TULSA, Okla.–(BUSINESS WIRE)–Empire Petroleum (NYSE American: EP) (“Empire” or the “Company”), today reported operational and financial results for the third quarter of 2022.
KEY THIRD QUARTER 2022 HIGHLIGHTS
- Increased sales volumes by 3% to 2,232 barrels of oil equivalent per day (“Boe/d”) (60% oil, 19% natural gas and 21% natural gas liquids (“NGLs”)) from 2,158 Boe/d (62% oil, 18% natural gas and 20% NGLs) for the second quarter of 2022;
- Recorded revenue of $14.8 million that resulted in net income of $0.2 million, or $0.01 per diluted share, and Adjusted Net Income1 of $3.7 million, or $0.16 per diluted share;
- Generated Adjusted EBITDA1 of $4.8 million, or $23.36 per barrel of oil equivalent (“Boe”);
- Increased cash position in the third quarter by 27% to $15.7 million, reduced debt $0.4 million to $7.8 million during the quarter, and ended the period with $16.0 million of liquidity; and
- Made significant progress on the Company’s Starbuck Field Enhancement Program (the “Starbuck Program”), including beginning the waterflood conformance phase, re-perforated and stimulated productive intervals to ensure maximum hydrocarbon recovery, completed seven sidetracks, and finished certain surface facility upgrades that began in 2021. The Starbuck Program is targeted to provide a material increase in production and reserves, with the first three phases of the project expected to be completed by the end of 2022.; and
-
Spudded four new non-operated Bakken wells with completion expected during the fourth quarter of 2022.
- Adjusted Net Income, 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
Tommy Pritchard, Chief Executive Officer of Empire, commented, “We were pleased with our overall results for the third quarter, which included increased collective production levels across our portfolio of assets. While the industry saw some pull back in commodity pricing levels during the third quarter, we continue to expect pricing levels to remain strong through the fourth quarter and into next year given current and projected supply and demand dynamics. I am also pleased to report that we continue to make significant progress on our Starbuck Program. We look forward to providing the market more details on our development activities as appropriate as we move through the program.”
Mike Morrisett, President of Empire, added, “During the third quarter we remained focused on improving our financial standing, including further paydown of our outstanding debt as well as enjoying an enhanced liquidity position that increased more than 25% since the end of the second quarter that benefits our Company and its shareholders. We will continue to execute on targeted field development opportunities to organically expand our production while evaluating additional strategic opportunities to prudently expand our operational footprint and ensure our long-term success.”
FINANCIAL AND OPERATIONAL RESULTS FOR THIRD QUARTER 2022
|
|
|
Q3 2022 |
|
|
Q2 2022 |
|
|
% Change Q3 2022 vs. Q2 2022 |
|
Q3 2021 |
|
|
% Change Q3 2022 vs. Q3 2021 |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Net sales (Boe/d) |
|
|
|
2,232 |
|
|
|
2,158 |
|
|
|
3 |
% |
|
|
2,090 |
|
|
|
7 |
% |
||
|
Net sales (Boe) |
|
|
|
205,380 |
|
|
|
196,412 |
|
|
|
5 |
% |
|
|
192,303 |
|
|
|
7 |
% |
||
|
Realized price ($/Boe) |
|
|
$ |
71.30 |
|
|
$ |
83.48 |
|
|
|
(15 |
%) |
|
$ |
50.11 |
|
|
|
42 |
% |
||
|
Revenue ($M) |
|
|
$ |
14,792 |
|
|
$ |
16,540 |
|
|
|
(11 |
%) |
|
$ |
10,096 |
|
|
|
47 |
% |
||
|
Net income ($M) |
|
|
$ |
216 |
|
|
$ |
5,534 |
|
|
|
(96 |
%) |
|
$ |
(3,726) |
|
|
|
106 |
% |
||
|
Adjusted Net Income ($M) |
|
|
$ |
3,747 |
|
|
$ |
5,967 |
|
|
|
(37 |
%) |
|
$ |
(2,434) |
|
|
|
254 |
% |
||
|
Adjusted EBITDA ($M) |
|
|
$ |
4,799 |
|
|
$ |
6,922 |
|
|
|
(31 |
%) |
|
$ |
7,778 |
|
|
|
(38 |
%) |
||
Net sales for the third quarter of 2022 were 2,232 Boe/d, including 1,346 net barrels of oil per day; 2,517 thousand cubic feet per day (“Mcf/d”), or 419 Boe/d, of natural gas; and 19,625 gallons per day, or 467 Boe/d, of NGLs. Contributing to the sequential increase from the second quarter of 2022 was increased sales volumes associated with Empire’s assets in New Mexico, Texas and Louisiana. This was partially offset by transitory declines in production for the Company’s assets in the Rockies Region primarily associated with taking certain well production offline temporarily as the Company completes the execution of the Starbuck Program.
