 15,000 0.97 - - Non-vested at End of Year - $ 105,000 $ 0.97 |
NOTE 1 - SUMMARY OF SIGNIFICA30
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items] | ||
Joint Venture, Ownership Interest | 50.00% | |
Impairment of Oil and Gas Properties | $ 424,163 | $ 268,093 |
Customer Deposits, Current | 8,415,528 | 7,937,786 |
Allowance for Doubtful Accounts Receivable | $ 2,270,773 | $ 1,734,713 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in Shares) | 23,331 | 161,966 |
Minimum [Member] | ||
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items] | ||
Property, Plant and Equipment, Useful Life | 3 years | |
Maximum [Member] | ||
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items] | ||
Property, Plant and Equipment, Useful Life | 7 years |
NOTE 1 - SUMMARY OF SIGNIFICA31
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of Earnings Per Share, Basic and Diluted - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Basic Loss Per Share: | ||
Net income (loss) available to common stock, Income | $ (2,010,816) | $ (2,151,856) |
Net income (loss) available to common stock, Shares | 15,194,534 | 14,943,323 |
Net income (loss) available to common stock, Per-Share Amount | $ (0.13) | $ (0.14) |
Loss Per Share: | ||
Effect of dilutive securities and stock options, Income | $ 0 | $ 0 |
Effect of dilutive securities and stock options, Shares | 0 | 0 |
Net income (loss) available to common stock, Income | $ (2,010,816) | $ (2,151,856) |
Net income (loss) available to common stock, Shares | 15,194,534 | 14,943,323 |
Net income (loss) available to common stock, Per-Share Amount | $ (0.13) | $ (0.14) |
NOTE 2 - OIL AND GAS PROPERTI32
NOTE 2 - OIL AND GAS PROPERTIES, EQUIPMENT AND FIXTURES (Details) - Schedule of Property, Plant and Equipment - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Oil and Gas | ||
Producing properties, including intangible drilling costs | $ 5,217,637 | $ 4,920,521 |
Undeveloped properties | 2,381,564 | 2,773,422 |
Lease and well equipment | 4,339,122 | 4,410,120 |
11,938,323 | 12,104,063 | |
Accumulated depletion, depreciation and amortization | (7,656,731) | (7,318,510) |
4,281,592 | 4,785,553 | |
Property, Plant and Equipment, Gross | 3,504,871 | 3,999,310 |
Accumulated depreciation | (1,253,985) | (1,190,197) |
2,250,886 | 2,809,113 | |
6,532,478 | 7,594,666 | |
Land, Buildings and Improvements [Member] | ||
Oil and Gas | ||
Property, Plant and Equipment, Gross | 2,266,050 | 2,768,394 |
Vehicles [Member] | ||
Oil and Gas | ||
Property, Plant and Equipment, Gross | 118,061 | 116,830 |
Furniture and Fixtures [Member] | ||
Oil and Gas | ||
Property, Plant and Equipment, Gross | $ 1,120,760 | $ 1,114,086 |
NOTE 2 - OIL AND GAS PROPERTI33
NOTE 2 - OIL AND GAS PROPERTIES, EQUIPMENT AND FIXTURES (Details) - Cost Incurred in Oil and Gas Property Acquisition, Exploration, and Development Activities Disclosure - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cost Incurred in Oil and Gas Property Acquisition, Exploration, and Development Activities Disclosure [Abstract] | ||
Acquisition - Proved | $ 69,446 | $ 3,215 |
Acquisition- Unproved | 113,749 | 84,715 |
Development | 672,651 | 1,346,433 |
Exploration | $ 1,845,585 | $ 2,309,105 |
NOTE 2 - OIL AND GAS PROPERTI34
NOTE 2 - OIL AND GAS PROPERTIES, EQUIPMENT AND FIXTURES (Details) - Capitalized Exploratory Well Costs, Roll Forward - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Capitalized Exploratory Well Costs, Roll Forward [Abstract] | ||
