~ Making Continued Progress on Targeted Full
Year 2023 Capital Spending Program ~
Empire Petroleum (NYSE American: EP) (“Empire” or the
“Company”), today announced operational and financial results for
the first quarter of 2023.
KEY FIRST QUARTER HIGHLIGHTS
- Increased year-over-year per day sales volumes by 4% to 2,206
barrels of oil equivalent per day (“Boe/d”) (61% oil, 19% natural
gas liquids (“NGLs”) and 20% natural gas) from 2,112 Boe/d (60%
oil, 19% NGLs, and 21% natural gas) for the first quarter of
2022;
- Reported revenue of $10.1 million, a net loss of $2.5 million,
or $0.11 per diluted share, and an Adjusted Net Loss1 of $1.9
million, or $0.08 per diluted share;
- Generated Adjusted EBITDA1 of $0.2 million;
- Ended first quarter of 2023 with $7.1 million of liquidity
(including $6.8 million of cash) and working capital of $2.3
million; and
- Leveraging lessons learned in 2022 from the Empire-operated
Starbuck Field Pilot Project Program (the “Starbuck Program”) in
North Dakota, during the first quarter of 2023 the Company made
further progress on its development program. Empire owns a 96%
working interest and 82.6% net revenue interest in the Starbuck
Program.
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.
MANAGEMENT COMMENTARY
Mike Morrisett, President and Chief Executive Officer of Empire,
commented, “While we clearly would have liked to see higher
sequential pricing for crude oil and natural gas, the first quarter
marked a solid start to 2023 on multiple fronts. We were pleased to
record higher sales volumes both year-over-year and sequentially,
as well as keep LOE and G&A per Boe substantially level
excluding non-recurring items. As in the past, I want to thank our
employees and business partners for their hard work and strong
dedication as we continue to execute on our targeted business plan
to drive organic production growth in 2023 that increases long-term
cash flow generation and shareholder value.”
Mr. Morrisett concluded, “Through our pilot program in North
Dakota that was executed in 2022 and into 2023, we have come away
with a clear direction on how to best tailor our 2023 capital
spending program. This includes a combination of activities,
including drilling and completions, workovers, recompletions and
related infrastructure. To ensure enhancement of our development
efforts, we have focused on adding depth to our technical,
operations and administrative teams. All of these experienced
professionals were targeted to join Empire based on their
respective proven histories of success, and we feel fortunate to
have them as part of our expanded team. The future of Empire is
bright, and we look forward to further steady execution of our 2023
business plan that is squarely focused on driving increased value
for our shareholders.”
FINANCIAL AND OPERATIONAL RESULTS FOR FIRST QUARTER
2023
Q1 2023
Q4 2022
% Change Q1 2023 vs. Q4
2022
Q1 2022
% Change Q1 2023 vs. Q1
2022
Net sales (Boe/d)
2,206
2,149
3
%
2,112
4
%
Net sales (Boe)
198,549
197,712
0
%
190,064
4
%
Realized price ($/Boe)
$
50.87
$
55.59
(8
%)
$
65.85
(23
%)
Revenue ($M)
$
10,052
$
10,728
(6
%)
$
12,428
(19
%)
Net income (loss) ($M)
$
(2,460
)
$
(2,290
)
(7
%)
$
3,623
NM
Adjusted Net Income (Loss) ($M)
$
(1,858
)
$
(894
)
(108
%)
$
4,302
NM
Adjusted EBITDA ($M)
$
228
$
1,308
(83
%)
$
5,594
(96
%)
NM - Not meaningful due to a change in
signs
Net sales for the fourth quarter of 2022 were 2,206 Boe/d,
including 1,336 barrels of oil per day; 442 barrels of NGLs per
day, and 2,569 thousand cubic feet per day (“Mcf/d”), or 428 Boe/d,
of natural gas. Contributing to the sequential increase from the
fourth quarter of 2022 was an 8% increase in production for
Empire’s assets in North Dakota.
Empire reported $10.1 million of revenue for the first quarter
of 2023 versus $10.7 million for the fourth quarter of 2022.
