Vaughn Taylor, who won the Knoxville Open last year, opened with a 3-under-par 69. He is joined there by Kyle Thompson and James Driscoll.
Watney got going on the front nine of Diamante Golf Club with a birdie on the par-5 third. He came back with a birdie at the sixth to get to minus-2.
The Fresno State graduate stumbled to the turn as he three-putted for bogey at the ninth. He erased that error with a birdie at the 13th. Watney bounced right back to birdie No. 15 to move to minus-3.
Watney, who won the Lewis Chitengwa Memorial Championship on the Canadian Tour just after turning professional last summer, closed with a flourish. He rolled home a birdie at the par-4 17th and came right back with a 6-foot birdie at the last to finish one stroke ahead of the field.
'Starting the day, I would have taken a 5-under score 100 out of 100 times,' said Watney. 'This golf course is difficult on both nines and I certainly don't think the back side is three shots easier than the front. Coming in, I made some putts and hit some shots close.'
Lunde stumbled out of the gate with a bogey at the second. He fought back with consecutive birdies from the fifth, but that run was ended by a bogey on the seventh.
The 28-year-old capped the front nine with a birdie on No. 9 to make the turn at minus-1. He drained another birdie at the 14th before birdieing the final two holes for a share of second place.
Lile started on the back nine and was hot over his first 10 holes. He birdied four of his first five holes in addition to the 18th to make the turn at minus-5. He came right back to birdie No. 1 to climb to 6 under.
Things took a turn for the worse from there though. Lile bogeyed the second and fourth to fall to 4 under. He tried to bounce back with a birdie on the seventh but closed with a bogey on No. 9, his last.
'It was tough out there today,' said Lile, who went to the nearby University of Arkansas. 'Not to try to boost my round, but I was hitting really good shots early on, as opposed to just good shots. I do feel like I left a few out there.'
Armour also opened on the back nine and birdied two of his first three holes. He then bogeyed the 13th before parring the final five holes of the back side.
Around the turn, he fell back to even par with a bogey on the second. Armour then caught fire. He birdied the third and dropped in back-to-back birdies from the fifth. He claimed a share of second with a birdie at the eighth.
Gary Hallberg and Anthony Painter lead a group at 2-under-par 70. They are joined there by Charley Hoffman, Ben Bates, Mike Standly and Scott Sterling.
Dicky Pride and Bobby Kalinowski pace a group of 11 players tied one stroke further back at minus-1.