Empire reported $14.8 million of revenue for the third quarter of 2022 versus $16.5 million for the second quarter of 2022. The increase in sales volumes for all products was offset by lower realized pricing as compared to the second quarter.
Operating expenses for the third quarter of 2022 were $8.5 million, which included a $1.4 million non-cash write-off associated with the Company’s joint development agreement with Petroleum & Independent Exploration, LLC and related entities (“PIE”). Excluding the PIE write-off, operating expenses were $7.1 million compared to $5.5 million for the second quarter of 2022 primarily as a result of increased workovers and other activities executed in advance of capital development programs at our New Mexico and Rockies Region assets.
General and administrative expenses, excluding non-cash share-based compensation, was $2.0 million, or $9.93 per Boe, in the third quarter of 2022 versus $2.8 million, or $14.23 per Boe, for the second quarter of 2022. Contributing to the sequential decrease was lower professional service fees.
Other expense for the third quarter of 2022 was $1.1 million compared to $0.2 million in the second quarter of 2022. Driving the increase was a non-cash $1.4 million settlement related to the purchase of Empire’s New Mexico assets.
Net income for the third quarter was $0.2 million, or $0.01 per diluted share, versus $5.5 million, or $0.24 per diluted share, in the second quarter of 2022. Contributing to the sequential decrease was lower realized pricing partially offset by higher production, the non-cash $1.4 million PIE write-off and the non-cash $1.4 million settlement related to the purchase of the Company’s New Mexico assets.
Adjusted Net Income for the third quarter was $3.7 million, or $0.16 per diluted share, versus $6.0 million, or $0.26 per diluted share, in the second quarter of 2022, with the decrease substantially due to lower realized pricing partially offset by higher production.
Adjusted EBITDA was $4.8 million for the third quarter compared to $6.9 million in the second quarter of 2022, with the decrease substantially due to lower realized pricing partially offset by higher production.
CAPITAL SPENDING, BALANCE SHEET & LIQUIDITY
For the nine months ended September 30, 2022, the Company spent approximately $500,000 on additions to oil and natural gas properties as a result of non-operated drilling, and an additional $1.0 million on capitalized additions to oil and natural gas properties. The Company anticipates additional capital expenditures in the coming quarters that will be funded with cash flows from operations, debt, and/or equity issuances.
Total liquidity at the end of the third quarter of 2022 was $16.0 million, including $15.7 million of cash and $0.3 million available on the Company’s Credit Facility. This represents a more than 25% increase in liquidity from $12.7 million as of June 30, 2022. As of September 30, 2022, the Company had total debt of $7.8 million and working capital of $11.3 million, which was a material increase from Empire’s working capital position of $1.1 million at December 31, 2021. Empire remains squarely focused on continuing to execute on its proven strategy to remain financially conservative as it evaluates additional opportunities to prudently invest in its current business and expand through targeted acquisitions that provide long-term value for its shareholders.
CONFERENCE CALL INFORMATION
An investor conference call to review the Company’s results will be held on Tuesday, November 15, 2022, at 12:00 p.m. Eastern (11:00 a.m. Central). The call will be hosted by Tommy Pritchard, the Company’s Chief Executive Officer, and Mike Morrisett, Empire’s President. Details for the conference call are as follows:
Date: Tuesday, November 15, 2022
Time: 12:00 p.m. Eastern (11:00 a.m. Central)
Telephone: 1-877-270-2148 (Toll free); 1-412-902-6510 (International); participants should ask to be joined into the Empire Petroleum Corporation call.
Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=foO19cFK
Replay: A webcast replay will be available on Empire’s website (www.empirepetroleumcorp.com) under “Investors Relations” on the “Events & Presentations” page following the call or via the webcast link listed above. The replay will be available through November 15, 2023.
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, 2021, 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.
| EMPIRE PETROLEUM CORPORATION | |||||||||||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | ||||||||||||||||
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|||||
| Revenue: | |||||||||||||||||||
| Oil Sales |
$ |
11,501,521 |
|
$ |
13,329,366 |
|
$ |
7,761,584 |
|
$ |
35,247,309 |
|
$ |
13,882,077 |
|
||||
| Gas Sales |
|
1,587,542 |
|
|
1,446,435 |
|
|
855,507 |
|
|
4,019,400 |
|
|
1,536,569 |
|
||||
| Natural Gas Liquids Sales |
|
1,637,808 |
|
|
1,763,546 |
|
|
1,439,799 |
|
|
5,133,872 |
|
|
1,913,191 |
|
||||
| Other |
|
22,921 |
|
|
24,913 |
|
|
71,043 |
|
|
71,877 |
|
|
154,018 |
|
||||
| Net Realized and Unrealized Gain (Loss) on Derivatives |
|
42,474 |
|
|
(23,893 |
) |
|
(32,271 |
) |
|
(93,740 |
) |
|
(572,220 |
) |
||||
| Total Revenue |
|
14,792,266 |
|
|
16,540,367 |
|
|
10,095,662 |
|
|
44,378,718 |
|
|
16,913,635 |
|
||||
| Costs and Expenses: | |||||||||||||||||||
| Operating |
|
8,505,640 |
|
|
5,503,850 |
|
|
3,597,124 |
|
|
19,200,436 |
|
|
7,328,066 |
|
||||
| Taxes – Production |
|
1,112,246 |
|
|
1,137,841 |
|
|
678,295 |
|
|
3,151,325 |
|
|
1,266,808 |
|
||||
| Depletion, Depreciation & Amortization |
|
539,543 |
|
|
455,799 |
|
|
1,279,534 |
|
|
1,429,788 |
|
|
2,025,407 |
|
||||
| Accretion of Asset Retirement Obligation |
|
342,619 |
|
|
336,488 |
|
|
327,018 |
|
|
1,009,107 |
|
|
881,638 |
|
||||
| General and Administrative |
|
2,850,059 |
|
|
3,282,452 |
|
|
1,914,326 |
|
|
8,587,891 |
|
|
6,040,475 |
|
||||
| Total Cost and Expenses |
|
13,350,107 |
|
|
10,716,430 |
|
|
7,796,297 |
|
|
33,378,547 |
|
|
17,542,394 |
|
||||
| Operating Income (Loss) |
|
1,442,159 |
|
|
5,823,937 |
|
|
2,299,365 |
|
|
11,000,171 |
|
|
(628,759 |
) |
||||
| Other Income and (Expense): | |||||||||||||||||||
| Convertible Debt Modification Inducement Expense |
|
– |
|
|
– |
|
|
(2,276,813 |
) |
|
– |
|
|
(2,276,813 |
) |
||||
| Unrealized Gain on Embedded Conversion Option |
|
– |
|
|
– |
|
|
689,215 |
|
|
– |
|
|
92,931 |
|
||||
| Other Income (Expense) |
|
(1,100,888 |
) |
|
(177,872 |
) |
|
29,687 |
|
|
(1,278,760 |
) |
|
190,387 |
|
||||
| Interest Expense |
|
(125,330 |
) |
|
(111,785 |
) |
|
(4,467,679 |
) |
|
(347,763 |
) |
|
(7,373,113 |
) |
||||
| Net Income (Loss) |
$ |
215,941 |
|
$ |
5,534,280 |
|
$ |
(3,726,225 |
) |
$ |
9,373,648 |
|
$ |
(9,995,367 |
) |
||||
| Net Income (Loss) per Common Share: | |||||||||||||||||||
| Basic |
$ |
0.01 |
|
$ |
0.27 |
|
$ |
(0.23 |
) |
$ |
0.45 |
|
$ |
(0.75 |
) |
||||
| Diluted |
$ |
0.01 |
|
$ |
0.24 |
|
$ |
(0.23 |
) |
$ |
0.41 |
|
$ |
(0.75 |
) |
||||
| Weighted Average Number of Common Shares Outstanding: | |||||||||||||||||||