Contributing to the decline was lower realized pricing as compared
to the fourth quarter and a lower sequential loss on derivates,
which was partially offset by higher sales volumes.
Lease operating expenses for the first quarter of 2023 were $6.5
million, which was a slight decrease from $6.6 million for the
fourth quarter of 2022 despite increased sales volumes.
Production and ad valorem taxes for the first quarter of 2023
were $0.8 million and essentially flat with the fourth quarter
2022, and were 7.5% and 7.2% of total product revenue,
respectively, for the first quarter of 2023 and fourth quarter of
2022.
General and administrative expenses, excluding share-based
compensation expense, were $3.0 million, or $15.23 per Boe, in the
first quarter of 2023 versus $2.7 million, or $13.65 per Boe, for
the fourth quarter of 2022. Included in the first quarter of 2023
was $0.4 million, or $1.89 per Boe, of cash severance costs
associated with departure of the Company’s previous Chief Executive
Officer. Excluding these costs, Empire’s cash general and
administrative expenses per Boe declined slightly.
Empire recorded a net loss for the first quarter 2023 of $2.5
million, or $0.11 per diluted share, versus 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 first quarter of
2023 of $1.9 million, or $0.08 per diluted share, versus an
Adjusted Net Loss of $0.9 million, or $0.04 per diluted share, in
the fourth quarter of 2022. The sequential quarterly decrease was
primarily due to lower realized pricing partially offset by higher
sales volumes during first quarter 2023.
Adjusted EBITDA was $0.2 million for the first quarter of 2023
compared to $1.3 million in the fourth quarter of 2022.
CAPITAL SPENDING, BALANCE SHEET & LIQUIDITY
For the three months ended March 31, 2023, the Company invested
approximately $2.2 million in capital expenditures primarily
related to the well enhancement project in North Dakota.
Total liquidity at the end of the first quarter of 2023 was $7.1
million, including $6.8 million of cash and approximately $0.3
million available on the Company’s Credit Facility. As of March 31,
2023, the Company had total debt of $7.1 million and working
capital of $2.3 million. Empire remains squarely focused on
continuing to execute on its proven strategy to remain financially
conservative as it executes on its 2023 development program for its
current business and will continue to evaluate opportunities to
expand through targeted acquisitions that provide long-term value
for the Company’s shareholders.
UPDATED PRESENTATION
An updated Company presentation will be posted by Friday, May 19
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
March 31. December 31,
March 31.
2023
2022
2022
Revenue:
Oil Sales
$
8,938,715
$
9,731,245
$
10,416,422
Gas Sales (1)
656,035
802,425
883,902
Natural Gas Liquids ("NGLs") Sales (1)
504,954
457,504
1,215,494
Total Product Revenues
10,099,704
10,991,174
12,515,818
Other
19,364
30,552
24,043
Gain (Loss) on Derivatives
(66,823
)
(294,190
)
(112,321
)
Total Revenue
10,052,245
10,727,536
12,427,540
Costs
and Expenses:
Lease Operating Expense
6,520,163
6,602,984
4,572,401
Production and Ad Valorem Taxes
758,114
792,141
901,238
Depletion, Depreciation & Amortization
622,489
519,403
434,446
Accretion of Asset Retirement Obligation
401,275
348,799
330,000
Impairment
-
936,620
-
General and Administrative
3,972,918
3,743,598
2,455,380
Total
Cost and Expenses
12,274,959
12,943,545
8,693,465
Operating Income (Loss)
(2,222,714
)
(2,216,009
)
3,734,075
Other Income and (Expense):
Interest Expense
(237,299
)
(161,777
)
(110,648
)
Other Income (Expense)
422
297,165
-
Income
(Loss) before Taxes
(2,459,591
)
(2,080,621
)
3,623,427
Income Tax
(Provision) Benefit
-
(208,898
)
-
Net Income (Loss)
$
(2,459,591
)
$
(2,289,519
)
$
3,623,427
Net
Income (Loss) per Common Share:
Basic
$
(0.11
)
$
(0.10
)
$
0.18
Diluted
$
(0.11
)
$
(0.10
)
$
0.15
Weighted Average Number of Common Shares Outstanding:
Basic
22,096,796
22,037,872
19,866,687
Diluted
22,096,796
22,037,872
24,018,453
(1) Presentation for the three months ended March 31, 2022
reflects reclassification of gathering and processing costs from
lease operating expense, which is consistent with the presentation
of results for the three months ended March 31, 2023 and December
31, 2022.
EMPIRE PETROLEUM CORPORATION Condensed
Operating Data (Unaudited)
Three Months Ended
March 31,
December 31, March 31,
2023
2022
2022
Net Production Volumes:
Oil (Bbl)
120,257
121,592
114,255
Natural gas (Mcf)
231,218
221,818
213,945
Natural gas liquids (Bbl)
39,756
39,151
40,152
Total (Boe)
198,549
197,712
190,064
Average
daily equivalent sales (Boe/d)
2,206
2,149
2,112
Average
Price per Unit:
Oil ($/Bbl)
$
74.33
$
80.03
$
91.17
Natural gas ($/Mcf)
$
2.84
$
3.62
$
4.13
Natural gas liquids ($/Bbl)
$
12.70
$
11.69
$
30.27
Total ($/Boe)
$
50.87
$
55.59
$
65.85
Operating Costs and Expenses per Boe:
Lease operating expense
$
32.84
$
33.40
$
24.06
Production and ad valorem taxes
$
3.82
$
4.01
$
4.74
Depreciation, depletion, amortization and accretion
$
5.16
$
4.39
$
4.02
General & administrative (including share-based
compensation)
$
20.01
$
18.93
$
12.92
General & administrative (excluding share-based
compensation)
$
15.23
$
13.65
$
10.94
EMPIRE PETROLEUM CORPORATION Condensed
Consolidated Balance Sheets (Unaudited)
March 31, December 31,
2023
2022
ASSETS
Current Assets: Cash
$
6,763,873
$
11,944,442
Accounts Receivable
6,504,017
7,780,239
Derivative Instruments
93,168
121,584
Inventory
2,261,133
1,840,274
Prepaids
1,413,336
1,048,434
Total Current Assets
17,035,527
22,734,973
Property and Equipment:
Oil and Natural Gas Properties, Successful Efforts
66,127,534
63,986,339
Less: Accumulated Depreciation, Depletion and Impairment
(20,679,739
)
(20,116,696
)
Total Oil and Gas Properties, Net
45,447,795
43,869,643
Other Property and Equipment, Net
1,452,137
1,441,529
Total Property and Equipment, Net
46,899,932
45,311,172
Sinking Fund
-
2,779,000
Utility and Other Deposits
746,884
719,930
TOTAL ASSETS
$
64,682,343
$
71,545,075
LIABILITIES
AND STOCKHOLDERS' EQUITY
Current Liabilities: Accounts
Payable
$
5,733,313
$
5,843,366
Accrued Expenses
6,280,462
9,461,010
Current Portion of Lease Liability
256,975
256,975
Current Portion of Long-Term Debt
2,481,236
2,059,309
Total Current Liabilities
14,751,986
17,620,660
Long-Term Debt
3,594,500
4,063,115
Long-Term Note Payable - Related Party
1,073,376
1,076,987
Long Term Lease Liability
519,852
547,692
Asset Retirement Obligations
25,142,831
25,000,740
Total Liabilities
45,082,545
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,
22,104,592 and 22,093,503 Shares Issued and Outstanding,
Respectively
81,626
81,615
Additional Paid-in Capital
74,126,976
75,303,479
Accumulated Deficit
(54,608,804
)
(52,149,213
)
Total Stockholders' Equity
19,599,798
23,235,881
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
64,682,343
$
71,545,075
EMPIRE PETROLEUM CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited) Three
Months Ended March 31,
December 31, March 31,
2023
2022
2022
Cash
Flows From Operating Activities:
Net Income (Loss)
$
(2,459,591
)
$
(2,289,519
)
$
3,623,427
Adjustments
to Reconcile Net Income (Loss) to Net Cash
Provided By Operating Activities:
Stock Compensation and
Issuances
949,639
1,043,929
376,284
Amortization of Right of Use Assets
76,225
128,613
39,706
Depreciation, Depletion and Amortization
622,489
519,403
434,446
Accretion of Asset Retirement Obligation
401,275
348,799
