~ Strategic Efforts Drive Full Year 2022
Increase of 46% in Net Production and 27% in Year-End Proved
Reserves ~
Empire Petroleum (NYSE American: EP) (“Empire” or the
“Company”), today announced operational and financial results for
the fourth quarter and full year of 2022, including year-end 2022
proved reserves.
KEY 2022 AND RECENT HIGHLIGHTS
- Increased full year net sales volumes by 46% to 2,163 barrels
of oil equivalent per day (“Boe/d”) (61% oil, 20% natural gas
liquids (“NGLs”) and 19% natural gas) from 1,479 Boe/d (62% oil,
19% NGLs, and 19% natural gas) for full year 2021;
- Higher net sales volumes and pricing drove a 95% increase in
revenue to $52.9 million for full year 2022 that resulted in net
income of $7.1 million, or $0.30 per diluted share, and adjusted
net income1 of $15.0 million, or $0.64 per diluted share;
- Reported fourth quarter revenue of $10.7 million, a net loss of
$2.3 million, or $0.10 per diluted share, and adjusted net income
of $0.1 million;
- Increased adjusted EBITDA1 by more than three times to $19.1
million for full year 2022;
- Recorded fourth quarter 2022 adjusted EBITDA of $1.3
million;
- Ended 2022 in a strong financial position with $12.2 million of
liquidity (including $11.9 million of cash) and working capital of
$5.1 million;
- Reduced debt 16% from $8.6 million at year-end 2021 to $7.2
million at year-end 2022, which represents less than three percent
of current market capitalization;
- Grew year-end 2022 proved reserves by 27% to 13.2 million
barrels of oil equivalent (“MMBoe”), and increased the standardized
measure of SEC proved reserves discounted at 10% by 57% to $147.7
million from $93.9 million at year-end 2021;
- Benefitted from positive revisions of previous quantity
estimates of 2.2 MMBoe due primarily to the inclusion of NGLs in
New Mexico, extensions and discoveries of 0.7 MMBoe, and
acquisitions of 0.7 MMBoe. Partially offsetting the additions was
0.8 MMBoe of production;
- All of Empire’s year-end 2022 proved reserves were classified
as proved developed producing;
- Continued to make significant progress on the Empire-operated
Starbuck Field Pilot Project Program (the “Starbuck Program”) in
North Dakota, including beginning the waterflood conformance phase,
re-perforating and stimulating productive intervals to ensure
maximum hydrocarbon recovery, successful execution of seven
sidetracks, and final completion of certain surface facility
upgrades that began in 2021;
- Completed a pilot drilling program on four wells in the fourth
quarter of 2022, with three of the four wells completed and placed
on production during the first quarter of 2023;
- Initial field production has increased from 3,000 barrels of
oil per month to 7,000 barrels of oil per month and the Company
anticipates further production increases in 2023;
- Empire owns a 96% working interest and 82.6% net revenue
interest in the Starbuck Program; and
- Completed and placed on production four new non-operated Bakken
wells during the fourth quarter of 2022.
1 Adjusted Net Income, EBITDA and Adjusted EBITDA are non-GAAP
financial measures. See “Non-GAAP Information” section later in
this release for more information including reconciliations to the
most comparable GAAP measure.
MANAGEMENT COMMENTARY
Mike Morrisett, President and Chief Executive Officer of Empire,
commented, “2022 was an outstanding year for Empire across the
board, and I want to thank our workforce and business partners for
their hard work and strong execution throughout the year. The
result was increased levels of production, revenue, net income,
adjusted net income and adjusted EBITDA. Supporting our efforts is
a well-designed business plan that we will continue to utilize as
we move further into growing our production organically to drive
enhanced cash flow generation and further shareholder value.”
Mr. Morrisett concluded, “The assets we acquired over the past
several years place us in a great position to launch our 2023
capital spending program, which is designed to strategically invest
capital in our highest rate-of-return projects. We plan to
primarily focus our initial capital investments on our asset base
in North Dakota through a combination of activities, including
drilling and completions, capital workovers, recompletions and
related infrastructure. In support of these efforts, we are adding
to the depth of our technical and operations teams through the
hiring of experienced professionals with a proven history of
success. I look forward to working closely with our expanded team
as we execute our 2023 capital spending program and further build
the business.”
