Empire Petroleum Corp is a conventional oil and natural gas producer with a main focus in the US onshore. The company possesses long-life, mature, producing assets with slow decline profiles in the Permian Basin, Bakken region, and central Gulf Coast region, in the states of New Mexico, North Dakota, Montana, Louisiana, and Texas. It has production from operated and non-operated wells in Lea County in New Mexico, Bottineau, Renville, Burke, and McKenzie Counties in North Dakota, Richland County in Montana, St. Landry, Beauregard Parishes in Louisiana, and Houston, Leon, and Madison Counties in Texas.
Performance and Challenges
Empire Petroleum Corp (EP, Financial) reported a net loss of $4.4 million for Q2 2024, a significant increase from the $2.5 million net loss in Q2 2023. Despite this, the company achieved notable production and revenue growth. Net equivalent sales increased by 20% quarter-over-quarter and 24% year-over-year, driven primarily by new wells completed in North Dakota.
However, the company faced rising costs, including lease operating expenses, which increased to $7.5 million from $7.1 million in Q2 2023. Additionally, depreciation, depletion, amortization, and accretion (DD&A) expenses rose to $3.2 million from $1.1 million in the same period last year, reflecting higher production and new drilling activities.
Financial Achievements
Empire Petroleum Corp (EP, Financial) reported total product revenue of $12.8 million for Q2 2024, a 31% increase from $9.8 million in Q2 2023. This growth was driven by higher oil sales volumes and improved realized prices for oil and natural gas liquids (NGLs).
Adjusted EBITDA improved significantly to $1.7 million in Q2 2024, compared to $0.2 million in Q2 2023. This improvement highlights the company's efforts to enhance operational efficiency and reduce costs.
Income Statement Highlights
| Metric | Q2 2024 | Q1 2024 | Q2 2023 |
|---|---|---|---|
| Net Equivalent Sales (Boe/d) | 2,638 | 2,207 | 2,135 |
| Net Oil Sales (Bbls/d) | 1,761 | 1,437 | 1,411 |
| Realized Price ($/Boe) | $53.26 | $50.96 | $50.22 |
| Product Revenue ($M) | $12.8 | $10.2 | $9.8 |
| Net Income (Loss) ($M) | ($4.4) | ($4.0) | ($2.5) |
| Adjusted EBITDA ($M) | $1.7 | ($0.7) | $0.2 |
Balance Sheet and Cash Flow
As of June 30, 2024, Empire Petroleum Corp (EP, Financial) had $9.3 million in cash on hand and approximately $0.7 million available on its credit facility. The company invested approximately $26 million in capital expenditures during the first half of 2024, primarily for drilling and completions activities in North Dakota.
Empire also raised gross proceeds of approximately $20.66 million through a Rights Offering in April 2024, which contributed to its liquidity position.
Operational Insights and Future Outlook
Empire Petroleum Corp (EP, Financial) continues to focus on enhancing production and reducing costs. The company has successfully reduced drilling costs in North Dakota by approximately 50% through the use of standard directional drilling techniques. This has enabled the company to increase the flow area and extend lateral well lengths, which is expected to drive further production improvements.
Phil Mulacek, Chairman, commented, “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).”
Looking ahead, Empire plans to complete the majority of its North Dakota development efforts in the latter half of 2024 and shift focus to its Permian assets in New Mexico's Lea County, where it sees greater potential for production growth.
Conclusion
Empire Petroleum Corp (EP, Financial) has demonstrated strong production and revenue growth in Q2 2024, despite facing rising costs and reporting a net loss. The company's strategic focus on enhancing operational efficiency and reducing drilling costs positions it well for future growth. Investors will be keen to monitor the company's progress in North Dakota and its upcoming initiatives in the Permian Basin.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Empire Petroleum Corp for further details.