Beginning balance at January 1 | $ 0 | $ 0 |
Additions to capitalized exploratory well costs pending the determination of proved reserves | 85,640 | 188,017 |
Reclassifications to wells, facilities, and equipment based on the determination of proved reserves | (85,640) | (188,017) |
Ending balance at December 31 | $ 0 | $ 0 |
NOTE 2 - OIL AND GAS PROPERTI35
NOTE 2 - OIL AND GAS PROPERTIES, EQUIPMENT AND FIXTURES (Details) - Results of Operations for Oil and Gas Producing Activities Disclosure - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Results of Operations for Oil and Gas Producing Activities Disclosure [Abstract] | ||
Oil and gas sales | $ 1,018,928 | $ 2,598,297 |
Production related costs | (1,449,082) | (2,044,479) |
Lease Impairment | (424,163) | (268,093) |
Depreciation, depletion and amortization | (400,813) | (315,574) |
Results of operations from producing and exploration activities | (1,255,130) | (29,849) |
Income Taxes (Benefit) | 0 | 0 |
Net Results | $ (1,255,130) | $ (29,849) |
NOTE 3 - ASSET RETIREMENT OBL36
NOTE 3 - ASSET RETIREMENT OBLIGATION (Details) - Schedule of Change in Asset Retirement Obligation - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Schedule of Change in Asset Retirement Obligation [Abstract] | ||
Asset retirement obligation, Beginning of the year | $ 804,206 | $ 862,369 |
Liabilities incurred during the period | 321,560 | 7,638 |
Settlements | (68,360) | (66,304) |
Accretion expense | 38,773 | 503 |
Asset retirement obligation, End of year | $ 1,096,179 | $ 804,206 |
NOTE 4 - TURNKEY DRILLING OBL37
NOTE 4 - TURNKEY DRILLING OBLIGATION (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred Revenue Disclosure [Abstract] | ||
Customer Deposits, Current | $ 8,415,528 | $ 7,937,786 |
NOTE 5 - LONG-TERM DEBT (Deta
NOTE 5 - LONG-TERM DEBT (Details) - Schedule of Long-term Debt - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||
Long Term Debt | $ 1,446,853 | $ 1,475,884 |
Less Current Maturity | 30,528 | 29,031 |
Long Term Debt Less Current Portion | 1,416,325 | 1,446,853 |
Secured Debt [Member] | ||
Debt Instrument [Line Items] | ||
Long Term Debt | $ 1,446,853 | $ 1,475,884 |
NOTE 5 - LONG-TERM DEBT (De39
NOTE 5 - LONG-TERM DEBT (Details) - Schedule of Long-term Debt (Parentheticals) - Secured Debt [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | ||
Purchase Agreement, Purchase Price | $ 2,000,000 | $ 2,000,000 |
Purchase Price, Cash Paid | 500,000 | 500,000 |
Note | $ 1,500,000 | $ 1,500,000 |
Note, Interest Rate | 5.75% | 5.75% |
Note, Payment | 119 regular payments of $9,525 each and one balloon payment estimated at $1,150,435 | 119 regular payments of $9,525 each and one balloon payment estimated at $1,150,435 |
Note, First Payment | Feb. 1, 2014 | Feb. 1, 2014 |
Note, due on | Jan. 1, 2024 | Jan. 1, 2024 |
Entered into Agreement | Dec. 24, 2013 | Dec. 24, 2013 |
Loan Covenants | Royale must maintain a ratio of EBITDA-Debt Service Coverage in excess of 1.50 to 1.00. | Royale must maintain a ratio of EBITDA-Debt Service Coverage in excess of 1.50 to 1.00. |
NOTE 5 - LONG-TERM DEBT (De40
NOTE 5 - LONG-TERM DEBT (Details) - Schedule of Maturities of Long-term Debt - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Schedule of Maturities of Long-term Debt [Abstract] | ||
2,016 | $ 30,528 | |
2,017 | 32,597 | |
2,018 | 34,549 | |
2,019 | 36,618 | |
Thereafter | 1,312,561 | |
Total | $ 1,446,853 | $ 1,475,884 |
NOTE 6 - INCOME TAXES (Details)