FINANCIAL AND OPERATIONAL RESULTS FOR FOURTH QUARTER
2022
% Change
% Change
Q4 2022 vs.
Q4 2022 vs.
Q4 2022
Q3 2022
Q3 2022
Q4 2021
Q4 2021
Net sales (Boe/d)
2,149
2,232
(4
%)
2,107
2
%
Net sales (Boe)
197,712
205,380
(4
%)
193,877
2
%
Realized price ($/Boe)
$
55.59
$
68.03
(18
%)
$
55.27
1
%
Revenue ($M)
$
10,728
$
14,038
(24
%)
$
10,722
0
%
Net (loss) income ($M)
$
(2,290)
$
216
n/a
$
(8,620)
n/a
Adjusted net income ($M)
$
150
$
3,747
(96
%)
$
(5)
n/a
Adjusted EBITDA ($M)
$
1,308
$
4,799
(73
%)
$
2,114
(38
%)
Net sales for the fourth quarter of 2022 were 2,149 Boe/d,
including 1,322 barrels of oil per day; 425 barrels of NGLs per
day, and 2,411 thousand cubic feet per day (“Mcf/d”), or 402 Boe/d,
of natural gas. Contributing to the sequential decrease from the
third quarter of 2022 was temporary downtime due to the impact of
severe winter storms across the Company’s operations and shut-ins
of production for Empire’s assets in the Rockies Region primarily
associated with taking certain wells offline temporarily as the
Company completed the execution of the Starbuck Program.
Empire reported $10.7 million of revenue for the fourth quarter
of 2022 versus $14.0 million for the third quarter of 2022.
Contributing to the decline was the aforementioned decrease in net
sales volumes and lower realized pricing as compared to the third
quarter.
Lease operating expenses for the fourth quarter of 2022 were
$6.6 million compared to $7.8 million for the third quarter of
2022. Included in the third quarter was a $1.4 million non-cash
write-off associated with the Company’s joint development agreement
with Petroleum & Independent Exploration, LLC and related
entities (“PIE”).
Production and ad valorem taxes for the fourth quarter of 2022
were $0.8 million versus $1.1 million for third quarter 2022.
Primarily driving the sequential decrease was lower product
revenues.
General and administrative expenses, excluding share-based
compensation expense, was $2.7 million, or $13.65 per Boe, in the
fourth quarter of 2022 versus $2.0 million, or $9.93 per Boe, for
the third quarter of 2022.
Other income for the fourth quarter of 2022 was $0.3 million
compared to other expense of $1.1 million in the third quarter of
2022. Included in the third quarter was a non-cash $1.4 million
settlement related to the purchase of Empire’s New Mexico
assets.
Empire recorded a net loss for the fourth quarter of $2.3
million, or $0.10 per diluted share, versus net income of $0.2
million, or $0.01 per diluted share, in the third quarter of 2022.
Contributing to the sequential decrease was lower overall net sales
volumes and realized pricing and a $0.9 million impairment recorded
in the fourth quarter of 2022 associated with the Company’s
Louisiana properties. In addition, included in third quarter net
income was the previously discussed non-cash $1.4 million PIE
write-off and non-cash $1.4 million settlement related to the
purchase of the Company’s New Mexico assets.
The Company posted adjusted net income for the fourth quarter of
2022 of $0.1 million, or $0.01 per diluted share, versus adjusted
net income of $3.7 million, or $0.16 per diluted share, in the
third quarter of 2022, with the decrease substantially due to lower
realized pricing and net sales during the fourth quarter.
Adjusted EBITDA was $1.3 million for the fourth quarter compared
to $4.8 million in the third quarter of 2022, with the decrease
substantially due to lower realized pricing and net sales during
the fourth quarter.
CAPITAL SPENDING, BALANCE SHEET & LIQUIDITY
For the twelve months ended December 31, 2022, the Company
invested approximately $14 million in capital expenditures,
including approximately $3 million related to acquisitions.
