Empire Petroleum (NYSE American: EP) (“Empire” or the
“Company”), an oil and gas company with producing assets in New
Mexico, North Dakota, Montana, Texas, and Louisiana, today reported
2024 second quarter results and progress on its North Dakota
development drilling program.
SECOND QUARTER 2024 HIGHLIGHTS
- Q2-2024 net production volumes rose 20% sequentially and 24%
year-over-year to 2,638 barrels of oil equivalent per day
(“Boe/d”);
- Average daily oil sales volumes grew by 23% sequentially and
25% year-over-year with largest increase from North Dakota
operations
- 67% oil, 16% natural gas liquids (“NGLs”), and 17% natural
gas;
- Completion of the first stage of the North Dakota horizontal
wells for Enhanced Oil Recovery (EOR) development in Q2-2024 and
the EOR infrastructure to be completed by end of Q3-2024;
- Largest production increase was from the Starbuck field, an
increase of ~500% from initial purchase;
- Increased year-over-year volumes by ~130% and quarter-over-year
volumes by ~45%
- Increase does not include the completion of drilling program or
effects on production from EOR activities starting at the end of
Q3-2024;
- Commenced conformance improvements in Empire’s New Mexico
assets, including an upcoming pilot drilling program; and
- Reported Q2-2024 total product revenue of $12.8 million, a net
loss of $4.4 million, or $0.15 per share and an Adjusted Net Loss
of $2.9 million, or $0.10 per share.
- Generated Q2-2024 Adjusted EBITDA of $1.7 million versus $0.2
million in Q2-2023
2024 OUTLOOK
Phil Mulacek, Chairman, commented, “Recent drilling and
development data from our North Dakota assets reinforce our
confidence in achieving significant long-term production gains. We
have successfully enhanced well economics, reducing costs by
approximately 50% to $2.4 million through standard directional
drilling, compared to $4.8 million with Coiled Tubing Drilling
(CTD). Directional drilling has also enabled us to nearly double
the hole diameter, increasing the flow area by 66% and extending
lateral well lengths by around 150% compared to early CTD wells. We
anticipate further production improvements in North Dakota
throughout 2024 and 2025 by integrating insights from our seismic
surveys and completing our EOR infrastructure. Our objective is to
continue boosting production in our Starbuck field through Q1 2025,
with the potential for additional increases following the
completion of our EOR development, guided by our 3D seismic
data.”
Mike Morrisett, President and CEO, added, “We have made
significant strides in North Dakota, resulting in notable
production enhancements and shaping our development strategy. Our
focus will be on completing the majority of North Dakota's
development efforts in the latter half of 2024. Following this, we
plan to shift our attention to our Permian assets in New Mexico’s
Lea County, where we see even greater potential for production
growth. We are advancing our technical review and planning for
these fields and aim to initiate a pilot drilling program in 2025.
Meanwhile, we remain dedicated to achieving continued improvements
in Lease Operating Expenses (LOE) through the end of 2024 and into
2025.”
North Dakota – Williston Basin:
Empire expects North Dakota development efforts to drive
production improvements; targeted to return operations to positive
cash flow and support New Mexico exploration and development in
2025 and beyond. The Company’s goal to see a significant base
production increase compared to when the assets were purchased is
still the objective through Q1-2025;
- 100% of the first stage of EOR horizontal wells were completed
in Q2-2024 and the first stage of the EOR infrastructure to be
completed in Q3-2024;
- Second stage of the EOR program and infrastructure to be
completed in 2025-2026;
- New horizontal laterals will be completed for Starbuck and
other fields the Company operates within North Dakota;
- Production anticipated to ramp in second half of 2024 with an
additional four wells coming online and EOR injection
commencing;
- Drill core data, currently being evaluated, has confirmed new
zones of potential development; and
- 3D & 2D processing to enhance infield development on the
Company’s Starbuck assets and apply knowledge to other Company
assets in order to expand the development footprint;
- Completion of the 3D & 2D seismic survey in May 2024
- Expect data processing and analysis to be completed by end of
Q3-2024;
New Mexico – Permian Basin:
- Continued data and analytics on historical water injection
profiles across all injectors in Empire’s waterflood units;
- Started conformance improvements on wells to evaluate the
response before implementation on the unit, then a phased in
approach;
- Commenced seeing well performance on production;
- Reduced water injection on wells;
- Continued upgrading high potential recompletion opportunities;
and
- Continue the legal and regulatory actions against third parties
trespassing on the NM water floods.