NOTE 6 - INCOME TAXES (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Income Tax Disclosure [Abstract] | |
Deferred Tax Assets, Tax Credit Carryforwards | $ 1.4 |
Operating Loss Carryforwards | $ 11.6 |
Operating Loss Carryforwards, Expiration Date | 2,027 |
NOTE 6 - INCOME TAXES (Details
NOTE 6 - INCOME TAXES (Details) - Schedule of Deferred Tax Assets and Liabilities - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred Tax Assets (Liabilities): | ||
Statutory Depletion Carry Forward | $ 555,093 | $ 672,480 |
Net Operating Loss | 4,651,428 | 4,568,737 |
Other | 1,247,829 | 939,061 |
Share-Based Compensation | 96,536 | 70,921 |
Capital Loss / AMT Credit Carry Forward | 18,915 | 76,410 |
Charitable Contributions Carry Forward | 21,644 | 16,602 |
Allowance for Doubtful Accounts | 887,418 | 681,052 |
Oil and Gas Properties and Fixed Assets | 4,980,324 | 4,828,214 |
12,459,187 | 11,853,477 | |
Valuation Allowance | (12,459,187) | (11,853,477) |
Net Deferred Tax Asset | 0 | 0 |
Deferred Tax Assets: | ||
Current | 150,845 | 126,499 |
Non-current | (150,845) | (126,499) |
Deferred Tax Liabilities: | ||
Current | 0 | 0 |
Non-current | 0 | 0 |
Net Deferred Tax Asset | $ 0 | $ 0 |
NOTE 6 - INCOME TAXES (Detai43
NOTE 6 - INCOME TAXES (Details) - Schedule of Effective Income Tax Rate Reconciliation - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Schedule of Effective Income Tax Rate Reconciliation [Abstract] | ||
Tax (benefit) computed at statutory rate of 34% | $ (683,678) | $ (731,630) |
Increase (decrease) in taxes resulting from: | ||
State tax / percentage depletion / other | 957 | 0 |
Other non-deductible expenses | 1,478 | 1,665 |
Change in valuation allowance | 681,243 | 729,965 |
Provision (benefit) | $ 0 | $ 0 |
NOTE 6 - INCOME TAXES (Detai44
NOTE 6 - INCOME TAXES (Details) - Schedule of Effective Income Tax Rate Reconciliation (Parentheticals) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Schedule of Effective Income Tax Rate Reconciliation [Abstract] | ||
Statutory rate | 34.00% | 34.00% |
NOTE 6 - INCOME TAXES (Detai45
NOTE 6 - INCOME TAXES (Details) - Schedule of Components of Income Tax Expense (Benefit) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Schedule of Components of Income Tax Expense (Benefit) [Abstract] | ||
Current tax provision (benefit) – federal | $ 0 | $ 0 |
Current tax provision (benefit) – state | 0 | 0 |
Deferred tax provision (benefit) – federal | 0 | 0 |
Deferred tax provision (benefit) – state | 0 | 0 |
Total provision (benefit) | $ 0 | $ 0 |
NOTE 7 - SERIES AA PREFERRED 46
NOTE 7 - SERIES AA PREFERRED STOCK (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Apr. 30, 1992 | Dec. 31, 2015 | Dec. 31, 2014 | |
NOTE 7 - SERIES AA PREFERRED STOCK (Details) [Line Items] | |||
Preferred Stock, Shares Authorized | 147,500 | 147,500 | |
Conversion of Stock, Amount Issued (in Dollars) | $ 0 | $ 17,865 | |
Conversion of Stock, Shares Issued | 3,061 | ||
Preferred Stock, Shares Issued | 46,662 | 46,662 | |
Preferred Stock, Shares Outstanding | 46,662 | 46,662 | |
Series AA Preferred Stock [Member] | |||
NOTE 7 - SERIES AA PREFERRED STOCK (Details) [Line Items] | |||
Preferred Stock, Shares Authorized | 147,500 | ||
Preferred Stock, Par or Stated Value Per Share (in Dollars per share) | $ 4 | ||
Preferred Stock, Call or Exercise Features | provides shareholders with a one-time dividend payable equal to forty cents ($0.40) per share of Series AA Convertible Preferred Stock within thirty days after the expiration of one year from the date of purchase | ||
