UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report: December 28, 2017

(Date of earliest event reported)

Royale Energy, Inc.

(Exact name of registrant as specified in its charter)

1870 Cordell Court, Suite 210

El Cajon, California 92020

(Address of principal executive offices) (Zip Code)

(619) 383-6600

 (Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Item 1.01.                      Entry into a Material Definitive Agreement.

Royale Energy, Inc., (“Royale”), and Royale Energy Holdings, Inc., Royale Merger Sub, Inc., Matrix Merger Sub, Inc., and Matrix Oil Management Corporation (“Matrix”) have adopted an amendment to the amended and restated Agreement and Plan of Merger and Reorganization dated December 31, 2016 (the “Amended and Restated Merger Agreement”).  The amendment extends the outside termination date for the merger from December 31, 2017, to January 31, 2018.  The outside termination date is the date, after which, either Royale or Matrix may terminate the Merger Agreement if it has not yet been closed and the failure to close is not due to the failure of the terminating party to perform or comply with any of its covenants or agreements to be performed under the Amended and Restated Merger Agreement.

The complete text of the Amendment filed as Exhibit 2.1 to this Current Report on Form 8-K and incorporated by reference herein.

Item 8.01                      Other Information

On December 28, 2017, Royale issued a press release announcing entry of the amendment to the merger agreement.  The press release, which is attached as Exhibit 99.1 to this Current Report, also states that Royale Energy Holdings, Inc. (“Holdings”) has entered into a non-binding letter of intent with a Dallas, Texas based private equity firm for up to $24 million in a new series of convertible preferred stock, and signed a non-binding term sheet from a traditional commercial lender for a $17.5 million senior secured credit facility backed by the assets of the merged companies. The financing transactions are subject to satisfactory negotiation of the definitive agreements and completion of due diligence.  The gross proceeds of up to $41.5 million from the issuance of the new convertible preferred stock and the new credit facility will be used to repay and replace Matrix’s lenders, fund the acquisition of the additional 50% working interest in Sansinena Field, and fund planned drilling and development activities for 2018. There can be no assurances that either of the financing transactions or the Merger Agreement will close.

This current report and exhibits contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended. Statements that are not strictly historical statements constitute forward-looking statements and may often, but not always, be identified by the use of such words such as “expects,” “believes,” “intends,” “anticipates,” “plans,” “estimates,” “potential,” “possible,” or “probable” or statements that certain actions, events or results “may,” “will,” “should,” or “could” be taken, occur or be achieved. The forward-looking statements include statements about future operations, estimates of reserve and production volumes and the anticipated timing for closing the proposed merger. Forward-looking statements are based on current expectations and assumptions and analyses made by Royale and Matrix in light of experience and perception of historical trends, current conditions and expected future developments, as well as other factors appropriate under the circumstances. However, whether actual results and developments will conform with expectations is subject to a number of risks and uncertainties, including but not limited to:  the possibility that the companies may be unable to obtain stockholder or limited partner approval or satisfy the other conditions to closing; the possibility that the companies may be unable to obtain the consent of Matrix’s senior secured lender; that problems may arise in the integration of the businesses of the two companies; that the acquisition may involve unexpected costs; the risks of the oil and gas industry (for example, operational risks in exploring for, developing and producing crude oil and natural gas); risks and uncertainties involving geology of oil and gas deposits; the uncertainty of reserve estimates; revisions to reserve estimates as a result of changes in commodity prices; the uncertainty of estimates and projections relating to future production, costs and expenses; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; health, safety and environmental risks and risks related to weather; further declines in oil and gas prices; inability of management to execute its plans to meet its goals, shortages of drilling equipment, oil field personnel and services, unavailability of gathering systems, pipelines and processing facilities and the possibility that government policies may change. Royale’s annual report on Form 10-K for the year ended December 31, 2016, recent current reports on Form 8-K, and other SEC filings

 

 

 

discuss some of the important risk factors identified that may affect its business, results of operations, and financial condition. Royale and Matrix undertake no obligation to revise or update publicly any forward-looking statements, except as required by law.

Item 9.01.                      Financial Statements and Exhibits.

(d)            Exhibits .

The following exhibits are filed with this Current Report on Form 8-K:

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.