Tulsa’s Empire Petroleum company says it expects to see increased oil production in 2024 largely because of its extensive drilling efforts in North Dakota’s Williston Basin and the Permian Basin in New Mexico and Texas.
In a first quarter report issued this week, the firm reported its average daily oil sales volumes grew by 11% from the fourth quarter of 2023 and 18% from a year ago.
Financially, Empire’s first quarter total revenue totaled $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.
The firm said the decrease was due to a $900,000 net loss on derivatives versus a net loss on derivaties of $0.07 million in the first quarter of 2023. Partially offsetting the change in derivatives loss was the increase in oil production due to new wells completed in North Dakota.
Adjusted EBITDA was a loss of $0.7 million for Q1-24 compared to Adjusted EBITDA of $0.2 million in Q1-23.
Q1-24 lease operating expenses increased to $7.4 million versus $6.5 million for Q1-23, primarily due to higher power and fuel costs, higher contract labor and an increase in employee headcount.
For the three months ended March 31, 2024, Empire invested approximately $13.4 million in capital expenditures, primarily reflecting the completion of 4 wells in North Dakota.
“Our principal focus for the balance of 2024 is to complete our North Dakota development program,” said Mike Morrisett, President and CEO.
“Moving into 2025, the Permian in New Mexico’s Lea County represents a significant production growth opportunity. We have initiated technical work to identify uplift opportunities at our three prolific waterflood units in Lea County, though we expect it to take a few more quarters before we can commence our pilot drilling program there.”
Board chairman Phil Mulacek was equally excited by the North Dakota drilling program.
“Recent drilling and data from the North Dakota field and reservoir affirm our confidence in the opportunity to drive meaningful production improvements in this area. We continue to see excellent well economics within our North Dakota operations and are pleased to have achieved significant per-well cost reductions as compared to our initial expectations, following the drilling of our most recent wells.”
He said the integration of the new 3-D and the EOR infrastructure in North Dakota are the key drivers for the company’s production growth goals in 2024.
The company expects the North Dakota development efforts to drive production improvements and return operations to positive cash flow and at the same time, support New Mexico exploration and development later in the year.
Empire reported 70% of the horizontal wells completed or in progress in North Dakota while more are under development for the next two quarters. The remaining wells, according to the firm, will be completed for initial Enhanced Oil Recovery development in the second and third quarters of this year.
In New Mexico, the firm reported it initiated data and analytics on historical water injection profiles across all injectors in Empire’s waterflood units.
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.
CAPITAL SPENDING, BALANCE SHEET & LIQUIDITY
For the three months ended March 31, 2024, Empire invested approximately $13.4 million in capital expenditures, primarily reflecting the completion of 4 wells in North Dakota.
As of March 31, 2024, Empire had approximately $3.5 million in cash on hand and approximately $1.1 million available on its credit facility. Empire received proceeds of approximately $20.66 million following the close of the Rights Offering in April 2024.