SECOND QUARTER 2024 FINANCIAL AND OPERATIONAL RESULTS
Q2-24 Q1-24 % Change2Q2-24 vs. Q1-24
Q2-23 % Change2Q2-24 vs. Q2-23 Net equivalent
sales (Boe/d)
2,638
2,207
20%
2,135
24%
Net oil sales (Bbls/d)
1,761
1,437
23%
1,411
25%
Realized price ($/Boe)
53.26
50.96
5%
50.22
6%
Product Revenue ($M)
12,788
10,235
25%
9,758
31%
Net Income (Loss) ($M)
(4,390)
(3,975)
-10%
(2,465)
-78%
Adjusted Net Income (Loss) ($M)1
(2,905)
(3,866)
25%
(2,398)
-21%
Adjusted EBITDA ($M)1
1,727
(729)
NM
171
NM
________________________________
1 Adjusted Net Income (Loss), 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. 2 NM: A
percentage calculation is not meaningful due to change in signs, a
zero-value denominator, or a percentage change greater than
200.
Net sales volumes for Q2-2024 were 2,638 Boe/d, including 1,761
barrels of oil per day; 435 barrels of NGLs per day, and 2,651
thousand cubic feet per day (“Mcf/d”) or 442 Boe/d of natural gas.
Quarter-over-quarter net oil sales volumes increase of 23%
primarily due to new wells completed in North Dakota.
Empire reported Q2-2024 total product revenue of $12.8 million
versus $9.8 million in Q2-2023. Contributing to the increase was
higher oil sales volumes in North Dakota and higher realized oil
and NGL prices.
Q2-2024 lease operating expenses increased to $7.5 million
versus $7.1 million for Q2-2023, primarily due to increased
production partially offset by lower workover expense of $1.6
million for Q2-2024 compared to $2.9 million for Q2-2023. Higher
workover expense in 2023 was primarily related to work performed on
wells in New Mexico to enhance production.
Production and ad valorem taxes for Q2-2024 were $1.1 million
versus $0.7 million in Q2-2023, as a result of higher product
revenues.
Depreciation, Depletion, Amortization and Accretion (“DD&A”)
for Q2-2024 was $3.2 million versus $1.1 million for Q2-2023. The
increase in DD&A reflects higher production, the acquisition of
additional working interest and the impact of the capitalized costs
associated with new drilling activity in North Dakota.
General and administrative expenses, excluding share-based
compensation expense, were $2.4 million, or $9.80 per Boe in
Q2-2024 versus $1.9 million, or $9.75 per Boe in Q2-2023. The
year-over-year increase was primarily due to an increase in
salaries and benefits associated with an increase in employee
headcount to support expanded operations.
Interest expense for Q2-2024 was $0.7 million compared to $0.2
million for Q2-2023.
Empire recorded a Q2-2024 net loss of $4.4 million, or $0.15 per
diluted share, versus a Q2-2023 net loss of $2.5 million, or $0.11
per diluted share.
Adjusted EBITDA improved to $1.7 million for Q2-2024 compared to
Adjusted EBITDA of $0.2 million in Q2-2023.
CAPITAL SPENDING, BALANCE SHEET & LIQUIDITY
For the six months ended June 30, 2024, Empire invested
approximately $26 million in capital expenditures, primarily
reflecting the continued drilling and completions activity in North
Dakota.
As of June 30, 2024, Empire had approximately $9.3 million in
cash on hand and approximately $0.7 million available on its credit
facility.
Empire received gross proceeds of approximately $20.66 million
at $5.00 per share following the close of the Rights Offering in
April 2024. The Company converted the Promissory Note with Energy
Evolution Fund, $5 million at 7%, to 800,000 shares of common
stock.
UPDATED PRESENTATION
An updated Company presentation will be posted by Friday, August
23, to the Company’s website under the Investor Relations
section.