Non-acquisition spending of approximate $11 million was primarily
related to well enhancement projects in North Dakota and
non-operated drilling.
Total liquidity at the end of the fourth quarter of 2022 was
$12.2 million, including $11.9 million of cash and $0.3 million
available on the Company’s Credit Facility. As of December 31,
2022, the Company had total debt of $7.2 million and working
capital of $5.1 million, which was almost five times higher than
its working capital position of $1.1 million at December 31, 2021.
The Company reduced debt 16% from $8.6 million at year-end 2021 to
$7.2 million at year-end 2022. Empire remains squarely focused on
continuing to execute on its proven strategy to remain financially
conservative as it evaluates additional opportunities to prudently
invest in its current business and expand through targeted
acquisitions that provide long-term value for its shareholders.
FINANCIAL AND OPERATIONAL RESULTS FOR FULL YEAR 2022
% Change
FY 2022 vs.
FY 2022
FY 2021
FY 2021
Net sales (Boe/d)
2,163
1,479
46
%
Net sales (Boe)
789,568
539,797
46
%
Realized price ($/Boe)
$
67.34
$
50.95
32
%
Revenue ($M)
$
52,887
$
27,092
95
%
Net income (loss) ($M)
$
7,084
$
(18,615
)
n/a
Adjusted net income ($M)
$
14,982
$
(6,696
)
n/a
Adjusted EBITDA ($M)
$
19,062
$
5,758
231
%
Net sales for the full year of 2022 were 2,163 Boe/d, including
1,323 barrels of oil per day; 440 barrels of NGLs per day; and
2,399 Mcf/d, or 400 Boe/d, of natural gas. Primarily contributing
to the 46% increase from 2021 was a full year impact of the
Company’s New Mexico properties acquired in May 2021.
Empire reported $52.9 million of revenue for full year 2022 – a
95% increase from $27.1 million for full year 2021. Contributing to
the year-over-year growth was the aforementioned net sales volumes
growth of 46% and a 32% increase in realized pricing on a Boe
basis.
Lease operating expense of $23.6 million and production and ad
valorem taxes of $3.9 million were higher for full year 2022 as
result of the Company’s New Mexico assets acquired in May 2021.
Also contributing to increased year-over-year costs was spending
associated with workover and lease operating activities in 2022 to
support Empire’s recompletion and sidetrack well drilling activity
in North Dakota.
General and administrative expenses, excluding share-based
compensation, was $9.6 million, or $12.18 per Boe, for full year
2022 versus $7.0 million, or $12.89 per Boe, for full year
2021.
Interest expense for full year 2022 was $0.5 million compared to
$8.6 million for 2021. Included in 2021 was approximately $7.0
million related to interest and amortization of debt issuance costs
for convertible notes issued in 2021 that were fully converted
prior to December 31, 2021.
Empire posted net income for full year 2022 of $7.1 million, or
$0.30 per diluted share, versus a net loss of $18.6 million, or
$1.27 per share, for full year 2021. The Company generated adjusted
income for full year 2022 of $15.0 million, or $0.64 per diluted
share, versus an adjusted net loss of $6.7 million, or $0.46 per
share, for 2021.
Adjusted EBITDA grew to $19.1 million for full year 2022 from
$5.8 million for 2021.
YEAR-END 2022 PROVED RESERVES
The Company’s year-end 2022 SEC proved reserves were 13.2 MMBoe
compared to 10.4 MMBoe at year-end 2021 – a 27% increase
year-over-year. Empire recorded reserve additions of 2.2 MMBoe for
revisions of previous estimates, 0.7 MMBoe for acquisitions, and
0.7 MMBoe for extensions, discoveries and improved recovery.
Partially offsetting the overall increase was 0.8 MMBoe of
production.
Year-end 2022 SEC proved reserves were comprised of
approximately 67% crude oil, 17% natural gas liquids, and 16%
natural gas. At year end, 100% of 2022 proved reserves were
classified as proved developed.