| Basic |
|
21,651,383 |
|
|
20,424,970 |
|
|
16,560,705 |
|
|
20,654,294 |
|
|
13,278,341 |
|
||||
| Diluted |
|
24,065,485 |
|
|
23,294,723 |
|
|
16,560,705 |
|
|
22,778,836 |
|
|
13,278,341 |
|
||||
| EMPIRE PETROLEUM CORPORATION | ||||||||||||||||
| Condensed Operating Data | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | June 30, | September 30, | September 30, | |||||||||||||
|
2022 |
2022 |
2021 |
2022 |
2021 |
||||||||||||
| Net Production Volumes: | ||||||||||||||||
| Oil (Bbl) |
|
123,804 |
|
123,167 |
|
114,495 |
|
361,226 |
|
220,780 |
||||||
| Natural gas (Mcf) |
|
231,522 |
|
208,363 |
|
224,118 |
|
653,829 |
|
379,600 |
||||||
| Natural gas liquids (Gal) |
|
1,805,523 |
|
1,617,751 |
|
1,699,112 |
|
5,109,649 |
|
2,598,655 |
||||||
| Total (Boe) |
|
205,380 |
|
196,412 |
|
192,303 |
|
591,856 |
|
345,919 |
||||||
| Average daily equivalent sales (Boe/d) |
|
2,232 |
|
2,158 |
|
2,090 |
|
2,168 |
|
1,267 |
||||||
| Average Price per Unit: | ||||||||||||||||
| Oil ($/Bbl) |
$ |
92.22 |
$ |
108.06 |
$ |
64.98 |
$ |
96.90 |
$ |
59.80 |
||||||
| Natural gas ($/Mcf) |
$ |
6.86 |
$ |
6.37 |
$ |
3.82 |
$ |
6.15 |
$ |
4.05 |
||||||
| Natural gas liquids ($/Gal) |
$ |
0.91 |
$ |
1.09 |
$ |
0.85 |
$ |
1.00 |
$ |
0.74 |
||||||
| Total ($/Boe) |
$ |
71.30 |
$ |
83.48 |
$ |
50.11 |
$ |
74.45 |
$ |
50.10 |
||||||
| Operating Costs and Expenses per Boe: | ||||||||||||||||
| Oil and natural gas production |
$ |
41.41 |
$ |
28.02 |
$ |
18.71 |
$ |
32.44 |
$ |
21.18 |
||||||
| Production and ad valorem taxes |
$ |
5.42 |
$ |
5.79 |
$ |
3.53 |
$ |
5.32 |
$ |
3.66 |
||||||
| Depreciation, depletion, amortization and accretion |
$ |
4.30 |
$ |
4.03 |
$ |
8.35 |
$ |
4.12 |
$ |
8.40 |
||||||
| General & administrative (including share-based compensation) |
$ |
13.88 |
$ |
16.71 |
$ |
9.95 |
$ |
14.51 |
$ |
17.46 |
||||||
| General & administrative (excluding share-based compensation) |
$ |
9.93 |
$ |
14.23 |
$ |
9.95 |
$ |
11.68 |
$ |
16.29 |
||||||
| EMPIRE PETROLEUM CORPORATION | |||||||
| Condensed Consolidated Balance Sheets | |||||||
| (Unaudited) | |||||||
| September 30, | December 31, | ||||||
|
|
2022 |
|
|
2021 |
|
||
| ASSETS | |||||||
| Current Assets: | |||||||
| Cash |
$ |
15,733,842 |
|
$ |
3,611,871 |
|
|
| Accounts Receivable |
|
5,981,533 |
|
|
7,733,905 |
|
|
| Unrealized Gain on Derivative Instruments |
|
348,665 |
|
|
55,242 |
|
|
| Inventory – Oil in Tanks |
|
1,605,357 |
|
|
1,037,880 |
|
|
| Prepaids |
|
724,484 |
|
|
679,122 |
|
|
| Total Current Assets |
|
24,393,881 |
|
|
13,118,020 |
|
|
| Property and Equipment: | |||||||
| Oil and Natural Gas Properties, Successful Efforts |
|
53,064,338 |
|
|
46,914,326 |
|
|
| Less: Accumulated Depreciation, Depletion and Impairment |
|
(18,703,073 |
) |
|
(17,525,918 |
) |
|
|
|
34,361,265 |
|
|
29,388,408 |
|
||
| Other Property and Equipment, Net |
|
1,535,765 |
|
|
1,288,611 |
|
|
| Total Property and Equipment, Net |
|
35,897,030 |
|
|
30,677,019 |
|
|
| Unrealized Gain on Derivative Instruments – Long Term |
|
51,660 |
|
|
194,018 |
|
|
| Sinking Fund |
|
5,450,000 |
|
|
4,810,000 |
|
|
| Utility and Other Deposits |
|
449,811 |
|
|
1,290,594 |
|
|
| TOTAL ASSETS |
$ |
66,242,382 |
|
$ |
50,089,651 |
|
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current Liabilities: | |||||||
| Accounts Payable |
$ |
4,226,799 |
|
$ |
4,329,535 |
|
|
| Accrued Expenses |
|
7,325,010 |
|
|
5,844,184 |
|
|
| Current Portion of Lease Liability |
|
251,117 |
|
|
180,105 |
|
|
| Current Portion of Long-Term Notes Payable |
|
1,258,804 |
|
|
1,700,663 |
|
|
| Total Current Liabilities |
|
13,061,730 |
|
|
12,054,487 |
|
|
| Long-Term Notes Payable |
|
5,174,783 |
|
|
6,117,091 |
|
|
| Long-Term Note Payable – PIE |
|
1,399,030 |
|
|
797,010 |
|
|
| Long Term Lease Liability |
|
613,899 |
|
|
646,311 |
|
|
| Asset Retirement Obligations |
|
21,722,407 |
|
|
20,640,599 |
|
|
| Total Liabilities |
|
41,971,849 |
|
|
40,255,498 |
|
|
| Stockholders’ Equity: | |||||||
| Series A Preferred Stock – $.001 Par Value, 10,000,000 Shares Authorized, 6 and 0 Shares Issued and Outstanding, Respectively |
|
– |
|
|
– |
|
|
| Common Stock – $.001 Par Value 190,000,000 Shares Authorized, 21,443,293 and 19,840,648 Shares Issued and Outstanding, Respectively |
|
81,550 |
|
|
79,362 |
|
|
| Additional Paid-in Capital |
|
74,048,678 |
|
|
68,988,134 |
|
|
| Accumulated Deficit |
|
(49,859,695 |
) |
|
(59,233,343 |
) |
|
| Total Stockholders’ Equity |
|
24,270,533 |
|
|
9,834,153 |
|
|
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
66,242,382 |
|
$ |
50,089,651 |
|
|
| EMPIRE PETROLEUM CORPORATION | |||||||||||||||||||
| Condensed Consolidated Statements of Cash Flows | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | ||||||||||||||||
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|||||
| Cash Flows From Operating Activities: | |||||||||||||||||||
| Net Income (Loss) |
$ |
215,941 |
|
$ |
5,534,280 |
|
$ |
(3,726,225 |
) |
$ |
9,373,648 |
|
$ |
(9,995,367 |
) |
||||
| Adjustments to Reconcile Net Income (Loss) to Net Cash | |||||||||||||||||||
| Provided By Operating Activities: | |||||||||||||||||||
| Stock Compensation and Issuances |
|
809,641 |
|
|
486,903 |
|
|
– |
|
|
1,672,823 |
|
|
406,250 |
|
||||
| Amortization of Right of Use Assets |
|
44,627 |
|
|
50,901 |
|
|
47,935 |
|
|
135,234 |
|
|
54,363 |
|
||||
| Depreciation, Depletion and Amortization |
|
539,543 |
|
|
455,799 |
|
|
1,279,534 |
|
|
1,429,788 |
|
|
2,025,407 |
|
||||
| Accretion of Asset Retirement Obligation |
|
342,619 |
|
|
336,488 |
|
|
327,018 |
|
|
1,009,107 |
|
|
881,638 |
|
||||
| Settlement of Asset Retirement Obligations |
|
– |
|
|
(342,344 |
) |
|
– |
|
|
(342,344 |
) |
|
– |
|
||||
| Loss on Settlement of Asset Retirement Obligations |
|
– |
|
|
181,386 |
|
|
– |
|
|
181,386 |
|
|
– |
|
||||
| Loss on XTO Final Settlement |
|
1,448,363 |
|
|
– |
|
|
– |
|
|
1,448,363 |
|
|
– |
|
||||
| PIE-Related Expense |
|
1,399,030 |
|
|
– |
|
|
– |
|
|
1,399,030 |
|
|
– |
|
||||
| Amortization of Loan Issue Costs |
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
14,587 |
|
||||
| Right to Buy Issuance Costs |
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
989,115 |
|
||||
| Unrealized Gain on Embedded Conversion Option |
|
– |
|
|
– |
|
|
(689,215 |
) |
|
– |
|
|
(92,931 |
) |
||||
| Amortization of Discount on Convertible Notes |
|
– |
|
|
– |
|
|
4,090,214 |
|
|
– |
|
|
6,670,129 |
|
||||
| Convertible Debt Modification Inducement Expense |
|
– |
|
|
– |
|
|
2,276,813 |
|
|
– |
|
|
2,276,813 |
|
||||
| Stock Issued for Interest Expense Payment |
|
– |
|
|
– |
|
|
241,054 |
|
|
– |
|
|
241,054 |
|
||||
| Forgiveness of Payroll Protection Plan Loan |
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
(160,700 |
) |
||||
| Change in Operating Assets and Liabilities: | |||||||||||||||||||
| Accounts Receivable |
|
1,417,093 |
|
|
(355,618 |
) |
|
(3,217,479 |
) |
|
304,009 |
|
|
(5,566,084 |
) |
||||
| Unrealized Gain on Derivatives |
|
(126,400 |
) |
|
(53,726 |
) |
|
(295,668 |
) |
|
(151,065 |
) |
|
(113,943 |
) |
||||
| Inventory, Oil in Tanks |
|
(412,768 |
) |
|
(216,911 |
) |
|
159,611 |
|
|
(567,477 |
) |
|
(681,208 |
) |
||||
| Prepaids, Current |
|
(184,958 |
) |
|
2,586 |
|
|
25,614 |
|
|
(45,362 |
) |
|
115,670 |
|
||||
| Other Assets |
|
39,033 |
|
|
4,735 |
|
|
200,100 |
|
|
43,773 |
|
|
(6,807 |
) |
||||
| Accounts Payable |
|
(1,459,997 |
) |
|
649,861 |
|
|
1,901,185 |
|
|
(2,464,573 |
) |
|
2,326,752 |
|
||||
| Accrued Expenses |
|
(208,689 |
) |
|
1,249,044 |
|
|
521,251 |
|
|
1,480,826 |
|
|
1,245,653 |
|
||||
| Net Cash Provided By Operating Activities |
|
3,863,078 |
|
|
7,983,384 |
|
|
3,141,742 |
|
|
14,907,166 |
|
|
630,391 |
|
||||
| Cash Flows from Investing Activities: | |||||||||||||||||||
| Acquisition of Oil and Natural Gas Properties |
|
– |
|
|
(2,205,000 |
) |
|
– |
|
|
(2,205,000 |
) |
|
(17,869,779 |
) |
||||
| Additions to Oil and Natural Gas Properties |
|
(276,024 |
) |
|
(802,225 |
) |
|
– |
|
|
(1,502,900 |
) |
|
– |
|
||||
| Purchase of Other Fixed Assets |
|
(189,179 |
) |
|
(109,578 |
) |
|
(424,760 |
) |
|
(307,787 |
) |
|
(508,571 |
) |
||||
| Cash Paid for Right of Use Assets |
|
(44,009 |
) |
|
(48,402 |
) |
|
– |
|
|
(135,244 |
) |
|
– |
|
||||
| Sinking Fund Deposit |
|
– |
|
|
(160,000 |
) |
|
(480,000 |
) |
|
(640,000 |
) |
|
(4,330,000 |
) |
||||
| Investment in Related Party |
|
– |
|
|
– |
|
|
1,250,000 |
|
|
– |
|
|
– |
|
||||
| Net Cash Used In Investing Activities |
|
(509,212 |
) |
|
(3,325,205 |
) |
|
345,240 |
|
|
(4,790,931 |
) |
|
(22,708,350 |
) |
||||
| Cash Flows from Financing Activities: | |||||||||||||||||||
| Proceeds from Debt Issued |
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
19,599,850 |
|
||||
| Principal Payments of Debt |
|
(461,779 |
) |
|
(462,436 |
) |
|
(1,899,452 |
) |
|
(1,384,167 |
) |
|
(5,546,738 |
) |
||||
| Proceeds from Stock and Warrant Issuance |
|
– |
|
|
– |
|
|
583,102 |
|
|
– |
|
|
11,054,661 |
|
||||
| Proceeds from Option and Warrant Exercise |
|
405,220 |
|
|
2,887,183 |
|
|
– |
|
|
3,389,903 |
|
|
– |
|
||||
| Net Cash Provided By (Used In) Financing Activities |
|
(56,559 |
) |