ABOUT EMPIRE PETROLEUM
Empire Petroleum Corporation is a publicly traded, Tulsa-based
oil and gas company with current producing assets in New Mexico,
North Dakota, Montana, Texas, and Louisiana. 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, 2023, 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 YTD June 30, March 31,
June 30, June 30,
2024
2024
2023
2024
2023
Revenue: Oil Sales
$
12,287,272
$
9,441,964
$
9,147,611
$
21,729,236
$
18,086,326
Gas Sales
(115,833
)
377,130
248,686
261,297
904,721
NGL Sales
617,029
416,211
362,181
1,033,240
867,135
Total Product Revenues
12,788,468
10,235,305
9,758,478
23,023,773
19,858,182
Other
11,227
10,086
18,361
21,313
37,725
Loss on Commodity Derivatives
(1,453
)
(858,150
)
(66,657
)
(859,603
)
(133,480
)
Total Revenue
12,798,242
9,387,241
9,710,182
22,185,483
19,762,427
Costs and Expenses: Lease Operating Expense
7,542,685
7,387,423
7,099,000
14,930,108
13,619,163
Production and Ad Valorem Taxes
1,065,718
833,447
721,275
1,899,165
1,479,389
Depletion, Depreciation & Amortization
2,676,981
1,490,130
711,042
4,167,111
1,333,531
Accretion of Asset Retirement Obligation
492,449
485,349
405,361
977,798
806,636
General and Administrative Expense: General and Administrative
2,354,080
2,879,037
1,894,204
5,233,117
4,917,483
Stock-Based Compensation
591,635
710,002
1,180,806
1,301,637
2,130,445
Total General and Administrative Expense
2,945,715
3,589,039
3,075,010
6,534,754
7,047,928
Total Cost and Expenses
14,723,548
13,785,388
12,011,688
28,508,936
24,286,647
Operating Income (Loss)
(1,925,306
)
(4,398,147
)
(2,301,506
)
(6,323,453
)
(4,524,220
)
Other Income and (Expense): Interest Expense
(735,220
)
(315,049
)
(184,887
)
(1,050,269
)
(422,186
)
Other Income (Expense)
(1,729,245
)
738,000
21,484
(991,245
)
21,906
Income (Loss) before Taxes
(4,389,771
)
(3,975,196
)
(2,464,909
)
(8,364,967
)
(4,924,500
)
Income Tax (Provision) Benefit
-
-
-
-
-
Net Income (Loss)
$
(4,389,771
)
$
(3,975,196
)
$
(2,464,909
)
$
(8,364,967
)
$
(4,924,500
)
Net Income (Loss) per Common Share: Basic
$
(0.15
)
$
(0.15
)
$
(0.11
)
$
(0.30
)
$
(0.22
)
Diluted
$
(0.15
)
$
(0.15
)
$
(0.11
)
$
(0.30
)
$
(0.22
)
Weighted Average Number of Common Shares Outstanding: Basic
29,839,853
25,688,427
22,105,704
27,752,816
22,101,264
Diluted
29,839,853
25,688,427
22,105,704
27,752,816
22,101,264
EMPIRE PETROLEUM CORPORATION Condensed Operating Data
(Unaudited) Three Months Ended Six Months
Ended June 30, March 31, June 30, June
30,
2024
2024
2023
2024
2023
Net Sales Volumes: Oil (Bbl)
160,283
130,760
128,413
291,043
248,670
Natural gas (Mcf)
241,242
211,820
211,293
453,063
442,511
Natural gas liquids (Bbl)
39,612
34,785
30,678
74,397
70,434
Total (Boe)
240,102
200,848
194,306
440,951
392,856
Average daily equivalent sales (Boe/d)
2,638
2,207
2,135
2,423
2,170
Average Price per Unit: Oil ($/Bbl)
$
76.66
$
72.21
$
71.24
$
74.66
$
72.73
Natural gas ($/Mcf)
$
(0.48
)
$
1.78
$
1.18
$
0.58
$
2.04
Natural gas liquids ($/Bbl)
$
15.58
$
11.97
$
11.81
$
13.89
$
12.31
Total ($/Boe)
$
53.26
$
50.96
$
50.22
$
52.21
$
50.55
Operating Costs and Expenses per Boe: Lease operating
expense
$
31.41
$
36.78
$
36.54
$
33.86
$
34.67
Production and ad valorem taxes
$
4.44
$
4.15
$
3.71
$
4.31
$
3.77
Depreciation, depletion, amortization and accretion
$
13.20
$
9.84
$
5.75
$
11.67
$
5.45
General & administrative expense: General & administrative
expense
$
9.80
$
14.33
$
9.75
$
11.87
$
12.52
Stock-based compensation
$
2.46
$
3.54
$
6.08
$
2.95
$
5.42
Total general & administrative expense
$
12.27
$
17.87
$
15.83
$
14.82
$
17.94
EMPIRE PETROLEUM CORPORATION Condensed Consolidated
