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ROYAL RESOURCES CORPORATION
<br />PRO FORMA CONSOLIDATED BALANCE SHEET
<br />December 31, 1986 (B)
<br />(Unaudited)
<br />Assets
<br />Cach and tempuraq~ cash invesl-
<br />ntenl5 .. .. .. .... .... ........
<br />M arketable securities ....... ....
<br />Inventories .. .. ........ .
<br />Trade accounu, and other receiva-
<br />bles ............. .. .........
<br />Other ...... .. .... .. ...... ...
<br />Tntal current assets .....
<br />Property and equipment:
<br />Mining properties...........
<br />Oil & gas properties a~ full cost
<br />method .................
<br />Ocher properly Rc eyuipmeni
<br />Less accumulmed depreciation, dc-
<br />plction, amortization and valua-
<br />tion allow~:+nce ..... .........
<br />Other assets' ....... .. ... ......
<br /> Sete of Mining
<br /> Mining Properly
<br />Sale of Oil & Ges Properties Properly Acquisition
<br />Adjustments Adjustments Adjustments Combined
<br />Increase Pro Forme Increase Increase Pro Forma
<br />Historical (Decrease) Results (Decrease) (Decrease) Results
<br />E 791,572 E 3,747,000 (4) E 4,285,759 E 2,900,000 (5) E(7,600,000)(6) E3,676,771
<br />- (252,813)(2) - - 91,012 (7) -
<br />7,570 - 7,570 - - 7,570
<br />- - - - 2?2,113 (7) 222,113
<br />650,063
<br />49,141
<br />1,498,346
<br />4,925,416
<br />43,367,617
<br />865.527
<br />49,158,560
<br />- 650,067 650,063
<br />- 49,141 - 20,224 (7) 69,365
<br />3,494,187 4,992,533 2,900,000 (3,266,651) 4,625,882
<br />- 4,925,416 (4.492,986)(5) 3,755,982 (7) 4,188,410
<br />(43,367,617)(1)
<br />(47,367,617)
<br />39.920,536 (39,529,625)(1)
<br />9,238.024 (3.837,992)
<br />127,725 -
<br />E10.864,095 b (347,805)
<br />865,527 - - 865.527
<br />5,790,947 (4,492,988) 3,755.982 5,057,937
<br />390,911 790,911
<br />5,400,032 (4,492,988) 3,755,982 4,663,026
<br />127,725 - - 127,725
<br />E10,520,290 E(1,592,968) E 489,331 E9,416,637
<br />The differences between the June 30, 1986 reserves and the December 31, i98ti reserves which
<br />amounted [0 82,904 barrels and 161,748 MCF have been discussed in the reports on Form 10-Q as of
<br />September 30, 1986 and December 31, 1986. In summary, the differences are accounted for by
<br />production and revisions in previous estimates. In addition, the net present value of these reserves. which
<br />decreased by $3.5 million during the six months ended December 31, 1986, has been affected by
<br />~ production, revisions of previous estimates, and lower prices for oil and gas at December 31, 1986
<br />t compared to June 30, 1986.
<br />1
<br />K. Prior Sales of Properties
<br />Prior to the Board of Directors' decision to sell substantially all of the Company's oil and gas properties,
<br />the Company sold a portion of its oil and gas properties to Victoria on January 26, 1987 for $97,000. The
<br />portion of properties sold consists of certain undeveloped acreage, acreage with shut-in production (the
<br />Saticoy prospect) and acreage with a producing well in which the Company has an interest after payout of
<br />drilling, completion and operating costs (the East Adon prospect). On January I5, 1987 the Company sold its
<br />West Virginia producing properties to the operator of those properties, Robert B. Hicks, fur $12,500.
<br />L. Pro Forma Effect of Sale
<br />The oil and gas properties being sold represent substantially all of the assets of the Company. Pro Forma
<br />Financial Statements are presented on the following pages.
<br />
<br />
<br />The accompanying notes are an integral par! ojthese financial statements.
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