|
2,424,747 |
|
|
(1,316,350 |
) |
|
2,005,736 |
|
|
25,107,773 |
|
||||
| Net Change in Cash |
|
3,297,307 |
|
|
7,082,926 |
|
|
2,170,632 |
|
|
12,121,971 |
|
|
3,029,814 |
|
||||
| Cash – Beginning of Period |
|
12,436,535 |
|
|
5,353,609 |
|
|
1,016,877 |
|
|
3,611,871 |
|
|
157,695 |
|
||||
| Cash – End of Period |
$ |
15,733,842 |
|
$ |
12,436,535 |
|
$ |
3,187,509 |
|
$ |
15,733,842 |
|
$ |
3,187,509 |
|
||||
Empire Petroleum Corporation
Non-GAAP Information
Certain financial information included in Empire’s financial results are not measures of financial performance recognized by accounting principles generally accepted in the United States, or GAAP. These non-GAAP financial measures include “Adjusted Net Income”, “EBITDA” and “Adjusted EBITDA”. These disclosures may not be viewed as a substitute for results determined in accordance with GAAP and are not necessarily comparable to non-GAAP performance measures which may be reported by other companies.
Adjusted Net Income is presented because the timing and amount of these items cannot be reasonably estimated and affect the comparability of operating results from period to period, and current periods to prior periods.
| ADJUSTED NET INCOME | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||||
| Net Income (Loss) |
$ |
215,941 |
|
$ |
5,534,280 |
|
$ |
(3,726,225 |
) |
$ |
9,373,648 |
|
$ |
(9,995,367 |
) |
|||||
| Adjusted for: | ||||||||||||||||||||
| Warrants and options granted in G&A |
|
809,641 |
|
|
486,903 |
|
|
– |
|
|
1,672,823 |
|
|
– |
|
|||||
| Unrealized (gain) loss on derivatives |
|
(126,400 |
) |
|
(53,726 |
) |
|
(295,668 |
) |
|
(151,065 |
) |
|
(113,943 |
) |
|||||
| Write off of JDA note receivable |
|
1,399,030 |
|
|
– |
|
|
– |
|
|
1,399,030 |
|
|
– |
|
|||||
| XTO final settlement – noncash settlement |
|
1,448,363 |
|
|
– |
|
|
– |
|
|
1,448,363 |
|
|
– |
|
|||||
| Convertible debt modification inducement expense |
|
– |
|
|
– |
|
|
2,276,813 |
|
|
– |
|
|
2,276,813 |
|
|||||
| Loss (gain) on conversion option |
|
– |
|
|
– |
|
|
(689,215 |
) |
|
– |
|
|
(92,931 |
) |
|||||
| Right to buy issuance costs |
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
989,115 |
|
|||||
| Stock compensation expense |
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
406,250 |
|
|||||
| Forgiveness of PPP loan |
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
(160,700 |
) |
|||||
| Adjusted Net Income |
$ |
3,746,575 |
|
$ |
5,967,457 |
|
$ |
(2,434,295 |
) |
$ |
13,742,799 |
|
$ |
(6,690,763 |
) |
|||||
| Diluted Weighted Average Shares Outstanding |
|
24,065,485 |
|
|
23,294,723 |
|
|
16,560,705 |
|
|
22,778,836 |
|
|
13,278,341 |
|
|||||
| Adjusted Net Income (Loss) Per Share |
$ |
0.16 |
|
$ |
0.26 |
|
$ |
(0.15 |
) |
$ |
0.60 |
|
$ |
(0.50 |
) |
|||||
The Company defines Adjusted EBITDA as net income (loss) plus net interest expense, depreciation, depletion and amortization (“DD&A”), accretion, amortization of loan issuance costs, ROU assets and discount on convertible notes, income tax (benefit) expense, and other non-cash items.