Oil (MMBbls)
Gas (MMcf)
NGLs (a)
MBOE
Balance, December 31, 2020
3,661
971
3,823
Acquisition of Reserves
5,634
10,533
7,390
Revisions
(617
)
251
(576
)
Extensions
150
51
159
Divestiture of Reserves
(47
)
27
(42
)
Production
(333
)
(625
)
(437
)
Balance, December 31, 2021
8,448
11,208
87
10,404
Acquisition of Reserves
650
205
61
745
Revisions
(350
)
1,834
2,248
2,203
Extensions
561
566
27
682
Production
(483
)
(876
)
(161
)
(790
)
Balance, December 31, 2022
8,826
12,937
2,262
13,244
(a) The Company did not present NGLs
separately in 2021.
The standardized measure of the Company’s reported SEC proved
reserves, discounted at 10%, at year-end 2022 was $147.7 million,
up 57% from $93.9 million at the end of 2021. As of December 31 for
each year:
2022
2021
Future cash inflows
$
941,172,544
$
627,654,125
Future production costs
(509,154,924
)
(362,254,813
)
Future development costs
(55,901,780)
(33,021,749
)
Future income tax expense
(90,724,632
)
(30,614,383
Future net cash flows
285,391,208
201,763,180
10% annual discount for estimated timing
of cash flows
(137,723,795
)
(107,911,087
)
Standardized measure
$
147,667,413
$
93,852,093
The 12-month average prices were adjusted to reflect applicable
transportation and quality differentials on a well-by-well basis to
arrive at realized sales prices used to estimate the properties'
reserves. The prices for the properties' reserves were as
follows:
2022
2021
Oil (BBl)
$
91.14
$
64.31
Natural gas (MMBtu)
$
4.23
$
7.34
*
* Pricing includes revenue received from
NGL sales as well as natural gas.
Changes in the Standardized Measure of Discounted Future Net
Cash Flows at 10% per annum are as follows as of December 31 for
each year:
2022
2021
Beginning of year
$
93,852,093
20,770,080
Net change in prices and production
costs
24,651,555
13,080,689
Net change in future development costs
(7,141,431
)
782,210
Oil and gas net revenue
(21,418,327
)
(10,587,395
)
Extensions
11,037,719
5,026,479
Acquisition of reserves
12,043,912
90,104,017
Divestiture of reserves
--
(318,813
)
Revisions of previous quantity
estimates
46,871,217
(3,794,860
)
Net change in taxes
(32,133,473
)
(15,544,094
)
Accretion of discount
10,939,619
2,077,008
Changes in timing and other
8,964,529
7,743,228
End of year
$
147,667,413
93,852,093
UPDATED PRESENTATION AND ADDITIONAL MANAGEMENT
COMMENTARY
In addition to an updated Company presentation, an audio
recording of management’s additional comments related to its
business and outlook will be posted on Wednesday, April 5 to the
Company’s website under the Investors Relations section.
ABOUT EMPIRE PETROLEUM
Empire Petroleum Corporation is a publicly traded, Tulsa-based
oil and gas company with current producing assets in Texas,
Louisiana, North Dakota, Montana, and New Mexico. Management is
focused on organic growth and targeted acquisitions of proved
developed assets with synergies with its existing portfolio of
wells. More information about Empire can be found at
www.empirepetroleumcorp.com.
SAFE HARBOR STATEMENT
This release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Forward-looking
statements involve a wide variety of risks and uncertainties, and
include, without limitations, statements with respect to the
Company’s estimates, strategy and prospects. Such statements are
subject to certain risks and uncertainties which are disclosed in
the Company’s reports filed with the SEC, including its Form 10-K
for the fiscal year ended December 31, 2022, and its other filings
with the SEC. Readers and investors are cautioned that the
Company’s actual results may differ materially from those described
in the forward-looking statements due to a number of factors,
including, but not limited to, the Company’s ability to acquire
productive oil and/or gas properties or to successfully drill and
complete oil and/or gas wells on such properties, general economic
conditions both domestically and abroad, and other risks and
uncertainties related to the conduct of business by the Company.
Other than as required by applicable securities laws, the Company
does not assume a duty to update these forward-looking statements,
whether as a result of new information, subsequent events or
circumstances, changes in expectations, or otherwise.
