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Empire Petroleum Announces Results for Fourth Quarter and Full Year 2023

~ Starbuck Drilling Program in North Dakota Continuing to Provide Encouraging Results ~

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 announced operational and financial results for the fourth quarter and full year of 2023, including year-end 2023 proved reserves.

KEY Q4 AND FULL YEAR HIGHLIGHTS

  • Produced fourth quarter 2023 net sales volumes of 2,011 barrels of oil equivalent per day (“Boe/d”) (64% oil, 16% natural gas liquids (“NGLs”) and 20% natural gas;
    • Full year 2023 production was 2,099 Boe/d (64% oil, 18% NGLs, and 18% natural gas);
  • Posted a net loss $4.8 million, or $0.20 per diluted share, for the fourth quarter 2023 and a net loss of $12.5 million, or $0.55 per diluted share, for full year 2023;
    • Contributing to the results were higher expenses associated with an increase in LOE including workovers, DD&A, and G&A to include the additional cost to build out the professional team to support current operations and future growth, and lower sequential year over year pricing;
  • Year-end 2023 proved reserves were 9.1 million barrels of oil equivalent (“MMBoe”), and the standardized measure of SEC proved reserves discounted at 10% was $83.0 million; The decrease in reserves year over year is primarily due to a decrease in the SEC mandated prices used to value oil, natural gas and NGL reserves;
  • Initiated technical work for production uplift opportunities on Empire’s New Mexico assets, including a pilot drilling program in New Mexico that is expected to begin later in 2024; and
  • Completed a $20 million equity raise.

2024 OUTLOOK

  • North Dakota, Williston Basin, Starbuck Field EOR development project: Six horizontal wells online, more under development in the Upper Charles formation and to be expanded in other development formations;
    • Currently, most of the horizontal laterals have been completed for the initial EOR development;
    • The first stage of injectors and infrastructure are to be completed in Q2;
    • The initial impact on production is anticipated in Q3 to Q4 and beyond;
    • The core data collected is currently being evaluated on the key new zones of potential development;
    • The completion of the 3-D seismic shoot and all 3-D processing anticipated in Q2; and
    • Further data analysis will provide the direction for future development activities by Q3
  • New Mexico, Permian Basin: Further evaluating flood performance optimization and new drill opportunities in the Company’s three prolific waterflood units in Lea County, NM: EMSU, EMSU-B and AGU;
  • Texas, Fort Trinidad Field and Empire’s other acreage nearby: under technical and economic review are potentially several development opportunities, with the goal of commencing later this year;
  • Reserves:
    • Anticipate the Starbuck Field EOR development and other Company recompletions, workovers, and drilling to increase proved reserves during 2024; and
    • Anticipate increasing reserve base lending and adding to Empire’s capacity to further develop its assets.

MANAGEMENT COMMENTARY

Mike Morrisett, President and Chief Executive Officer of Empire, commented, “We are committed to executing on our targeted plan for developing our unique asset base. We see significant potential given our top-notch group of technical professionals led by the oversight of Phil Mulacek. Bottom line, we are looking at 2024 to be a real turning point for Empire. As always, I want to thank all our employees, consultants and vendors for their continued hard work and dedication.”

Phil Mulacek, Chairman of the Board, expanded, “As we discussed in our update last month, we continue to learn a substantial amount about the North Dakota field and reservoir, and continue to refine our EOR drilling and completion techniques. As always, our focus remains on driving excellent well economics within our North Dakota operations, and we have been pleased to see significant per well cost reduction with the most recent wells drilled, which drives better immediate and long-term economics. All this while we gather the core technical data to vastly improve Empire’s forward development activities in the EOR and other development structures.”

Mr. Mulacek concluded, “We are also excited about the development opportunities we see in our remaining attractive asset portfolio. This includes a near term focus on our New Mexico assets, including the potential to begin a pilot drilling program in New Mexico later this year. We look forward to keeping everyone apprised of our progress.”