Preferred Stock, Dividend Rate, Per-Dollar-Amount (in Dollars per share) | $ 0.40 | ||
Convertible Preferred Stock, Terms of Conversion | The Series AA Convertible Preferred Stock is convertible any time at the basic conversion rate of one share of common stock for two shares of Series AA Convertible Preferred Stock, subject to adjustment. Royale Energy has the option to call, at any time after six months from the issuance, the Series AA Convertible Preferred Stock at either the issue price of $4 per share plus 10%, if called within one year after issuance, or $4 per share thereafter. | ||
Preferred Stock, Liquidation Preference Per Share (in Dollars per share) | $ 4 | ||
Preferred Stock, Redemption Terms | In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of the shares of the Series AA Convertible Preferred Stock shall be entitled to be paid out of the assets of the Corporation available for distribution to its shareholders before any payment shall be made in respect of the Corporation’s common stock, but only after payment to its creditors, an amount equal to $4.40 per share, if called within one year after issuance, or $4 per share thereafter. | ||
Conversion of Stock, Shares Converted | 6,122 | ||
Conversion of Stock, Amount Issued (in Dollars) | $ 17,865 | ||
Preferred Stock, Shares Issued | 46,662 | 46,662 | |
Preferred Stock, Shares Outstanding | 46,662 | 46,662 |
NOTE 8 - COMMON STOCK (Details)
NOTE 8 - COMMON STOCK (Details) - USD ($) | Nov. 25, 2015 | Dec. 31, 2015 | Dec. 31, 2014 |
Sales Agreements [Member] | |||
NOTE 8 - COMMON STOCK (Details) [Line Items] | |||
Stock Issued During Period, Shares, New Issues | 701,397 | 0 | |
Stock Issued During Period, Value, New Issues (in Dollars) | $ 556,123 | ||
Securities Purchase Agreement [Member] | |||
NOTE 8 - COMMON STOCK (Details) [Line Items] | |||
Stock Issued During Period, Shares, New Issues | 497,948 | ||
Shares Issued, Price Per Share (in Dollars per share) | $ 0.408 | ||
Class of Warrant or Rights, Granted | 248,973 | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share) | $ 1 | ||
Warrant Term | 3 years | ||
Proceeds from Issuance or Sale of Equity (in Dollars) | $ 203,165 | ||
Warrants, Vesting Term | 1 year | ||
Fair Value Assumptions, Expected Volatility Rate | 78.96% | ||
Fair Value Assumptions, Risk Free Interest Rate | 1.13% | ||
Fair Value Assumptions, Expected Term | 1460 days |
NOTE 9 - OPERATING LEASES (Deta
NOTE 9 - OPERATING LEASES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
NOTE 9 - OPERATING LEASES (Details) [Line Items] | ||
Description of Lessee Leasing Arrangements, Operating Leases | month-to-month basis | |
Operating Leases, Rent Expense | $ 10,400 | $ 74,047 |
Operating Lease, Office Space, Woodland [Member] | ||
NOTE 9 - OPERATING LEASES (Details) [Line Items] | ||
Operating Leases, Rent Expense, Minimum Rentals | $ 500 |
NOTE 10 - RELATED PARTY TRANS49
NOTE 10 - RELATED PARTY TRANSACTIONS (Details) | 12 Months Ended | |
Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Donald H. Hosmer, co-president and co-chief executive officer [Member] | ||
NOTE 10 - RELATED PARTY TRANSACTIONS (Details) [Line Items] | ||
Equity Method Investment, Ownership Percentage | 8.08% | |
Number of Wells, Participated Individually | 178 | |
Number of Wells with Fractional Interest | 2 | 4 |
Wells, Fractional Interest, Value (in Dollars) | $ 3,143 | $ 18,692 |
Due from Related Parties (in Dollars) | $ 991 | |