EMPIRE PETROLEUM CORPORATION Condensed Consolidated
Statements of Operations
(Unaudited)
Three Months Ended Twelve Months Ended December
31, September 30, December 31, December
31,
2022
2022
2021
2022
2021
Revenue: Oil Sales
$
9,731,245
$
11,501,521
$
8,444,212
$
44,978,554
$
22,326,289
Gas Sales (1)
802,425
1,526,148
957,679
4,534,370
2,288,481
Natural Gas Liquids ("NGLs") Sales (1)
457,504
945,317
1,312,985
3,659,451
2,888,747
Total Product Revenues
10,991,174
13,972,986
10,714,876
53,172,375
27,503,517
Other
30,552
22,921
20,591
102,429
174,609
Gain (Loss) on Derivatives
(294,190
)
42,474
(13,961
)
(387,930
)
(586,181
)
Total Revenue
10,727,536
14,038,381
10,721,506
52,886,874
27,091,945
Costs and Expenses: Lease Operating Expense
6,602,984
7,751,755
6,498,888
23,584,039
13,283,758
Production and Ad Valorem Taxes
792,141
1,112,246
835,964
3,943,466
2,102,772
Depletion, Depreciation & Amortization
519,403
539,543
476,868
1,949,191
2,502,275
Accretion of Asset Retirement Obligation
348,799
342,619
332,841
1,357,906
1,214,479
Impairment
936,620
-
-
936,620
-
General and Administrative
3,743,598
2,850,059
2,421,556
12,331,489
8,462,031
Total Cost and Expenses
12,943,545
12,596,222
10,566,117
44,102,711
27,565,315
Operating Income (Loss)
(2,216,009
)
1,442,159
155,389
8,784,163
(473,370
)
Other Income and (Expense): Other Income (Expense)
297,165
(1,100,888
)
218,838
(981,595
)
409,225
Interest Expense
(161,777
)
(125,330
)
(1,227,586
)
(509,540
)
(8,600,699
)
Convertible Debt Modification Inducement Expense
-
-
-
-
(2,276,813
)
Loss on Convertible Debt Redemption Option
-
-
(3,169,201
)
-
(3,169,201
)
Loss on Embedded Conversion Option
-
-
(4,597,035
)
-
(4,504,104
)
Income (Loss) before Taxes
(2,080,621
)
215,941
(8,619,595
)
7,293,028
(18,614,962
)
Income Tax (Provision) Benefit
(208,898
)
-
-
(208,898
)
-
Net Income (Loss)
$
(2,289,519
)
$
215,941
$
(8,619,595
)
$
7,084,130
$
(18,614,962
)
Net Income (Loss) per Common Share: Basic
$
(0.10
)
$
0.01
$
(0.46
)
$
0.34
$
(1.27
)
Diluted
$
(0.10
)
$
0.01
$
(0.46
)
$
0.30
$
(1.27
)
Weighted Average Number of Common Shares Outstanding: Basic
22,037,872
21,651,383
18,627,300
21,003,563
14,630,168
Diluted
22,037,872
24,065,485
18,627,300
23,387,646
14,630,168
(1) September 2022 and December 2021 amounts reflect
reclassifications of gathering and processing costs from lease
operating expense to conform to December 2022 presentation.
