Empire Petroleum Announces Results for First Quarter 2023
~ Making Continued Progress on Targeted Full Year 2023 Capital Spending Program ~
TULSA, Okla.–(BUSINESS WIRE)–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 |
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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 |
|
|||
Contacts
Empire Petroleum Corporation:
Mike Morrisett, President & CEO
539-444-8002
Investor Relations:
Al Petrie Advisors
Wes Harris, Partner
281-740-1334
