EX-99 2 emp_exh99-18723.htm PRESS RELEASE DATED MAY 15, 2023

EXHIBIT 99

 

 

 

FOR IMMEDIATE RELEASE NYSE American – EP

 

 

EMPIRE PETROLEUM ANNOUNCES RESULTS FOR FIRST QUARTER 2023

~ Making Continued Progress on Targeted Full Year 2023 Capital Spending Program ~

 

Tulsa, Oklahoma – May 15, 2023 – 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.”

 

 

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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.

 

 

 

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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.

 

 

 

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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.

CONTACT INFORMATION

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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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.

 

 

 

 

 

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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 

 

 

 

 

 

 

 


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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 

 

 

 

 

 

 

 

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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 

 

 



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 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.

 

 

 

 

 

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   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 

 

 

 

 

 

 

 

 

 

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