Balance Sheets June 30, December 31,
2024
2023
ASSETS Current
Assets: Cash
$
9,257,773
$
7,792,508
Accounts Receivable
8,783,051
8,354,636
Derivative Instruments
-
406,806
Inventory
1,451,195
1,433,454
Prepaids
788,073
757,500
Total Current Assets
20,280,092
18,744,904
Property and Equipment: Oil and Natural Gas
Properties, Successful Efforts
123,509,574
93,509,803
Less: Accumulated Depreciation, Depletion and Impairment
(27,040,862
)
(22,996,805
)
Total Oil and Gas Properties, Net
96,468,712
70,512,998
Other Property and Equipment, Net
1,625,870
1,883,211
Total Property and Equipment, Net
98,094,582
72,396,209
Other Noncurrent Assets
1,570,531
1,474,503
TOTAL ASSETS
$
119,945,205
$
92,615,616
LIABILITIES AND STOCKHOLDERS'
EQUITY Current Liabilities: Accounts Payable
$
13,641,835
$
16,437,219
Accrued Expenses
8,105,002
7,075,302
Derivative Instruments
189,468
-
Current Portion of Lease Liability
425,528
432,822
Current Portion of Note Payable - Related Party
1,060,004
1,060,004
Current Portion of Long-Term Debt
339,825
44,225
Total Current Liabilities
23,761,662
25,049,572
Long-Term Debt
8,523,756
4,596,775
Long-Term Lease Liability
338,953
544,382
Asset Retirement Obligations
28,649,500
27,468,427
Total Liabilities
61,273,871
57,659,156
Stockholders' Equity: Series A Preferred Stock -
$.001 Par Value, 10,000,000 Shares Authorized, 6 and 6 Shares
Issued and Outstanding, Respectively
-
-
Common Stock - $.001 Par Value, 190,000,000 Shares Authorized,
31,375,375 and 25,503,530 Shares Issued and Outstanding,
Respectively
90,897
85,025
Additional Paid-in-Capital
131,564,222
99,490,253
Accumulated Deficit
(72,983,785
)
(64,618,818
)
Total Stockholders' Equity
58,671,334
34,956,460
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
119,945,205
$
92,615,616
EMPIRE PETROLEUM CORPORATION Condensed Consolidated
Statements of Cash Flows (Unaudited) Three
Months Ended Six Months Ended June 30, March
31, June 30, June 30, June 30,
2024
2024
2023
2024
2023
Cash Flows From Operating Activities: Net Income
(Loss)
$
(4,389,771
)
$
(3,975,196
)
$
(2,464,909
)
$
(8,364,967
)
$
(4,924,500
)
Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided By Operating Activities: Stock Compensation and Issuances
591,635
710,002
1,180,806
1,301,637
2,130,445
Amortization of Right of Use Assets
135,734
135,733
87,560
271,467
163,785
Depreciation, Depletion and Amortization
2,676,981
1,490,130
711,042
4,167,111
1,333,531
Accretion of Asset Retirement Obligation
492,449
485,349
405,361
977,798
806,636
(Gain) Loss on Commodity Derivatives
1,453
858,150
66,657
859,603
133,480
Settlement on or Purchases of Derivative Instruments
(252,630
)
(10,700
)
-
(263,330
)
(41,187
)
(Gain) Loss on Financial Derivatives
1,736,000
(738,000
)
-
998,000
-
Amortization of Debt Discount on Convertible Notes
500,382
-
-
500,382
-
Gain on Extinguishment of Debt
(16,611
)
-
-
(16,611
)
-
Change in Operating Assets and Liabilities: Accounts Receivable
(1,694,690
)
1,064,629
(1,189,280
)
(630,061
)
(2,039,189
)
Inventory, Oil in Tanks
346,147
(363,888
)
155,057
(17,741
)
(265,802
)
Prepaids, Current
462,599
(2,398
)
618,737
460,201
708,549
Accounts Payable
(2,484,238
)
4,339,024
(1,587,886
)
1,854,786
(1,697,939
)
Accrued Expenses
668,416
361,284
(464,538
)
1,029,700
(3,642,305
)
Other Long Term Assets and Liabilities
(574,966
)
(446,430
)
(436,523
)
(1,021,396
)
(650,134
)
Net Cash Provided By (Used In) Operating Activities
(1,801,110
)
3,907,689
(2,917,916
)
2,106,579
(7,984,630
)
Cash Flows from Investing Activities: Deposit for
Acquisition of Oil ad Natural Gas Properties
-
-
(670,000
)
-
(670,000
)
Additions to Oil and Natural Gas Properties
