Empire Petroleum Provides Encouraging North Dakota Drilling Program Update and Reports Q1 2024 Results
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 inMay 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
($0.7) million
-
Generated Q1-24 Adjusted EBITDA of
2024 OUTLOOK
Empire expects
- 70% of the horizontal wells completed or in progress and more under development over the next 2 quarters; the remaining 30% of the horizontal laterals will be completed for initial Enhanced Oil Recovery (EOR) development in Q2-Q3 2024;
- First stage of the EOR infrastructure to be completed in Q2-2024 and the balance installed in Q3-2024;
- Initial production impact anticipated to ramp in Q3-2024 to Q4-2024 and beyond;
- Drill core data, currently being evaluated, has confirmed new zones of potential development; and
-
3-D seismic program to guide
North Dakota drilling and development;-
Completed 3-D & 2-D seismic shoot in early
May 2024 ; expect to complete 3-D processing/analysis and updated 3-D model by end of Q2-2024 to support launch of development program in Q3-2024
-
Completed 3-D & 2-D seismic shoot in early
- Initiated data and analytics on historical water injection profiles across all injectors in Empire’s waterflood units;
- Currently focused on evaluating conformance improvements;
- Optimizing waterflood aerial performance to enhance overall recovery efficiency;
- Constructed reservoir simulation model of Eunice Monument South Unit (EMSU), Eunice Monument South Unit-B (EMSU-B) and Arrowhead Grayburg Unit (AGU) to evaluate performance and impact to SWD injection and long-term flooding into the San Andres;
- Identified high potential recompletion opportunities in outlying fields; and
- Initiated legal and regulatory actions against third parties trespassing on the NM water floods
Q1-24 |
Q4-23 |
% Change2
|
Q1-23 |
% Change2
|
|
|
|
|
|
|
|
Net equivalent sales (Boe/d) |
2,207 |
2,011 |
10% |
2,206 |
NM |
Net oil sales (Bbls/d) |
1,437 |
1,294 |
11% |
1,336 |
8% |
Realized price ($/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
Q1-24 lease operating expenses increased to
Production and ad valorem taxes for Q1-24 were
Depreciation, Depletion, Amortization and Accretion (“DD&A”) for Q1-24 was
General and administrative expenses, excluding share-based compensation expense, were
Interest expense for Q1-24 was
Empire recorded a Q1-24 net loss of
Adjusted EBITDA was a loss of
CAPITAL SPENDING, BALANCE SHEET & LIQUIDITY
For the three months ended
As of
ABOUT
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
|
||||||||||||
Condensed Consolidated Statements of Operations | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
|
|
|
||||||||||
|
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 |
|
|
||||||||||
Condensed Operating Data | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended | ||||||||||
|
|
|
||||||||
|
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 |
|
|||||||
Condensed Consolidated Balance Sheets | |||||||
|
|
||||||
|
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: | |||||||
|
|
107,020,654 |
|
|
93,509,803 |
|
|
Less: Accumulated Depreciation, Depletion and Impairment |
|
(24,427,923 |
) |
|
(22,996,805 |
) |
|
|
|
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 - |
|
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 - |
|
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 - Shares Issued and Outstanding, Respectively |
|
- |
|
|
- |
|
|
Common Stock - 25,503,530 Shares Issued and Outstanding, Respectively |
|
85,145 |
|
|
85,025 |
|
|
|
|
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 |
|
|
|
||||||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
|
|
|
||||||||||
|
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 |
||||||||||||
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 |
|
(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 |
|
|||
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
Three Months Ended | ||||||||||||
|
|
|
||||||||||
|
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 | ||||||||||||
|
|
|
||||||||||
|
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/
President & CEO
539-444-8002
Info@empirepetrocorp.com
Communications & Investor Relations Manager
918-995-5046
IR@empirepetrocorp.com
Source: