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 provided
an update on its North Dakota development drilling program and
reported results for the first quarter of 2024.
FIRST QUARTER 2024 HIGHLIGHTS
- Reported Q1-24 net sales volumes of 2,207 barrels of oil
equivalent per day (“Boe/d”);
- 65% oil, 17% natural gas liquids (“NGLs”), and 18% natural
gas
- Average daily oil sales volumes grew by 11% sequentially and 8%
year-over-year
- Commenced $20.66M Rights Offering at $5.00 per share to fund
current drilling, 3-D seismic imaging, other strategic initiatives,
and operations, which was successfully completed in Q2-24;
- Initiated 3-D & 2-D seismic survey for the North Dakota
drilling program, 3-D & 2-D shoot was completed in May 2024,
with data sent for processing and a completion target of the end of
Q2-24;
- Continued optimization and evaluation around the waterflood
units in Empire’s New Mexico assets, including an upcoming pilot
drilling program; and
- Reported Q1-24 total revenue of $9.4 million, a net loss of
$4.0 million, or $0.15 per share and an Adjusted Net Loss of $3.9
million, or $0.15 per share;
- Generated Q1-24 Adjusted EBITDA of ($0.7) million
2024 OUTLOOK
Phil Mulacek, Chairman, commented, “Recent drilling and data
from the North Dakota field and reservoir affirm our confidence in
the opportunity to drive meaningful production improvements in this
area. We continue to see excellent well economics within our North
Dakota operations and are pleased to have achieved significant
per-well cost reductions as compared to our initial expectations,
following the drilling of our most recent wells. The integration of
the new 3-D and the EOR infrastructure in North Dakota are the key
drivers for our production growth goals in 2024, which we expect to
be weighted to the second half of the year.”
Mike Morrisett, President and CEO, added, “Our team has
assembled a strong base of producing assets, and we have a clear,
focused strategy to build value from this portfolio. Our principal
focus for the balance of 2024 is to complete our North Dakota
development program. Moving into 2025, the Permian in New Mexico’s
Lea County represents a significant production growth opportunity.
We have initiated technical work to identify uplift opportunities
at our three prolific waterflood units in Lea County, though we
expect it to take a few more quarters before we can commence our
pilot drilling program there.”
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
late 2024 and beyond.
- 70% of the horizontal wells completed or in progress and more
under development over the next 2 quarters; the remaining 30% of
the horizontal laterals will be completed for initial Enhanced Oil
Recovery (EOR) development in Q2-Q3 2024;
- First stage of the EOR infrastructure to be completed in
Q2-2024 and the balance installed in Q3-2024;
- Initial production impact anticipated to ramp in Q3-2024 to
Q4-2024 and beyond;
- Drill core data, currently being evaluated, has confirmed new
zones of potential development; and
- 3-D seismic program to guide North Dakota drilling and
development;
- Completed 3-D & 2-D seismic shoot in early May 2024; expect
to complete 3-D processing/analysis and updated 3-D model by end of
Q2-2024 to support launch of development program in Q3-2024
New Mexico – Permian Basin:
- Initiated data and analytics on historical water injection
profiles across all injectors in Empire’s waterflood units;
- Currently focused on evaluating conformance improvements;
- Optimizing waterflood aerial performance to enhance overall
recovery efficiency;
- Constructed reservoir simulation model of Eunice Monument South
Unit (EMSU), Eunice Monument South Unit-B (EMSU-B) and Arrowhead
Grayburg Unit (AGU) to evaluate performance and impact to SWD
injection and long-term flooding into the San Andres;
- Identified high potential recompletion opportunities in
outlying fields; and
- Initiated legal and regulatory actions against third parties
trespassing on the NM water floods
Q1-24
Q4-23
% Change2 Q1-24 vs.
Q4-23
Q1-23
% Change2 Q1-24 vs.
Q1-23
Net equivalent sales (Boe/d)
2,207
2,011
10%
2,206
NM
Net oil sales (Bbls/d)
1,437
1,294
11%
1,336
8%
Realized price ($/Boe)
50.96
53.50
-5%
50.87
NM
Product Revenue ($M)
10,235
9,898
3%
10,100
1%
Net Income (Loss) ($M)
(3,975)
(4,797)
17%
(2,460)
-62%
Adjusted Net Income (Loss) ($M)1
(3,866)
(5,753)
33%
(2,059)
-88%
Adjusted EBITDA ($M)1
(729)
(2,917)
75%
228
NM
FIRST QUARTER 2024 FINANCIAL AND OPERATIONAL RESULTS
_______________________________
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 for Q1-24 were 2,207 Boe/d, including 1,437 barrels of
oil per day; 382 barrels of NGLs per day, and 2,328 thousand cubic
feet per day (“Mcf/d”) or 388 Boe/d of natural gas.
Empire reported Q1-24 total revenue of $9.4 million versus $10.1
million in Q1-23. Contributing to the decrease was a $0.9 million
net loss on derivatives versus a net loss on derivatives of $0.07
million in Q1-23. Partially offsetting the change in derivatives
loss was the increase in oil production due to new wells completed
in North Dakota.
Q1-24 lease operating expenses increased to $7.4 million versus
$6.5 million for Q1-23, primarily due to higher power and fuel
costs, higher contract labor and an increase in employee
headcount.
Production and ad valorem taxes for Q1-24 were $0.8 million,
slightly higher year-over-year as a result of higher product
revenues.
Depreciation, Depletion, Amortization and Accretion (“DD&A”)
for Q1-24 was $1.98 million versus $1.02 million for Q1-23. The
increase in production and the impact of higher capitalized costs
associated with the new drilling activity in North Dakota drove
DD&A expense higher year-over-year.
General and administrative expenses, excluding share-based
compensation expense, were $2.9 million, or $14.33 per Boe in Q1-24
versus $3.0 million, or $15.23 per Boe in Q1-23. The year-over-year
decrease was primarily due to severance expense for the former CEO
in Q1-23, which more than offset a Q1-24 increase in salaries and
benefits associated with an increase in employee headcount.
Interest expense for Q1-24 was $0.3 million compared to $0.2
million for Q1-23.
Empire recorded a Q1-24 net loss of $4.0 million, or $0.15 per
diluted share, versus a Q1-23 net loss of $2.5 million, or $0.11
per diluted share.
Adjusted EBITDA was a loss of $0.7 million for Q1-24 compared to
Adjusted EBITDA of $0.2 million in Q1-23.
CAPITAL SPENDING, BALANCE SHEET & LIQUIDITY
For the three months ended March 31, 2024, Empire invested
approximately $13.4 million in capital expenditures, primarily
reflecting the completion of 4 wells in North Dakota.
As of March 31, 2024, Empire had approximately $3.5 million in
cash on hand and approximately $1.1 million available on its credit
facility. Empire received proceeds of approximately $20.66 million
following the close of the Rights Offering in April 2024.
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 March 31, December 31, March
31,
2024
2023
2023
Revenue: Oil Sales
$
9,441,964
$
9,106,041
$
8,938,715
Gas Sales
377,130
410,816
656,035
Natural Gas Liquids ("NGLs") Sales
416,211
381,497
504,954
Total Product Revenues
10,235,305
9,898,354
10,099,704
Other
10,086
15,705
19,364
Gain (Loss) on Derivatives
(858,150
)
1,253,708
(66,823
)
Total Revenue
9,387,241
11,167,767
10,052,245
Costs and Expenses: Lease Operating Expense
7,387,423
7,956,264
6,520,163
Production and Ad Valorem Taxes
833,447
772,781
758,114
Depletion, Depreciation & Amortization
1,490,130
1,035,059
622,489
Accretion of Asset Retirement Obligation
485,349
478,881
401,275
Impairment
-
-
-
General and Administrative Expense: General and Administrative
2,879,037
4,536,237
3,023,279
Stock-Based Compensation
710,002
855,514
949,639