FINANCIAL AND OPERATIONAL RESULTS FOR FOURTH QUARTER 2023

 

 

Q4 2023

 

Q3 2023

 

%

Change

Q4 2023

vs. Q3

2023
2

 

Q4 2022

 

%

Change

Q4 2023

vs. Q4

2022
2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales (Boe/d)

 

 

 

2,011

 

 

2,048

 

 

(2

%)

 

 

2,149

 

 

(6

%)

Net sales (Boe)

 

 

 

185,009

 

 

188,396

 

 

(2

%)

 

 

197,712

 

 

(6

%)

Realized price ($/Boe)

 

 

$

53.50

$

54.75

 

 

(2

%)

 

$

55.59

 

 

(4

%)

Product Revenue ($M)

 

 

$

9,898

 

$

10,315

 

 

(4

%)

 

$

10,991

 

(10

%)

Net income (loss) ($M)

 

 

$

(4,797)

 

$

(2,748)

 

 

(75

%)

 

$

(2,290)

 

 

(109

%)

Adjusted net income (loss) ($M)1

 

 

$

(5,753)

 

$

(1,462)

 

 

NM

 

 

$

(894)

 

 

NM

 

Adjusted EBITDA ($M)1

 

 

$

(2,917)

 

$

134

 

 

NM

 

 

$

1,308

 

 

NM

 

Net sales for the fourth quarter of 2023 were 2,011 Boe/d, including 1,294 barrels of oil per day; 326 barrels of NGLs per day, and 2,346 thousand cubic feet per day (“Mcf/d”), or 391 Boe/d, of natural gas.

Empire reported $11.2 million of total revenue for the fourth quarter of 2023 versus $9.1 million for the third quarter of 2023. Contributing to the increase was a $1.3 million net gain on derivatives versus a derivatives net loss on derivatives of $1.2 million in the third quarter. Partially offsetting the change in derivatives gains was the decline in production and realized prices together with higher overall operating expenses further explained below.

__________________________

1Adjusted 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.

2NM: A percentage calculation is not meaningful due to change in signs, a zero-value denominator or a percent age change greater than 200.

Lease operating expenses for the fourth quarter of 2023 were $8.0 million versus $7.1 million for the third quarter of 2023. Primarily driving the increase was the workover operations in North Dakota and New Mexico and more wells being brought online.

Production and ad valorem taxes for the fourth quarter of 2023 remained steady at $0.8 million.

General and administrative expenses, excluding share-based compensation expense, was $4.5 million, or $24.52 per Boe, in the fourth quarter of 2023 versus $2.6 million, or $13.70 per Boe, for the third quarter of 2023. Contributing to the increase was the hiring of additional professionals and staff to further support current operational needs as well as for the expected growth from Empire’s targeted capital development program.

Interest expense for the fourth quarter of 2023 was $0.3 million, which was slightly higher than $0.2 million for the third quarter.

Empire recorded a net loss- for the fourth quarter of $4.8 million, or $0.20 per diluted share, versus a net loss of $2.7 million, or $0.12 per diluted share, in the third quarter of 2023 and a net loss of $2.3 million, or $0.10 per diluted share, in the fourth quarter of 2022.

The Company posted an adjusted net loss for the fourth quarter of 2023 of $5.8 million, or $0.24 per diluted share, versus an adjusted net loss of $1.5 million, or $0.06 per diluted share, for the third quarter of 2023 and an adjusted net loss of $0.894 million, or $0.04 per diluted share, for the fourth quarter of 2022.

Adjusted EBITDA was a loss of $2.9 million for the fourth quarter of 2023 compared to Adjusted EBITDA income of $0.1 million in the third quarter of 2023 and Adjusted EBITDA income of $1.3 million for the fourth quarter of 2022.

CAPITAL SPENDING, BALANCE SHEET & LIQUIDITY

For the three months and twelve months ended December 31, 2023, the Company invested approximately $19 million and $27 million, respectively, in capital expenditures. Looking at full year 2023, this included approximately $2 million related to acquisitions. Non-acquisition spending of approximately $25 million primarily reflects the development of Empire’s North Dakota operations.

As of December 31, 2023, Empire had approximately $8 million in cash on hand and approximately $5.5 million available on its credit facility.

FINANCIAL AND OPERATIONAL RESULTS FOR FULL YEAR 2023

 

 

FY 2023

 

 

FY 2022

 

 

% Change

FY 2023 vs. FY

2022
2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales (Boe/d)

 

 

 

2,099

 

 

 

2,163

 

 

 

(3)

%

Net sales (Boe)

 

 

 

766,261

 

 

 

789,567

 

 

 

(3)

%

Realized price ($/Boe)

 

 

$

52.29

 

 

$

67.34

 

 

 

(22)

%

Product Revenue ($M)

 

 

$

40,072

 

 

$

53,172

 

 

 

(25)

%

Net income (loss) ($M)

 

 

$

(12,470)

 

 

$

7,084

 

 

 

NM

Adjusted net income (loss) ($M)1

 

 

$

(11,673)

 

 

$

12,265

 

 

 

NM

 

Adjusted EBITDA ($M)1

 

 

$

(2,384)

 

 

$

19,062

 

 

 

NM

 

 

1Adjusted 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.

2NM: 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 the full year of 2023 were 2,099 Boe/d, including 1,337 barrels of oil per day; 373 barrels of NGLs per day; and 2,340 Mcf/d, or 390 Boe/d, of natural gas.

Total revenues for 2023 decreased compared to the prior year primarily due to lower realized oil, natural gas and NGL prices and lower NGL volumes, partially offset by higher oil volumes in North Dakota.

Lease operating expense includes approximately $12.0 million of workover expense for 2023 as compared to approximately $7.9 million for 2022. Lease operating expense was higher in 2023 primarily due to higher workover activities.

Production taxes were lower for 2023 compared to 2022 because of the lower product revenues discussed above.

General and administrative expenses, excluding share-based compensation, was $12.0 million, or $15.71 per Boe, for full year 2023 versus $9.6 million, or $12.18 per Boe, for full year 2022.

Interest expense for full year 2023 was $1.0 million compared to $0.5 million for 2022. Cash-based interest expense increased as higher interest rates were partially offset by a lower outstanding balance under the Company’s credit facility.

Empire posted a net loss for full year 2023 of $12.5 million, or $0.55 per diluted share, versus net income of $7.1 million, or $0.30 per diluted share, for full year 2022. The Company posted an adjusted net loss for full year 2023 of $11.7 million, or $0.51 per diluted share, versus adjusted net income of $12.3 million, or $0.52 per diluted share, for 2022. Adjusted EBITDA was a loss of $2.4 million in 2023 versus Adjusted EBITDA income of $19.1 million in 2022.

YEAR-END 2023 PROVED RESERVES

The Company’s year-end 2023 SEC proved reserves were 9.1 MMBoe compared to 13.2 MMBoe at year-end 2022. The Company recorded 0.2 MMBoe for extensions, discoveries, and improved recovery, as well as 0.04 MMBoe for acquisitions.

Year-end 2023 SEC proved reserves were comprised of approximately 76% crude oil, 13% NGL’s, and 11% natural gas. At year end, 100% of 2023 proved reserves were classified as proved developed.

 

Oil (MBbls)

Gas (MMcf)

NGL (MBbls)

MBOE

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

Acquisition of Reserves (a)

36

19

5

44

Revisions (b)

(1,625)

(5,998)

(960)

(3,585)

Extensions

175

-

-

175

Production

(488)

(854)

(136)

(766)

Balance, December 31, 2023

6,924

6,104

1,171

9,112

(a)

2023 acquisitions primarily relate to additional working interests in certain of the Company’s New Mexico properties. The 2022 acquisitions relate to small acquisition in Empire’s Rockies and New Mexico regions.

(b)

The revisions in 2023 are primarily related to decreases in prices.

The standardized measure of the Company’s reported SEC proved reserves, discounted at 10%, at year-end 2023 was $83.0 million. As of December 31 for each year:

 

2023

 

2022

Future cash inflows

$

543,067,776

 

941,172,544

Future production costs

 

(350,439,800)

 

(509,154,924)

Future development costs

 

(42,475,160)

 

(55,901,780)

Future income tax expense

 

(25,201,886)

 

(90,724,632)

Future net cash flows

 

124,950,930

 

285,391,208

10% annual discount for estimated timing of cash flows

 

(41,954,370)

 

(137,723,795)

Standardized measure

$

83,016,560

 

147,667,413

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:

 

2023

 

2022

Oil (BBl)

$

75.65

 

$

91.14

Natural gas (MMBtu)

$

1.51

 

$

4.23

NGLs (BBL)

$

9.82

 

$

36.29

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:

 

 

 

2023

 

2022

 

Beginning of year

 

$

147,667,413

 

93,852,093

 

Net change in prices and production costs

 

 

(71,619,375)

 

24,651,555

 

Net change in future development costs

 

 

3,314,220

 

(7,141,431)

 

Oil and gas net revenue

 

 

(6,256,366)

 

(21,418,327)

 

Extensions

 

 

4,684,473

 

11,037,719

 

Acquisition of reserves

 

 

526,848

 

12,043,912

 

Revisions of previous quantity estimates

 

 

(55,329,684)

 

46,871,217

 

Net change in taxes

 

 

33,317,731

 

(32,133,473)

 

Accretion of discount

 

 

19,542,907

 

10,939,619

 

Changes in timing and other

 

 

7,168,393

 

8,964,529

 

End of year

 

$

83,016,560

 

147,667,413

 

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 Year Ended
December 31, September 30, December 31, December 31,

2023

2023

2022

2023

2022

Revenue:
Oil Sales

$

9,106,041

 

$

9,492,127

 

$

9,731,245

 

$

36,684,494

 

$

44,978,554

 

Gas Sales

 

410,816

 

 

411,217

 

 

802,425

 

 

1,726,754

 

 

4,534,370

 

Natural Gas Liquids ("NGLs") Sales

 

381,497

 

 

411,624

 

 

457,504

 

 

1,660,256

 

 

3,659,451

 

Total Product Revenues

 

9,898,354

 

 

10,314,968

 

 

10,991,174

 

 

40,071,504

 

 

53,172,375

 

Other

 

15,705

 

 

17,050

 

 

30,552

 

 

70,480

 

 

102,429

 

Gain (Loss) on Derivatives

 

1,253,708

 

 

(1,185,921

)

 

(294,190

)

 

(65,693

)

 

(387,930

)

Total Revenue

 

11,167,767

 

 

9,146,097

 

 

10,727,536

 

 

40,076,291

 

 

52,886,874

 

 
Costs and Expenses:
Lease Operating Expense

 

7,956,264

 

 

7,050,054

 

 

6,602,984

 

 

28,625,481

 

 

23,584,039

 

Production and Ad Valorem Taxes

 

772,781

 

 

792,241

 

 

792,141

 

 

3,044,411

 

 

3,943,466

 

Depletion, Depreciation & Amortization

 

1,035,059

 

 

727,943

 

 

519,403

 

 

3,096,533

 

 

1,949,191

 

Accretion of Asset Retirement Obligation

 

478,881

 

 

470,505

 

 

348,799

 

 

1,756,022

 

 

1,357,906

 

Impairment

 

-

 

 

-

 

 

936,620

 

 

-

 

 

936,620

 

General and Administrative Expense:
General and Administrative

 

4,536,237

 

 

2,580,464

 

 

2,699,880

 

 

12,034,184

 

 

9,614,948

 

Stock-Based Compensation

 

855,514

 

 

158,792

 

 

1,043,718

 

 

3,144,751

 

 

2,716,541

 

Total General and Administrative Expense

 

5,391,751

 

 

2,739,256

 

 

3,743,598

 

 

15,178,935

 

 

12,331,489

 

 
Total Cost and Expenses

 

15,634,736

 

 

11,779,999

 

 

12,943,545

 

 

51,701,382

 

 

44,102,711

 

 
Operating Income (Loss)

 

(4,466,969

)

 

(2,633,902

)

 

(2,216,009

)

 

(11,625,091

)

 

8,784,162

 

 
Other Income and (Expense):
Interest Expense

 

(328,445

)

 

(249,796

)

 

(161,777

)

 

(1,000,427

)

 

(509,540

)

Other Income (Expense)

 

465

 

 

1,350

 

 

297,165

 

 

23,721

 

 

(981,595

)

Income (Loss) before Taxes

 

(4,794,949

)

 

(2,882,348

)

 

(2,080,621

)

 

(12,601,797

)

 

7,293,027

 

 
Income Tax (Provision) Benefit

 

(2,528

)

 

134,720

 

 

(208,898

)

 

132,192

 

 

(208,898

)

 
Net Income (Loss)

$

(4,797,477

)

$

(2,747,628

)

$

(2,289,519

)

$

(12,469,605

)

$

7,084,129

 

 
Net Income (Loss) per Common Share:
Basic

$

(0.20

)

$

(0.12

)

$

(0.10

)

$

(0.55

)

$

0.34

 

Diluted

$

(0.20

)

$

(0.12

)

$

(0.10

)

$

(0.55

)

$

0.30

 

Weighted Average Number of Common Shares Outstanding:
Basic

 

23,912,271

 

 

22,727,639

 

 

22,037,872

 

 

22,718,890

 

 

21,003,563

 

Diluted

 

23,912,271

 

 

22,727,639

 

 

22,037,872

 

 

22,718,890

 

 

23,387,646

 

EMPIRE PETROLEUM CORPORATION
Condensed Operating Data
(Unaudited)
 

Three Months Ended

 

Year Ended

December 31,

 

September 30,

 

December 31,

 

December 31,

2023

 

2023

 

2022

 

2023

 

2022

 
Net Sales Volumes:
Oil (Bbl)

 

119,022

 

120,177

 

121,592

 

487,869

 

482,818

Natural gas (Mcf)

 

215,855

 

195,908

 

221,818

 

854,274

 

875,647

Natural gas liquids (Bbl)

 

30,011

 

35,568

 

39,150

 

136,013

 

160,809

Total (Boe)

 

185,009

 

188,396

 

197,712

 

766,261

 

789,567

 
Average daily equivalent sales (Boe/d)

 

2,011

 

2,048

 

2,149

 

2,099

 

2,163

 
Average Price per Unit:
Oil ($/Bbl)

$

76.51

$

78.98

$

80.03

$

75.19

$

93.16

Natural gas ($/Mcf)

$

1.90

$

2.10

$

3.62

$

2.02

$

5.18

Natural gas liquids ($/Bbl)

$

12.71

$

11.57

$

11.69

$

12.21

$

22.76

Total ($/Boe)

$

53.50

$

54.75

$

55.59

$

52.29

$

67.34

 
Operating Costs and Expenses per Boe:
Lease operating expense

$

43.00

$

37.42

$

33.40

$

37.36

$

29.87

Production and ad valorem taxes

$

4.18

$

4.21

$

4.01

$

3.97

$

4.99

Depreciation, depletion, amortization and accretion

$

8.18

$

6.36

$

4.39

$

6.33

$

4.19

General & administrative expense:
General & administrative expense

$

24.52

$

13.70

$

13.65

$

15.71

$

12.18

Stock-based compensation

$

4.62

$

0.84

$

5.28

$

4.10

$

3.44

Total general & administrative expense

$

29.14

$

14.54

$

18.93

$

19.81

$

15.62

 
 
 
EMPIRE PETROLEUM CORPORATION
Condensed Consolidated Balance Sheets
 

December 31,

 

December 31,

2023

 

2022

 
ASSETS
Current Assets:
Cash

$

7,792,508

 

$

11,944,442

 

Accounts Receivable

 

8,354,636

 

 

7,780,239

 

Derivative Instruments

 

406,806

 

 

121,584

 

Inventory

 

1,433,454

 

 

1,840,274

 

Prepaids

 

757,500

 

 

1,048,434

Total Current Assets

 

18,744,904

 

 

22,734,973

 

 
Property and Equipment:
Oil and Natural Gas Properties, Successful Efforts

 

93,509,803

 

 

63,986,339

 

Less: Accumulated Depreciation, Depletion and Impairment

 

(22,996,805

)

 

(20,116,696

)

Total Oil and Gas Properties, Net

 

70,512,998

 

 

43,869,643

 

Other Property and Equipment, Net

 

1,883,211

 

 

1,441,529

 

Total Property and Equipment, Net

 

72,396,209

 

 

45,311,172

 

 
Sinking Fund

 

-

 

 

2,779,000

 

Other Noncurrent Assets

 

1,474,503

 

 

719,930

 

 
TOTAL ASSETS

$

92,615,616

 

$

71,545,075

 

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable

$

16,437,219

 

$

5,843,366

 

Accrued Expenses

 

7,075,302

 

 

9,461,010

 

Current Portion of Lease Liability

 

432,822

 

 

256,975

 

Current Portion of Note Payable - Related Party

 

1,060,004

 

 

-

 

Current Portion of Long-Term Debt

 

44,225

 

 

2,059,309

Total Current Liabilities

 

25,049,572

 

 

17,620,660

 

 
Long-Term Debt

 

4,596,775

 

 

4,063,115

 

Term Note Payable - Related Party

 

-

 

 

1,076,987

 

Long-Term Lease Liability

 

544,382

 

 

547,692

 

Asset Retirement Obligations

 

27,468,427

 

 

25,000,740

 

Total Liabilities

 

57,659,156

 

 

48,309,194

 

 
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, 25,503,530 and 22,093,503 Shares Issued and Outstanding, Respectively

 

85,025

 

 

81,615

 

Additional Paid-in-Capital

 

99,490,253

 

 

75,303,479

 

Accumulated Deficit

 

(64,618,818

)

 

(52,149,213

)

Total Stockholders' Equity

 

34,956,460

 

 

23,235,881

 

 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

92,615,616

 

$

71,545,075

 

EMPIRE PETROLEUM CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31,

2023

2023

2022

2023

2022

 
Cash Flows From Operating Activities:
Net Income (Loss)

$

(4,797,477

)

$

(2,747,628

)

$

(2,289,519

)

$

(12,469,605

)

$

7,084,129

 

 
Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided By Operating Activities:
Stock Compensation and Issuances

 

855,513

 

 

158,792

 

 

1,043,929

 

 

3,144,750

 

 

2,716,752

 

Amortization of Right of Use Assets

 

135,733

 

 

124,171

 

 

128,613

 

 

423,689

 

 

263,847

 

Depreciation, Depletion and Amortization

 

1,035,059

 

 

727,943

 

 

519,403

 

 

3,096,533

 

 

1,949,191

 

Accretion of Asset Retirement Obligation

 

478,881

 

 

470,505

 

 

348,799

 

 

1,756,022

 

 

1,357,906

 

(Gain) Loss on Derivatives

 

(1,253,708

)

 

1,185,921

 

 

294,190

 

 

65,693

 

 

387,930

 

Settlement on or Purchases of Derivative Instruments

 

(266,653

)

 

(45,855

)

 

(15,461

)

 

(353,695

)

 

(260,266

)

Impairment

 

-

 

 

-

 

 

936,620

 

 

-

 

 

936,620

 

Loss on XTO Final Settlement

 

-

 

 

-

 

 

-

 

 

-

 

 

1,448,363

 

