Starbuck is giving a shot in the arm to Tulsa’s Empire Petroleum company.
Not the Starbucks drive-in coffee place but the Starbuck oil play in North Dakota. Empire indicated in its second quarter financial report that it saw big increases and gains in oil production from the play. Big increases indeed. Empire stated the largest production increase was from the Starbuck field, an increase of ~500% from initial purchase.
However, at the same time, Empire also reported a net loss of $4.4 million as its total product revenue was $12.8 million and 15 cents a share. It also recorded an Adjusted Net Loss of $2.9 million or a dime a share. The company said its adjusted EBITDA for the quarter was $1.7 million versus $0.2 million in the second quarter of 2023.
With producing assets in New Mexico, North Dakota, Montana, Texas and Louisiana, the company’s North Dakota development drilling program appears to have been the big producer and to no surprise to company executives.
The firm’s average daily oil sales vollumes grew by 23% compared to the first quarter of the year but 25% compared to the past year and the largest increase was in the North Dakota operations. Empire’s second quarter net production volumes amounted to 2,638 barrels of oil equivalent a day.
The company saw completion of the first stage of the North Dakota horizontal wells for Enhanced Oil Recovery development and it anticipates the EOR infrastructure to be completed in the third quarter. The company also launched its conformance improvements in its New Mexico assets including an upcoming pilot drilling program.
Still, Starbuck and the North Dakota operations had the attention of Phil Mulacek, Chairman of Empire.
“Recent drilling and development data from our North Dakota assets reinforce our confidence in achieving significant long-term production gains. We have successfully enhanced well economics, reducing costs by approximately 50% to $2.4 million through standard directional drilling, compared to $4.8 million with Coiled Tubing Drilling (CTD). Directional drilling has also enabled us to nearly double the hole diameter, increasing the flow area by 66% and extending lateral well lengths by around 150% compared to early CTD wells.”
He anticipates even more production improements in North Dakota for the remainder of the year and in 2025.
“Our objective is to continue boosting production in our Starbuck field through Q1 2025, with the potential for additional increases following the completion of our EOR development, guided by our 3D seismic data.”
For the six months ended June 30, 2024, Empire invested approximately $26 million in capital expenditures, primarily reflecting the continued drilling and completions activity in North Dakota.
President and CEO Mike Morrisett said what the company has done in North Dakota amounted to “significant strikes—resulting in notable production enhancements.”
“Our focus will be on completing the majority of North Dakota’s development efforts in the latter half of 2024. Following this, we plan to shift our attention to our Permian assets in New Mexico’s Lea County, where we see even greater potential for production growth.”
North Dakota – Williston Basin:
Empire expects North Dakota development efforts to drive production improvements; targeted to return operations to positive cash flow and support New Mexico exploration and development in 2025 and beyond. The Company’s goal to see a significant base production increase compared to when the assets were purchased is still the objective through Q1-2025;
- 100% of the first stage of EOR horizontal wells were completed in Q2-2024 and the first stage of the EOR infrastructure to be completed in Q3-2024;
- Second stage of the EOR program and infrastructure to be completed in 2025-2026;
- New horizontal laterals will be completed for Starbuck and other fields the Company operates within North Dakota;
- Production anticipated to ramp in second half of 2024 with an additional four wells coming online and EOR injection commencing;
- Drill core data, currently being evaluated, has confirmed new zones of potential development; and
- 3D & 2D processing to enhance infield development on the Company’s Starbuck assets and apply knowledge to other Company assets in order to expand the development footprint;
- Completion of the 3D & 2D seismic survey in May 2024
- Expect data processing and analysis to be completed by end of Q3-2024;
New Mexico – Permian Basin:
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- Continued data and analytics on historical water injection profiles across all injectors in Empire’s waterflood units;
- Started conformance improvements on wells to evaluate the response before implementation on the unit, then a phased in approach;
- Commenced seeing well performance on production;
- Reduced water injection on wells;
- Continued upgrading high potential recompletion opportunities; and
- Continue the legal and regulatory actions against third parties trespassing on the NM water floods.
- Empire recorded a Q2-2024 net loss of $4.4 million, or $0.15 per diluted share, versus a Q2-2023 net loss of $2.5 million, or $0.11 per diluted share.Adjusted EBITDA improved to $1.7 million for Q2-2024 compared to Adjusted EBITDA of $0.2 million in Q2-2023.As of June 30, 2024, Empire had approximately $9.3 million in cash on hand and approximately $0.7 million available on its credit facility.
Empire received gross proceeds of approximately $20.66 million at $5.00 per share following the close of the Rights Offering in April 2024. The Company converted the Promissory Note with Energy Evolution Fund, $5 million at 7%, to 800,000 shares of common stock.