EMPIRE PETROLEUM CORPORATION Condensed Operating Data
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
2022
2022
2021
2022
2021
Net Production Volumes: Oil (Bbl)
121,592
123,804
112,378
482,818
333,158
Natural gas (Mcf)
221,818
231,522
242,874
875,647
622,474
Natural gas liquids (Bbl)
39,151
42,989
41,020
160,809
102,893
Total (Boe)
197,712
205,380
193,877
789,568
539,797
Average daily equivalent sales (Boe/d)
2,149
2,232
2,107
2,163
1,479
Average Price per Unit: Oil ($/Bbl)
$
80.03
$
92.90
$
75.14
$
93.16
$
67.01
Natural gas ($/Mcf)
$
3.62
$
6.59
$
3.94
$
5.18
$
3.68
Natural gas liquids ($/Bbl)
$
11.69
$
21.99
$
32.01
$
22.76
$
28.08
Total ($/Boe)
$
55.59
$
68.03
$
55.27
$
67.34
$
50.95
Operating Costs and Expenses per Boe: Lease operating
expense
$
33.40
$
37.74
$
33.52
$
29.87
$
24.61
Production and ad valorem taxes
$
4.01
$
5.42
$
4.31
$
4.99
$
3.90
Depreciation, depletion, amortization and accretion
$
4.39
$
4.30
$
4.18
$
4.19
$
6.89
General & administrative (including share-based compensation)
$
18.93
$
13.88
$
12.49
$
15.62
$
15.68
General & administrative (excluding share-based compensation)
$
13.65
$
9.93
$
6.84
$
12.18
$
12.89
EMPIRE PETROLEUM CORPORATION Condensed Consolidated
Balance Sheets As of December 31,
2022
2021
ASSETS
Current Assets: Cash
$
11,944,442
$
3,611,871
Accounts Receivable
7,780,239
7,733,905
Derivative Instruments
121,584
55,242
Inventory - Oil in Tanks
1,840,274
1,037,880
Prepaids
1,048,434
679,122
Total Current Assets
22,734,973
13,118,020
Property and Equipment: Oil and Natural
Gas Properties, Successful Efforts
63,986,339
46,914,326
Less: Accumulated Depreciation, Depletion and Impairment
(20,116,696
)
(17,525,918
)
Total Oil and Gas Properties, Net
43,869,643
29,388,408
Other Property and Equipment, Net
1,441,529
1,288,611
Total Property and Equipment, Net
45,311,172
30,677,019
Derivative Instruments - Long Term
-
194,018
Sinking Fund
2,779,000
4,810,000
Utility and Other Deposits
719,930
1,290,594
TOTAL ASSETS
$
71,545,075
$
50,089,651
LIABILITIES AND
STOCKHOLDERS' EQUITY Current Liabilities:
Accounts Payable
$
5,843,366
$
4,329,535
Accrued Expenses
9,461,010
5,844,184
Current Portion of Lease Liability
256,975
180,105
Current Portion of Long-Term Debt
2,059,309
1,700,663
Total Current Liabilities
17,620,660
12,054,487
Long-Term Debt
4,063,115
6,117,091
Long-Term Note Payable - PIE
1,076,987
797,010
Long Term Lease Liability
547,692
646,311
Asset Retirement Obligations
25,000,740
20,640,599
Total Liabilities
48,309,194
40,255,498
Stockholders' Equity: Series A
Preferred Stock - $.001 Par Value, 10,000,000 Shares Authorized, 6
and 0 Shares Issued and Outstanding, Respectively
-
-
Common Stock - $.001 Par Value 190,000,000 Shares Authorized,
22,093,503 and 19,840,648 Shares Issued and Outstanding,
Respectively
81,615
79,362
Additional Paid-in Capital
75,303,479
68,988,134
Accumulated Deficit
(52,149,213
)
(59,233,343
)
Total Stockholders' Equity
23,235,881
9,834,153
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
71,545,075
$
50,089,651
EMPIRE PETROLEUM CORPORATION Condensed Consolidated
Statements of Cash Flows (Unaudited)
Three Months Ended Twelve Months Ended
December 31, September 30, December 31,
December 31,
2022
2022
2021
2022
2021
Cash Flows From Operating Activities:
Net Income (Loss)
$
(2,289,519
)
$
215,941
$
(8,619,595
)
$
7,084,130
$
(18,614,962
)
Adjustments to Reconcile Net Income (Loss) to Net
Cash Provided By Operating Activities: Stock Compensation
and Issuances
1,043,929
809,641
1,095,970
2,716,752
1,502,220
Amortization of Right of Use Assets
128,613
44,627
82,683