Stephen M. Hosmer, co-president, co-chief executive officer and chief financial officer [Member] | ||
NOTE 10 - RELATED PARTY TRANSACTIONS (Details) [Line Items] | ||
Equity Method Investment, Ownership Percentage | 7.89% | |
Number of Wells, Participated Individually | 178 | |
Number of Wells with Fractional Interest | 4 | 4 |
Wells, Fractional Interest, Value (in Dollars) | $ 4,389 | $ 7,714 |
Due from Related Parties (in Dollars) | $ 7,696 | |
Harry E. Hosmer, former president and former chief executive officer [Member] | ||
NOTE 10 - RELATED PARTY TRANSACTIONS (Details) [Line Items] | ||
Equity Method Investment, Ownership Percentage | 4.41% | |
Number of Wells with Fractional Interest | 4 | 3 |
Wells, Fractional Interest, Value (in Dollars) | $ 5,633 | $ 9,985 |
Due from Related Parties (in Dollars) | 4,380 | |
Related Party Transaction, Amounts of Transaction (in Dollars) | $ 13,805 |
NOTE 11 - STOCK COMPENSATION 50
NOTE 11 - STOCK COMPENSATION PLAN (Details) - USD ($) | Oct. 10, 2014 | Jan. 01, 2013 | Jan. 01, 2012 | Dec. 31, 2010 | Dec. 31, 2015 | Dec. 31, 2014 |
NOTE 11 - STOCK COMPENSATION PLAN (Details) [Line Items] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 140,000 | 100,000 | 35,000 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | 90,000 | 35,000 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% | 0.00% | ||||
Share Price (in Dollars per share) | $ 0.36 | |||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options (in Dollars) | $ 86,877 | |||||
Allocated Share-based Compensation Expense (in Dollars) | $ 33,785 | |||||
Employee Stock Option [Member] | ||||||
NOTE 11 - STOCK COMPENSATION PLAN (Details) [Line Items] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 20,000 | 400,000 | 0 | |||
undefined (in Dollars per share) | $ 5 | $ 3.25 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 3 years | 5 years | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period | 2 years | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Date | Dec. 31, 2017 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights | These options became exercisable at 5,000 shares per period beginning October 13, 2014, January 1, 2015, April 1, 2015 and July 1 2015. | |||||
Share-based Compensation (in Dollars) | $ 86,877 | $ 33,785 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% | |||||
Employee Stock Option [Member] | 2014 Stock Options [Member] | ||||||
NOTE 11 - STOCK COMPENSATION PLAN (Details) [Line Items] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 2 years | |||||
Employee Stock Option [Member] | Options granted to each director and executive officer [Member] | ||||||
NOTE 11 - STOCK COMPENSATION PLAN (Details) [Line Items] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 50,000 | 140,000 | ||||
Employee Stock Option [Member] | Share-based Compensation Award, Tranche One [Member] | ||||||
NOTE 11 - STOCK COMPENSATION PLAN (Details) [Line Items] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | 200,000 | |||||
Employee Stock Option [Member] | Share-based Compensation Award, Tranche Two [Member] | ||||||
NOTE 11 - STOCK COMPENSATION PLAN (Details) [Line Items] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | 200,000 |
NOTE 11 - STOCK COMPENSATION 51
NOTE 11 - STOCK COMPENSATION PLAN (Details) - Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Abstract] | ||
Expected volatility | 0.00% | 81.33% |
Weighted-average volatility | 0.00% | 81.33% |
Expected dividends | 0.00% | 0.00% |
Expected term (months) | 0 years | 39 years |