330,000
Impairment
-
936,620
-
(Gain) Loss on Derivatives
66,823
294,190
112,321
Settlement on or Purchases of Derivative Instruments
(41,187
)
(15,449
)
(83,260
)
Change in Operating Assets and Liabilities:
Accounts Receivable
(849,909
)
(2,116,239
)
(757,466
)
Inventory
(420,859
)
(234,917
)
62,202
Prepaids, Current
89,812
(323,950
)
137,010
Other Long Term Assets and Liabilities
(213,611
)
(612,463
)
-
Accounts Payable
(110,053
)
2,991,255
(1,654,437
)
Accrued Expenses
(3,177,767
)
2,478,344
440,471
Net Cash Provided By (Used In) Operating Activities
(5,066,714
)
3,148,616
3,060,704
Cash
Flows from Investing Activities:
Acquisition of Oil and Natural Gas Properties
-
(497,613
)
-
Additions to Oil and Natural Gas Properties
(2,210,004
)
(8,658,811
)
(424,651
)
Purchase of Other Fixed Assets
(27,170
)
(3,442
)
(9,030
)
Cash Paid for Right of Use Assets
(86,545
)
(133,690
)
(42,833
)
Sinking Fund Deposit
2,779,000
2,671,000
(480,000
)
Net Cash Provided By (Used In) Investing Activities
455,281
(6,622,556
)
(956,514
)
Cash
Flows from Financing Activities:
Principal Payments of Debt
(569,136
)
(315,673
)
(459,952
)
Proceeds from Stock and Warrant Issuance
-
212
97,500
Net Cash Used In Financing Activities
(569,136
)
(315,461
)
(362,452
)
Net
Change in Cash
(5,180,569
)
(3,789,401
)
1,741,738
Cash -
Beginning of Period
11,944,442
15,733,843
3,611,871
Cash - End of Period
$
6,763,873
$
11,944,442
$
5,353,609
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,
2023
2022
2022
Net Income (Loss)
$
(2,459,591
)
$
(2,289,519
)
$
3,623,427
Adjusted for:
(Gain) loss on derivatives
66,823
294,190
112,321
Settlement on or purchases of derivative instruments
(41,187
)
(15,449
)
(83,260
)
Impairment cost
-
936,620
-
Stock-based compensation expense related to CEO separation
201,453
-
-
CEO severance
374,820
-
-
Settlement and fees related to Texas sales tax audit
-
180,040
650,000
Adjusted Net Income
(Loss)
$
(1,857,682
)
$
(894,118
)
$
4,302,488
Diluted Weighted Average Shares
Outstanding
22,096,796
22,037,872
24,018,453
Adjusted Net Income (Loss)
Per Share
$
(0.08
)
$
(0.04
)
$
0.18
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 March 31,
December 31, March 31,
2023
2022
2022
Net Income (Loss)
$
(2,459,591
)
$
(2,289,519
)
$
3,623,427
Add Back:
Interest Expense
237,299
161,777
110,648
DD&A
622,489
519,403
434,446
Accretion
401,275
348,799
330,000
Impairment cost
-
936,620
-
Amortization of right of use assets
76,225
128,613
39,706
EBITDA
$
(1,122,303
)
$
(194,307
)
$
4,538,227
Adjustments:
Stock compensation and issuances
949,639
1,043,929
376,284
(Gain) loss on derivatives
66,823
294,190
112,321
Settlement on or purchases of derivative instruments
(41,187
)
(15,449
)
(83,260
)
CEO severance
374,820
-
-
Settlement and fees related to Texas sales tax audit
-
180,040
650,000
Adjusted EBITDA
$
227,792
$
1,308,403
$
5,593,572
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230515005803/en/
Empire Petroleum Corporation: Mike Morrisett, President &
CEO 539-444-8002 info@empirepetrocorp.com Investor Relations: Al
Petrie Advisors Wes Harris, Partner 281-740-1334
wes@alpetrie.com
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