PIE-Related Expense

 

-

 

 

-

 

 

-

 

 

-

 

 

1,399,030

 

Change in Operating Assets and Liabilities:
Accounts Receivable

 

(1,128,490

)

 

467,151

 

 

(2,116,239

)

 

(2,700,528

)

 

(1,812,230

)

Inventory, Oil in Tanks

 

131,230

 

 

(26,255

)

 

(234,917

)

 

(160,827

)

 

(802,394

)

Prepaids, Current

 

(165,768

)

 

202,867

 

 

(323,950

)

 

745,648

 

 

(369,312

)

Accounts Payable

 

556,917

 

 

1,892,377

 

 

2,991,255

 

 

751,355

 

 

526,682

 

Accrued Expenses

 

649,185

 

 

(89,808

)

 

2,136,000

 

 

(3,082,928

)

 

3,616,826

 

Other Long Term Assets and Liabilities

 

(160,691

)

 

(292,782

)

 

(270,107

)

 

(1,103,607

)

 

(387,292

)

Net Cash Provided By Operating Activities

 

(3,930,269

)

 

2,027,399

 

 

3,148,616

 

 

(9,887,500

)

 

18,055,782

 

 
Cash Flows from Investing Activities:
Acquisition of Oil and Natural Gas Properties

 

-

 

 

(1,424,419

)

 

(497,613

)

 

(2,094,419

)

 

(2,702,613

)

Additions to Oil and Natural Gas Properties

 

(8,950,338

)

 

(2,468,688

)

 

(8,658,811

)

 

(14,546,873

)

 

(10,161,711

)

Purchase of Other Fixed Assets

 

(173,337

)

 

(26,478

)

 

(3,442

)

 

(352,851

)

 

(311,229

)

Cash Paid for Right of Use Assets

 

(124,485

)

 

(223,606

)

 

(133,690

)

 

(552,196

)

 

(268,934

)

Sinking Fund Deposit

 

-

 

 

-

 

 

2,671,000

 

 

2,779,000

 

 

2,031,000

 

Net Cash Used In Investing Activities

 

(9,248,160

)

 

(4,143,191

)

 

(6,622,556

)

 

(14,767,339

)

 

(11,413,487

)

 
Cash Flows from Financing Activities:
Proceeds from Debt Issued

 

4,492,484

 

 

10,000,000

 

 

-

 

 

14,492,484

 

 

-

 

Principal Payments of Debt

 

(4,517,576

)

 

(644,224

)

 

(315,673

)

 

(6,450,774

)

 

(1,699,840

)

Proceeds from Option and Warrant Exercises

 

9,961,195

 

 

2,500,000

 

 

212

 

 

12,461,195

 

 

3,390,115

 

Net Cash Provided By (Used In) Financing Activities

 

9,936,103

 

 

11,855,776

 

 

(315,461

)

 

20,502,905

 

 

1,690,275

 

 
Net Change in Cash

 

(3,242,326

)

 

9,739,984

 

 

(3,789,401

)

 

(4,151,934

)

 

8,332,570

 

 
Cash - Beginning of Period

 

11,034,834

 

 

1,294,850

 

 

15,733,843

 

 

11,944,442

 

 

3,611,871

 

 
Cash - End of Period

$

7,792,508

 

$

11,034,834

 

$

11,944,442

 

$

7,792,508

 

$

11,944,441

 

 
Supplemental Cash Flow Information:
Cash Paid for Interest

$

650,637

 

$

473,205

 

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 Year Ended
December 31, September 30, December 31, December 31, December 31,

2023

2023

2022

2023

2022

 
Net Income (Loss)

$

(4,797,477

)

$

(2,747,628

)

$

(2,289,519

)

$

(12,469,605

)

$

7,084,129

 

 
Adjusted for:
(Gain) loss on derivatives

 

(1,253,708

)

 

1,185,921

 

 

294,190

 

 

65,693

 

 

387,930

 

