First quarter finances at Tulsa’s Empire Petroleum showed a significant drop because of extreme winter conditions and a pipeline failure that led to a short-term 75% decrease in net production.
Empire’s first quarter total product revenue was $9 million, a net loss of $4.2 million or 12 cents a share. Its adjusted EBITDA was a minus $600,000 for the quarter compared to minus-$700,000 in the first quarter of last year. The $9 million in product revenue compared to $10.2 in the first quarter of 2024. The net loss also was more than the $4 million or 15 cents a share loss recorded a year earlier.
“Empire’s first-quarter results reflect the temporary production losses caused by severe weather and operational disruptions, which contributed to a net loss for the quarter,” said Phil Mulacek, Chairman of the Board. “Despite these short-term impacts, our flexible structure and multi-basin footprint allow us to quickly adapt to changing market conditions and technical developments in real time.”
He reported the failed pipeline that affected the company’s finances and production has been replaced and the company is preparing to launch drilling operations in Texas in the second half of the year. The Texas region where it intends to begin drilling was historically one where vertical wells were operated but the company recently identified six to seven prospective pay zones with potential for horizontal development. The company indicated it completed its necessary infrastructure to support the planned drilling program and is positioning itself for long-term, capital-efficient growth in the region.
Lease operating expenses in Q1-2025 decreased to $5.8 million versus $7.4 million in Q1-2024 primarily due to lower workover costs. Q1-2025 workover expense decreased to $0.4 million versus $2.0 million in Q1-2024. Higher workover expense in 2024 was primarily in New Mexico as Empire continued work in the region to enhance and maintain production.
With operations in New Mexico, North Dakota, Montana, Texas and Louisiana, Empire produced Q1-2025 net production volumes of 2,049 barrels of oil equivalent per day (“Boe/d”) including 1,329 barrels of oil per day (“Bbls/d”); Boe/d is comprised of 65% oil, 17% natural gas liquids (“NGLs”), and 18% natural gas.
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- Initiating phase one of Enhanced Oil Recovery (“EOR”) efforts in the Starbuck Drilling Programin North Dakota yielded encouraging early results, with daily production increasing significantly from approximately 80 bbls/d to more than 1,200 bbls/d during initial operations.
- Reported Q1-2025 total product revenue $9.0 million, a net loss of $4.2 million, or ($0.12) per diluted share;
- Adjusted EBITDA of ($0.6) million for Q1-2025.
2025 OUTLOOK
Mike Morrisett, President and CEO, added, “We entered 2025 with clear strategic priorities, and Q1 marked continued progress across several fronts, from field-level optimizations in North Dakota to new permitting activity in Texas and New Mexico. We are responding dynamically to new data and operational results, which allow us to fine-tune our approach in each region and ensure we’re maximizing performance and recovery. Our operational agility remains a core advantage in the current energy landscape.”
North Dakota – Williston Basin:
- Empire remains focused on stabilizing and optimizing EOR operations in the Starbuck region following initial setbacks and partial system restoration;
- Since restoring partial operations, production has already increased nearly 70%;
- Expectations are to reach recovery and performance over the next 3-5 quarters of steady-state EOR operations; and
- Continued progress is dependent on consistent technical performance and seasonal operating stability.
New Mexico – Permian Basin:
- After four years of expenditures, Empire is close to a resolution with the New Mexico Oil Conservation Commission (“NMOCD”) related to Empire’s applications to revoke the existing four permits granted and deny the five new applications for what the Company believes to be the illegal dumping of wastewater into Eunice Monument South Unit’s (“EMSU”) Unitized Interval by third-party Saltwater Disposal (“SWD”) Companies;
- Following resolution with the NMOCD, Empire will proceed with the litigation for trespass and damages against all third-party SWD Operators, who the Company believes to be illegally disposing wastewater into the EMSU Unitized Interval;
- The long-standing litigation has negatively impacted Empire’s results by over $30.0 million in additional costs from May 2021 to present;
- These legal expenses have contributed to elevated operating costs in recent periods; and
- Upon final resolution, the Company expects a meaningful reduction in operating expenses, which is projected to positively impact the bottom line and further strengthen its financial position.
Texas – East Texas Basin:
- Advancements in technology, reservoir modeling, and improved hydraulic fracturing techniques have significantly enhanced the development potential of the region;
- These improvements allow for more precise targeting of productive zones, increased recovery rates, and more efficient use of capital;
- Empire is currently evaluating horizontal well designs to maximize production from the prospective pay zones identified in the area; and
- By targeting these stacked formations with horizontal drilling, the Company aims to unlock greater long-term value and improve overall project economics.
FIRST QUARTER 2025 FINANCIAL AND OPERATIONAL RESULTS
| Q1-25 | Q4-24 | % Change Q1-25 vs. Q4-24 |
Q1-24 | % Change Q1-25 vs. Q1-24 |
|
| Net equivalent sales (Boe/d) |
2,049 |
2,356 |
-13% |
2,207 |
-7% |
| Net oil sales (Bbls/d) |
1,329 |
1,581 |
-16% |
1,437 |
-7% |
| Realized price ($/Boe) |
$48.76 |
$46.48 |
5% |
$50.96 |
-4% |
| Product Revenue ($M) |
$8,992 |
$10,077 |
-11% |
$10,235 |
-12% |
| Net Loss ($M) |
($4,221) |
($4,193) |
-1% |
($3,974) |
-6% |
| Adjusted Net Loss ($M)1 |
($4,253) |
($4,193) |
-1% |
($3,865) |
-10% |
| Adjusted EBITDA ($M)1 |
($553) |
($260) |
-113% |
($729) |
24% |
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Net sales volumes for Q1-2025 were 2,049 Boe/d, including 1,329 barrels of oil per day; 349 barrels of NGLs per day, and 2,221 thousand cubic feet per day (“Mcf/d”) or 370 Boe/d of natural gas. Oil sales volumes decreased approximately 9% compared to Q1-2024 primarily due to five wells being down to redrill in North Dakota during Q1-2025.
Production and ad valorem taxes for Q1-2025 were $0.7 million versus $0.8 million in Q1-2024, as a result of lower product revenues.
Depreciation, Depletion, and Amortization (“DD&A”) and Accretion for Q1-2025 was $2.8 million versus $2.0 million for Q1-2024. The increase in DD&A is primarily due to the acquisition of additional working interest and the impact of the capitalized costs associated with the new drilling as part of Empire’s Starbuck Drilling Program in North Dakota. Accretion increased slightly due to the new drilling activity.
General and administrative expenses, excluding share-based compensation expense, was $3.2 million, or $17.34 per Boe in Q1-2025 versus $2.9 million, or $14.33 per Boe in Q1-2024. The increase in expenses was primarily due to an increase in salaries and benefits associated with an increase in employee headcount.
Interest expense for Q1-2025 slightly decreased, compared to Q1-2024, primarily due to certain non-cash interest expense in Q1-2024 from the convertible promissory note partially offset by a higher average outstanding balance on the Company’s credit facility.
CAPITAL SPENDING, BALANCE SHEET & LIQUIDITY
For Q1-2025, Empire invested approximately $2.7 million in capital expenditures, primarily related to the continued drilling and completions activity related to Empire’s Starbuck Drilling Program in North Dakota.
As of March 31, 2025, Empire had approximately $1.1 million in cash on hand and approximately $7.8 million available on its credit facility.