Risk-free rate | 0.00% | 0.57% |
NOTE 11 - STOCK COMPENSATION 52
NOTE 11 - STOCK COMPENSATION PLAN (Details) - Schedule of Share-based Compensation, Stock Options, Activity - $ / shares | Oct. 10, 2014 | Dec. 31, 2015 | Dec. 31, 2014 |
Options | |||
Outstanding and Exercisable at Beginning of Year (in Shares) | 281,308 | 346,308 | |
Outstanding and Exercisable at Beginning of Year | $ 3.47 | $ 3.25 | |
Granted or Vested (in Shares) | 140,000 | 100,000 | 35,000 |
Granted or Vested | $ 5 | $ 5 | |
Exercised (in Shares) | 0 | 0 | |
Exercised | $ 0 | $ 0 | |
Forfeited (in Shares) | (281,308) | (100,000) | |
Forfeited | $ 0 | $ 0 | |
Options Outstanding and Exercisable at Year End (in Shares) | 100,000 | 281,308 | |
Options Outstanding and Exercisable at Year End | $ 5 | $ 3.47 | |
Weighted-average Fair Value of Options Granted During the Year | $ 0 | $ 0 | |
Outstanding and Exercisable at Beginning of Year (in Shares) | 281,308 | ||
Outstanding and Exercisable at Beginning of Year | $ 3.47 |
NOTE 11 - STOCK COMPENSATION 53
NOTE 11 - STOCK COMPENSATION PLAN (Details) - Schedule of Nonvested Restricted Stock Units Activity - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Non-vested Stock Options | ||
Non-vested at Beginning of Year | 105,000 | 0 |
Non-vested at Beginning of Year (in Dollars per share) | $ 0.97 | $ 0 |
Granted | 0 | 140,000 |
Granted (in Dollars per share) | $ 0 | $ 0.97 |
Reinstated | 0 | 0 |
Reinstated (in Dollars per share) | $ 0 | $ 0 |
Vested | 90,000 | 35,000 |
Vested (in Dollars per share) | $ 0.97 | $ 0.97 |
Expired or Forfeited | 15,000 | 0 |
Expired or Forfeited (in Dollars per share) | $ 0.97 | $ 0 |
Non-vested at End of Year | 0 | 105,000 |
Non-vested at End of Year (in Dollars per share) | $ 0.97 |
NOTE 12 - SIMPLE IRA PLAN (Deta
NOTE 12 - SIMPLE IRA PLAN (Details) - Pension Plan [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
NOTE 12 - SIMPLE IRA PLAN (Details) [Line Items] | ||
Defined Contribution Plan, Maximum Annual Contributions Per Employee, Percent | 3.00% | 3.00% |
Defined Contribution Plan, Cost Recognized | $ 43,001 | $ 47,081 |
NOTE 14 - CONCENTRATIONS OF C55
NOTE 14 - CONCENTRATIONS OF CREDIT RISK (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
NOTE 14 - CONCENTRATIONS OF CREDIT RISK (Details) [Line Items] | ||
Cash, FDIC Insured Amount | $ 250,000 | $ 250,000 |
Cash, Uninsured Amount | $ 3,400,000 | $ 2,800,000 |
Customer A [Member] | Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | ||
NOTE 14 - CONCENTRATIONS OF CREDIT RISK (Details) [Line Items] | ||
Concentration Risk, Percentage | 87.00% |
NOTE 16 - SUBSEQUENT EVENTS (De
NOTE 16 - SUBSEQUENT EVENTS (Details) - USD ($) | 2 Months Ended | 12 Months Ended | |
Mar. 14, 2016 | Dec. 31, 2015 | Feb. 11, 2016 | |
Directors and Officers [Member] | |||
NOTE 16 - SUBSEQUENT EVENTS (Details) [Line Items] | |||
Stock Issued During Period, Shares, Share-based Compensation, Gross (in Shares) | 1,220,084 | ||
Stock Issued During Period, Value, Share-based Compensation, Gross | $ 163,437 | ||
Directors and Officers [Member] | Subsequent Event [Member] | |||
NOTE 16 - SUBSEQUENT EVENTS (Details) [Line Items] | |||
Stock Issued During Period, Shares, Share-based Compensation, Gross (in Shares) | 1,405,821 | ||
Stock Issued During Period, Value, Share-based Compensation, Gross | $ 251,805 | ||
Building [Member] | Subsequent Event [Member] | |||
NOTE 16 - SUBSEQUENT EVENTS (Details) [Line Items] | |||
Assets Held-for-sale, Not Part of Disposal Group | $ 2,500,000 |