263,847
137,046
Depreciation, Depletion and Amortization
519,403
539,543
476,868
1,949,191
2,502,275
Accretion of Asset Retirement Obligation
348,799
342,619
332,841
1,357,906
1,214,479
Impairment
936,620
-
-
936,620
-
Loss on Settlement of Asset Retirement Obligations
-
-
-
181,386
-
Loss on XTO Final Settlement
-
1,448,363
-
1,448,363
-
PIE-Related Expense
-
1,399,030
-
1,399,030
-
Amortization of Loan Issue Costs
-
-
-
-
14,587
Right to Buy Issuance Costs
-
-
-
-
989,115
Loss on Embedded Conversion Option
-
-
4,597,035
-
4,504,104
Amortization of Discount on Convertible Notes
-
-
1,057,084
-
7,727,213
Loss on Extinguishemt of Debt
-
-
3,169,201
-
3,169,201
Convertible Debt Modification Inducement Expense
-
-
-
-
2,276,813
Stock Issued for Interest Expense Payment
-
-
55,073
-
296,127
Forgiveness of Payroll Protection Plan Loan
-
-
(106,850
)
-
(267,550
)
Change in Operating Assets and Liabilities: Accounts
Receivable
(2,116,239
)
1,417,093
(916,187
)
(1,812,230
)
(6,482,271
)
Derivative Instruments
278,741
(126,400
)
(141,066
)
127,676
(255,009
)
Inventory, Oil in Tanks
(234,917
)
(412,768
)
174,637
(802,394
)
(506,571
)
Prepaids, Current
(323,950
)
(184,958
)
(20,299
)
(369,312
)
95,371
Other Long Term Assets and Liabilities
(612,463
)
39,033
(481,737
)
(568,690
)
(488,544
)
Accounts Payable
2,991,255
(1,459,997
)
(116,467
)
526,682
2,210,285
Accrued Expenses
2,478,344
(208,689
)
1,900,700
3,616,826
3,146,353
Net Cash Provided By Operating Activities
3,148,616
3,863,078
2,539,891
18,055,783
3,170,282
Cash Flows from Investing Activities:
Acquisition of Oil and Natural Gas Properties
(497,613
)
-
(1,675,726
)
(2,702,613
)
(19,545,505
)
Additions to Oil and Natural Gas Properties
(8,658,811
)
(276,024
)
-
(10,161,711
)
-
Purchase of Other Fixed Assets
(3,442
)
(189,179
)
287,802
(311,229
)
(220,769
)
Cash Paid for Right of Use Assets
(133,690
)
(44,009
)
(140,604
)
(268,934
)
(140,604
)
Sinking Fund Deposit
2,671,000
-
(480,000
)
2,031,000
(4,810,000
)
Net Cash Used In Investing Activities
(6,622,556
)
(509,212
)
(2,008,528
)
(11,413,487
)
(24,716,878
)
Cash Flows from Financing Activities:
Proceeds from Debt Issued
-
-
(106,850
)
-
19,493,000
Principal Payments of Debt
(315,673
)
(461,779
)
(347,246
)
(1,699,840
)
(5,893,984
)
Proceeds from Stock and Warrant Issuance
-
-
240,245
-
11,294,906
Proceeds from Option and Warrant Exercise
212
405,220
-
3,390,115
-
Paycheck Protection Program Loan Proceeds
-
-
106,850
-
106,850
Net Cash Provided By (Used In) Financing Activities
(315,461
)
(56,559
)
(107,001
)
1,690,275
25,000,772
Net Change in Cash
(3,789,401
)
3,297,307
424,362
8,332,571
3,454,176
Cash - Beginning of Period
15,733,842
12,436,535
3,187,509
3,611,871
157,695
Cash - End of Period
$
11,944,441
$
15,733,842
$
3,611,871
$
11,944,442
$
3,611,871
Empire Petroleum Corporation Non-GAAP
Information
Certain financial information included in Empire’s financial
results are not measures of financial performance recognized by
accounting principles generally accepted in the United States, or
GAAP. These non-GAAP financial measures include “Adjusted Net
Income (Loss)”, “EBITDA” and “Adjusted EBITDA”. These disclosures
may not be viewed as a substitute for results determined in
accordance with GAAP and are not necessarily comparable to non-GAAP
performance measures which may be reported by other companies.
Adjusted Net Income (Loss) is presented because the timing and
amount of these items cannot be reasonably estimated and affect the
comparability of operating results from period to period, and
current periods to prior periods.
