Amendment to Merger Agreement

On March 31, 2017, Royale Energy, Inc., (Royale), entered into
Amendment No. 1 (the Amendment) to the Amended and Restated
Agreement and Plan of Merger and Reorganization dated December
31, 2016 (the Merger Agreement), among Royale, Royale Energy
Holdings, Inc., Royale Merger Sub, Inc., Matrix Merger Sub, Inc.,
and Matrix Oil Management Corporation (Matrix).

The Amendment adopts three material changes to the Merger
Agreement. First, the Amendment extends the outside termination
date for the merger from March 31, 2017, to June 30, 2017. 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 Merger
Agreement.

Second, Royale has agreed to pay $100,000 to Matrix to help
defray Matrixs legal fees incurred in connection with the Merger
Agreement. The Amendment also provides for a $100,000 termination
fee to be paid from Matrix to Royale if Royale or Matrix
terminates the Merger Agreement and the termination is not due to
the failure of Matrix to perform or comply with any of its
covenants or agreements to be performed under the Merger
Agreement.

Third, the Amendment deletes a condition to closing of the Merger
Agreement which required Royale to have cash in excess of 65% of
Royales deferred drilling obligations immediately prior to the
closing of the merger. 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.

The preceding is a summary of the material provisions of the
Amendment and is qualified in its entirety by reference to the
complete text of the Amendment filed as Exhibit 2.1 to this
Current Report on Form 8-K and incorporated by reference herein.

Forward-Looking Statements

This current report contains 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 Matrixs 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. Royales 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: