Royale Energy, Inc. (ROYL) presents a deeply negative liquidation posture as of September 30, 2025. Total assets of $15.4M face total liabilities at face value of $29.4M, producing a GAAP stockholders' deficit of $(14.0M). Under liquidation haircuts, recovery is materially worse. Applying standard haircuts: cash $0.8M at 100% = $0.8M; restricted cash $5.5M at 100% = $5.5M (though $5.5M is earmarked for turnkey drilling obligations, creating a direct offset against the $14.0M Deferred Drilling Obligations liability — this cash is not freely available to general creditors); receivables ($1.2M gross, net of $2.3M allowance already applied) at 90-95% = ~$1.1M; prepaid/deferred costs $1.3M at 0-10% = ~$0.1M; oil and gas properties net $5.9M at 50-60% distressed E&P asset recovery = ~$3.0-3.5M; ROU asset $0.2M at 0%; other noncurrent assets $0.6M at 0-20% = ~$0.1M. Estimated gross liquidation recovery: approximately $10.6-11.1M. Against face-value liabilities of $29.4M, equity recovery is approximately $(18.3-18.8M) — consistent with MFFAIS CLV of $(20.3M). The dominant liability is Deferred Drilling Obligations of $14.0M (current), which increased $2.5M from $11.5M at December 31, 2024. These are advance payments from turnkey drilling participants; if wells are not drilled, a portion is refundable. On wind-down, the full $14.0M would likely be claimable by participants, though the non-refundable portion is not disclosed separately in the XBRL tags. The $5.5M restricted cash directly backs a portion of this obligation. Asset Retirement Obligations total $5.1M ($1.0M current, $4.1M noncurrent), unchanged materially from prior quarter, and represent real plug-and-abandonment cash costs that do not extinguish on liquidation. Notes payable (noncurrent) rose to $4.1M from $3.5M, driven by a $500K additional advance in August 2025 on the CEO-controlled Walou Investments secured term loan at 15% (reduced from 18%), now due April 2027 — a related-party instrument secured by Ector County oil and gas assets. Working capital deficit widened to $(12.2M) from $(10.0M) at December 31, 2024. The going concern disclosure is explicit. The company also discloses a material weakness in internal controls over financial reporting as of September 30, 2025. A prior-quarter reclassification error of $390K was corrected in Q3 2025 as an out-of-period adjustment with no net income impact. The Pradera Fuego asset acquisition ($1.5M, September 3, 2025) added to proved property but increases ARO exposure. Filing does not separately XBRL-tag the non-refundable portion of Deferred Drilling Obligations or the specific face value of the Senior Unsecured Promissory Notes from the October 2024 restructuring (approximately $1.85M) versus the Walou secured note ($1.9M face); the combined LongTermNotesPayable of $4.1M covers both but they are not disaggregated in XBRL.
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