Total General and Administrative Expense
3,589,039
5,391,751
3,972,918
Total Cost and Expenses
13,785,388
15,634,736
12,274,959
Operating Income (Loss)
(4,398,147
)
(4,466,969
)
(2,222,714
)
Other Income and (Expense): Interest Expense
(315,049
)
(328,445
)
(237,299
)
Other Income (Expense)
738,000
465
422
Income (Loss) before Taxes
(3,975,196
)
(4,794,949
)
(2,459,591
)
Income Tax (Provision) Benefit
-
(2,528
)
-
Net Income (Loss)
$
(3,975,196
)
$
(4,797,477
)
$
(2,459,591
)
Net Income (Loss) per Common Share: Basic
$
(0.15
)
$
(0.20
)
$
(0.11
)
Diluted
$
(0.15
)
$
(0.20
)
$
(0.11
)
Weighted Average Number of Common Shares Outstanding: Basic
25,688,427
23,912,271
22,096,796
Diluted
25,688,427
23,912,271
22,096,796
EMPIRE PETROLEUM CORPORATION Condensed Operating Data
(Unaudited) Three Months Ended March
31, December 31, March 31,
2024
2023
2023
Net Sales Volumes: Oil (Bbl)
130,760
119,022
120,257
Natural gas (Mcf)
211,820
215,855
231,218
Natural gas liquids (Bbl)
34,785
30,011
39,756
Total (Boe)
200,848
185,009
198,549
Average daily equivalent sales (Boe/d)
2,207
2,011
2,206
Average Price per Unit: Oil ($/Bbl)
$
72.21
$
76.51
$
74.33
Natural gas ($/Mcf)
$
1.78
$
1.90
$
2.84
Natural gas liquids ($/Bbl)
$
11.97
$
12.71
$
12.70
Total ($/Boe)
$
50.96
$
53.50
$
50.87
Operating Costs and Expenses per Boe: Lease operating
expense
$
36.78
$
43.00
$
32.84
Production and ad valorem taxes
$
4.15
$
4.18
$
3.82
Depreciation, depletion, amortization and accretion
$
9.84
$
8.18
$
5.16
General & administrative expense: General & administrative
expense
$
14.33
$
24.52
$
15.23
Stock-based compensation
$
3.54
$
4.62
$
4.78
Total general & administrative expense
$
17.87
$
29.14
$
20.01
EMPIRE PETROLEUM CORPORATION Condensed Consolidated
Balance Sheets March 31, December 31,
2024
2023
ASSETS Current
Assets: Cash
$
3,491,465
$
7,792,508
Accounts Receivable
7,290,007
8,354,636
Derivative Instruments
-
406,806
Inventory
1,797,342
1,433,454
Prepaids
1,250,672
757,500
Total Current Assets
13,829,486
18,744,904
Property and Equipment: Oil and Natural Gas
Properties, Successful Efforts
107,020,654
93,509,803
Less: Accumulated Depreciation, Depletion and Impairment
(24,427,923
)
(22,996,805
)
Total Oil and Gas Properties, Net
82,592,731
70,512,998
Other Property and Equipment, Net
1,729,316
1,883,211
Total Property and Equipment, Net
84,322,047
72,396,209
Other Noncurrent Assets
1,931,161
1,474,503
TOTAL ASSETS
$
100,082,694
$
92,615,616
LIABILITIES AND STOCKHOLDERS'
EQUITY Current Liabilities: Accounts Payable
$
17,194,236
$
16,437,219
Accrued Expenses
7,436,586
7,075,302
Derivative Instruments
440,644
-
Current Portion of Lease Liability
430,273
432,822
Current Portion of Note Payable - Related Party
1,060,004
1,060,004
Current Portion of Long-Term Debt
486,483
44,225
Total Current Liabilities
27,048,226
25,049,572
Long-Term Debt
8,533,693
4,596,775
Term Note Payable - Related Party
2,970,000
-
Long-Term Lease Liability
441,748
544,382
Derivative Instruments
1,292,000
-
Asset Retirement Obligations
28,105,761
27,468,427
Total Liabilities
68,391,428
57,659,156
Stockholders' Equity: Series A Preferred Stock -
$.001 Par Value, 10,000,000 Shares Authorized, 6 and 6Shares Issued
and Outstanding, Respectively
-
-
Common Stock - $.001 Par Value, 190,000,000 Shares Authorized,
25,623,674 and25,503,530 Shares Issued and Outstanding,
Respectively
85,145
85,025
Additional Paid-in-Capital
100,200,135
99,490,253
Accumulated Deficit
(68,594,014
)
(64,618,818
)
Total Stockholders' Equity
31,691,266
34,956,460
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
100,082,694
$
92,615,616
EMPIRE PETROLEUM CORPORATION Condensed
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31, December 31,