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
2022
2022
2021
2022
2021
Net Income (Loss)
$
(2,289,519
)
$
215,941
$
(8,619,595
)
$
7,084,130
$
(18,614,962
)
Adjusted for: Stock compensation and issuances
1,043,929
809,641
1,095,970
2,716,752
1,502,220
Unrealized (gain) loss on derivatives
278,741
(126,400
)
(141,066
)
127,676
(255,009
)
Write off of JDA note receivable
-
1,399,030
-
1,399,030
-
XTO final settlement - noncash
-
1,448,363
-
1,448,363
-
Impairment cost
936,620
-
-
936,620
-
Settlement and fees related to Texas sales tax audit
180,040
-
-
1,269,358
-
Convertible debt modification inducement expense
-
-
-
-
2,276,813
Loss on convertible debt redemption option
-
-
3,169,201
-
3,169,201
Loss on conversion option
-
-
4,597,035
-
4,504,104
Right to buy issuance costs
-
-
-
-
989,115
Forgiveness of PPP loan
-
-
(106,850
)
-
(267,550
)
Adjusted Net Income (Loss)
$
149,811
$
3,746,575
$
(5,305
)
$
14,981,929
$
(6,696,068
)
Diluted Weighted Average Shares Outstanding
24,436,817
24,065,485
18,627,300
23,387,646
14,630,168
Adjusted Net Income (Loss) Per Share
$
0.01
$
0.16
$
(0.00
)
$
0.64
$
(0.46
)
The Company defines Adjusted EBITDA as net income (loss) plus
net interest expense, depreciation, depletion and amortization
(“DD&A”), accretion, amortization of loan issuance costs, right
of use assets and discount on convertible notes, income tax
(benefit) expense, and other non-cash items.
Company management believes this presentation is relevant and
useful because it helps investors understand Empire’s operating
performance and makes it easier to compare its results with those
of other companies that have different financing, capital and tax
structures. Adjusted EBITDA should not be considered in isolation
from or as a substitute for net income, as an indication of
operating performance or cash flows from operating activities or as
a measure of liquidity. In addition, Adjusted EBITDA does not
represent funds available for discretionary use.
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
2022
2022
2021
2022
2021
Net Income (Loss)
$
(2,289,519
)
$
215,941
$
(8,619,595
)
$
7,084,130
$
(18,614,962
)
Add Back: Interest Expense
161,777
125,330
1,227,586
509,540
8,600,699
DD&A
519,403
539,543
476,868
1,949,191
2,502,275
Accretion
348,799
342,619
332,841
1,357,906
1,214,479
Impairment cost
936,620
-
-
936,620
-
Amortization of right of use assets
128,613
44,627
82,683
263,847
137,046
EBITDA
$
(194,307
)
$
1,268,060
$
(6,499,617
)
$
12,101,234
$
(6,160,463
)
Consideration of noncash items: Stock compensation and
issuances
1,043,929
809,641
1,095,970
2,716,752
1,502,220
Unrealized (gain) loss on derivatives
278,741
(126,400
)
(141,066
)
127,676
(255,009
)
Write off of JDA note receivable
-
1,399,030
-
1,399,030
-
XTO final settlement - noncash
-
1,448,363
-
1,448,363
-
Settlement and fees related to Texas sales tax audit
180,040
-
-
1,269,358
-
Convertible debt modification inducement expense
-
-
-
-
2,276,813
Loss on convertible debt redemption option
-
-
3,169,201
-
3,169,201
Loss on conversion option
-
-
4,597,035
-
4,504,104
Right to buy issuance costs
-
-
-
-
989,115
Forgiveness of PPP loan
-
-
(106,850
)
-
(267,550
)
Adjusted EBITDA
$
1,308,403
$
4,798,694
$
2,114,673
$
19,062,413
$
5,758,431
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230331005437/en/
Empire Petroleum Corporation: Mike Morrisett, President &
CEO 539-444-8002 info@empirepetrocorp.com
Investor Relations: Al Petrie Advisors Wes Harris, Partner
713-300-6321 wes@alpetrie.com
Empire Petroleum (AMEX:EP)
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