Settlement on or purchases of derivative instruments

 

(266,653

)

 

(45,855

)

 

(15,449

)

 

(353,695

)

 

(260,266

)

CEO severance (including employer taxes)

 

-

 

 

-

 

 

-

 

 

374,820

 

 

-

 

COO severance (including employer taxes)

 

-

 

 

145,319

 

 

-

 

 

145,319

 

 

-

 

Write-off of JDA note receivable

 

-

 

 

-

 

 

-

 

 

-

 

 

1,399,030

 

XTO final settlement

 

-

 

 

-

 

 

-

 

 

-

 

 

1,448,363

 

Impairment

 

-

 

 

-

 

 

936,620

 

 

-

 

 

936,620

 

Settlement and fees related to Texas sales tax audit

 

-

 

 

-

 

 

180,040

 

 

-

 

 

1,269,358

 

Professional fees for potential financing transactions

 

564,588

 

 

-

 

 

-

 

 

564,588

 

 

-

 

 
Adjusted Net Income (Loss)

$

(5,753,250

)

$

(1,462,243

)

$

(894,118

)

$

(11,672,880

)

$

12,265,164

 

 
Diluted Weighted Average Shares Outstanding

 

23,912,271

 

 

22,727,639

 

 

22,037,872

 

 

22,718,890

 

 

23,387,646

 

 
Adjusted Net Income (Loss) Per Share

$

(0.24

)

$

(0.06

)

$

(0.04

)

$

(0.51

)

$

0.52

 

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 Year Ended
December 31, September 30, December 31, December 31, December 31,

 

2023

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 
Net Income (Loss)

$

(4,797,477

)

$

(2,747,628

)

$

(2,289,519

)

$

(12,469,605

)

$

7,084,128

 

 
Add Back:
Interest expense

 

328,445

 

 

249,796

 

 

161,777

 

 

1,000,427

 

 

509,540

 

DD&A

 

1,035,059

 

 

727,943

 

 

519,403

 

 

3,096,533

 

 

1,949,191

 

Accretion

 

478,881

 

 

470,505

 

 

348,799

 

 

1,756,022

 

 

1,357,906

 

Impairment

 

-

 

 

-

 

 

936,620

 

 

-

 

 

936,620

 

Amortization of right of use assets

 

135,733

 

 

124,171

 

 

128,613

 

 

423,689

 

 

263,847

 

Income taxes

 

2,528

 

 

(134,720

)

 

-

 

 

(132,192

)

 

-

 

EBITDA

$

(2,816,831

)

$

(1,309,933

)

$

(194,307

)

$

(6,325,126

)

$

12,101,232

 

 
Adjustments:
Stock based Compensation

 

855,514

 

 

158,792

 

 

1,043,929

 

 

3,144,751

 

 

2,716,758

 

(Gain) loss on derivatives

 

(1,253,708

)

 

1,185,921

 

 

294,190

 

 

65,693

 

 

387,930

 

Settlement on or purchases of derivative instruments

 

(266,653

)

 

(45,855

)

 

(15,449

)

 

(353,695

)

 

(260,266

)

CEO severance (including employer taxes)

 

-

 

 

-

 

 

-

 

 

374,820

 

 

-

 

COO severance (including employer taxes)

 

-

 

 

145,319

 

 

-

 

 

145,319

 

 

-

 

Write-off of JDA note receivable

 

-

 

 

-

 

 

-

 

 

-

 

 

1,399,030

 

XTO final settlement

 

-

 

 

-

 

 

-

 

 

-

 

 

1,448,363

 

Settlement and fees related to Texas sales tax audit

 

-

 

 

-

 

 

180,040

 

 

-

 

 

1,269,358

 

Professional fees for potential financing transactions

 

564,588

 

 

-

 

 

-

 

 

564,588

 

 

-

 

 
Adjusted EBITDA

$

(2,917,090

)

$

134,244

 

$

1,308,403

 

$

(2,383,650

)

$

19,062,405

 

 

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