(13,202,315
)
(16,940,873
)
(917,843
)
(30,143,188
)
(3,127,847
)
Purchase of Other Fixed Assets
(88,868
)
(31,023
)
(125,866
)
(119,891
)
(153,036
)
Cash Paid for Right of Use Assets
(125,237
)
(125,238
)
(117,560
)
(250,475
)
(204,105
)
Sinking Fund Deposit
-
-
-
-
2,779,000
Net Cash Provided By (Used In) Investing Activities
(13,416,420
)
(17,097,134
)
(1,831,269
)
(30,513,554
)
(1,375,988
)
Cash Flows from Financing Activities: Borrowings on
Credit Facility
-
3,950,000
-
3,950,000
-
Proceeds from Promissory Note
-
5,000,000
-
5,000,000
-
Proceeds from Rights offering (net of transaction costs)
20,511,529
-
-
20,511,529
-
Principal Payments of Debt
(156,594
)
(61,598
)
(719,838
)
(218,192
)
(1,288,974
)
Net Proceeds from Warrants Exercises
628,903
-
-
628,903
-
Net Cash Provided By (Used In) Financing Activities
20,983,838
8,888,402
(719,838
)
29,872,240
(1,288,974
)
Net Change in Cash
5,766,308
(4,301,043
)
(5,469,023
)
1,465,265
(10,649,592
)
Cash - Beginning of Period
3,491,465
7,792,508
6,763,873
7,792,508
11,944,442
Cash - End of Period
$
9,257,773
$
3,491,465
$
1,294,850
$
9,257,773
$
1,294,850
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 Six Months Ended June 30,
March 31, June 30, June 30, June 30,
2024
2024
2023
2024
2023
Net Income (Loss)
$
(4,389,771
)
$
(3,975,196
)
$
(2,464,909
)
$
(8,364,967
)
$
(4,924,500
)
Adjusted for: (Gain) loss on commodity derivatives
1,453
858,150
66,657
859,603
133,480
Settlement on or purchases of derivative instruments
(252,630
)
(10,700
)
-
(263,330
)
(41,187
)
Loss on financial derivatives
1,736,000
(738,000
)
-
998,000
-
CEO severance (including employer taxes)
-
-
-
-
374,820
Adjusted Net Income (Loss)
$
(2,904,948
)
$
(3,865,746
)
$
(2,398,252
)
$
(6,770,694
)
$
(4,457,387
)
Diluted Weighted Average Shares Outstanding
29,839,853
25,688,427
22,105,704
27,752,816
22,101,264
Adjusted Net Income (Loss) Per Share
$
(0.10
)
$
(0.15
)
$
(0.11
)
$
(0.24
)
$
(0.20
)
The Company defines Adjusted EBITDA as net income (loss) plus
net interest expense, depreciation, depletion and amortization
(“DD&A”), accretion, amortization of right of use assets and
other 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 Six Months Ended June 30,
March 31,
June 30,
June 30, June 30,
2024
2024
2023
2024
2023
Net Income (Loss)
$
(4,389,771
)
$
(3,975,196
)
$
(2,464,909
)
$
(8,364,967
)
$
(4,924,500
)
Add Back: Interest expense
735,220
315,049
184,887
1,050,269
422,186
DD&A
2,676,981
1,490,130
711,042
4,167,111
1,333,531
Accretion
492,449
485,349
405,361
977,798
806,636
Amortization of right of use assets
135,734
135,733
87,560
271,467
163,785
Income taxes
-
-
-
-
-
EBITDA
$
(349,387
)
$
(1,548,935
)
$
(1,076,059
)
$
(1,898,322
)
$
(2,198,362
)
Adjustments: Stock based Compensation
591,635
710,002
1,180,806
1,301,637
2,130,445
(Gain) loss on commodity derivatives
1,453
858,150
66,657
859,603
133,480
Settlement on or purchases of derivative instruments
(252,630
)
(10,700
)
-
(263,330
)
(41,187
)
(Gain) Loss on financial derivatives
1,736,000
(738,000
)
-
998,000
-
CEO severance (including employer taxes)
-
-
-
-
374,820
Adjusted EBITDA
$
1,727,071
$
(729,483
)
$
171,404
$
997,588
$
399,196
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240814852806/en/
Empire Petroleum Corporation Mike Morrisett President
& CEO 539-444-8002 Info@empirepetrocorp.com
Kali Carter Communications & Investor Relations Manager
918-995-5046 IR@empirepetrocorp.com
Empire Petroleum (AMEX:EP)
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De Jul 2024 a Ago 2024
Empire Petroleum (AMEX:EP)
Gráfica de Acción Histórica
De Ago 2023 a Ago 2024