March 31,
2024
2023
2023
Cash Flows From Operating Activities: Net Income
(Loss)
$
(3,975,196
)
$
(4,797,477
)
$
(2,459,591
)
Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided By Operating Activities: Stock Compensation and Issuances
710,002
855,513
949,639
Amortization of Right of Use Assets
135,733
135,733
76,225
Depreciation, Depletion and Amortization
1,490,130
1,035,059
622,489
Accretion of Asset Retirement Obligation
485,349
478,881
401,275
(Gain) Loss on Commodity Derivatives
858,150
(1,253,708
)
66,823
Settlement on or Purchases of Derivative Instruments
(10,700
)
(266,653
)
(41,187
)
Gain on Financial Derivatives
(738,000
)
-
-
Change in Operating Assets and Liabilities: Accounts Receivable
1,064,629
(1,128,490
)
(849,909
)
Inventory, Oil in Tanks
(363,888
)
131,230
(420,859
)
Prepaids, Current
(2,398
)
(165,768
)
89,812
Accounts Payable
4,339,024
556,917
(213,611
)
Accrued Expenses
361,284
649,185
(110,053
)
Other Long Term Assets and Liabilities
(446,430
)
(160,691
)
(3,177,767
)
Net Cash Provided By (Used In) Operating Activities
3,907,689
(3,930,269
)
(5,066,714
)
Cash Flows from Investing Activities: Additions to
Oil and Natural Gas Properties
(16,940,873
)
(8,950,338
)
(2,210,004
)
Purchase of Other Fixed Assets
(31,023
)
(173,337
)
(27,170
)
Cash Paid for Right of Use Assets
(125,238
)
(124,485
)
(86,545
)
Sinking Fund Deposit
-
-
2,779,000
Net Cash Provided By (Used In) Investing Activities
(17,097,134
)
(9,248,160
)
455,281
Cash Flows from Financing Activities: Borrowings on
Credit Facility
3,950,000
4,492,484
-
Proceeds from Promissory Note
5,000,000
-
-
Principal Payments of Debt
(61,598
)
(4,517,576
)
(569,136
)
Proceeds from Option and Warrant Exercises
-
9,961,195
-
Net Cash Provided By (Used In) Financing Activities
8,888,402
9,936,103
(569,136
)
Net Change in Cash
(4,301,043
)
(3,242,326
)
(5,180,569
)
Cash - Beginning of Period
7,792,508
11,034,834
11,944,442
Cash - End of Period
$
3,491,465
$
7,792,508
$
6,763,873
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 March 31, December
31, March 31,
2024
2023
2023
Net Income (Loss)
$
(3,975,196
)
$
(4,797,477
)
$
(2,459,591
)
Adjusted for: (Gain) loss on commodity derivatives
858,150
(1,253,708
)
66,823
Settlement on or purchases of derivative instruments
(10,700
)
(266,653
)
(41,187
)
Gain on financial derivatives
(738,000
)
-
-
CEO severance (including employer taxes)
-
-
374,820
Professional fees for potential financing transactions
-
564,588
-
Adjusted Net Income (Loss)
$
(3,865,746
)
$
(5,753,250
)
$
(2,059,135
)
Diluted Weighted Average Shares Outstanding
25,688,427
23,912,271
22,096,796
Adjusted Net Income (Loss) Per Share
$
(0.15
)
$
(0.24
)
$
(0.09
)
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 March 31, December
31, March 31,
2024
2023
2023
Net Income (Loss)
$
(3,975,196
)
$
(4,797,477
)
$
(2,459,591
)
Add Back: Interest expense
315,049
328,445
237,299
DD&A
1,490,130
1,035,059
622,489
Accretion
485,349
478,881
401,275
Amortization of right of use assets
135,733
135,733
76,225
Income taxes
-
2,528
-
EBITDA
$
(1,548,935
)
$
(2,816,830
)
$
(1,122,303
)
Adjustments: Stock based Compensation
710,002
855,514
949,639
(Gain) loss on commodity derivatives
858,150
(1,253,708
)
66,823
Settlement on or purchases of derivative instruments
(10,700
)
(266,653
)
(41,187
)
Gain on financial derivatives
(738,000
)
-
-
CEO severance (including employer taxes)
-
-
374,820
Professional fees for potential financing transactions
-
564,588
-
Adjusted EBITDA
$
(729,483
)
$
(2,917,089
)
$
227,792
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240515252127/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
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