Company management believes this presentation is relevant and useful because it helps investors understand Empire’s operating performance and makes it easier to compare its results with those of other companies that have different financing, capital and tax structures. Adjusted EBITDA should not be considered in isolation from or as a substitute for net income, as an indication of operating performance or cash flows from operating activities or as a measure of liquidity. In addition, Adjusted EBITDA does not represent funds available for discretionary use.
| EBITDA & ADJUSTED EBITDA | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||||
| Net Income (Loss) |
$ |
215,941 |
|
$ |
5,534,280 |
|
$ |
(3,726,225 |
) |
$ |
9,373,648 |
|
$ |
(9,995,367 |
) |
|||||
| Add Back: | ||||||||||||||||||||
| Interest Expense |
|
125,330 |
|
|
111,785 |
|
|
4,467,679 |
|
|
347,763 |
|
|
7,373,113 |
|
|||||
| DD&A |
|
539,543 |
|
|
455,799 |
|
|
1,279,534 |
|
|
1,429,788 |
|
|
2,025,407 |
|
|||||
| Accretion |
|
342,619 |
|
|
336,488 |
|
|
327,018 |
|
|
1,009,107 |
|
|
881,638 |
|
|||||
| Amortization of loan issuance costs |
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
14,587 |
|
|||||
| Amortization of ROU assets |
|
44,627 |
|
|
50,901 |
|
|
47,935 |
|
|
135,234 |
|
|
54,363 |
|
|||||
| Amortization of disc. on convertible notes |
|
– |
|
|
– |
|
|
4,090,214 |
|
|
– |
|
|
6,670,129 |
|
|||||
| EBITDA |
$ |
1,268,060 |
|
$ |
6,489,253 |
|
$ |
6,486,155 |
|
$ |
12,295,540 |
|
$ |
7,023,870 |
|
|||||
| Consideration of noncash items: | ||||||||||||||||||||
| Warrants and options granted in G&A |
|
809,641 |
|
|
486,903 |
|
|
– |
|
|
1,672,823 |
|
|
– |
|
|||||
| Unrealized (gain) loss on derivatives |
|
(126,400 |
) |
|
(53,726 |
) |
|
(295,668 |
) |
|
(151,065 |
) |
|
(113,943 |
) |
|||||
| Write off of JDA note receivable |
|
1,399,030 |
|
|
– |
|
|
– |
|
|
1,399,030 |
|
|
– |
|
|||||
| XTO final settlement – noncash settlement |
|
1,448,363 |
|
|
– |
|
|
– |
|
|
1,448,363 |
|
|
– |
|
|||||
| Convertible debt modification inducement expense |
|
– |
|
|
– |
|
|
2,276,813 |
|
|
– |
|
|
2,276,813 |
|
|||||
| Loss (gain) on conversion option |
|
– |
|
|
– |
|
|
(689,215 |
) |
|
– |
|
|
(92,931 |
) |
|||||
| Right to buy issuance costs |
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
989,115 |
|
|||||
| Stock compensation expense |
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
406,250 |
|
|||||
| Forgiveness of PPP loan |
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
(160,700 |
) |
|||||
| Adjusted EBITDA |
$ |
4,798,694 |
|
$ |
6,922,430 |
|
$ |
7,778,085 |
|
$ |
16,664,691 |
|
$ |
10,328,474 |
|
|||||
Contacts
Empire Petroleum Corporation:
Tommy Pritchard, CEO
Mike Morrisett, President
539-444-8002
info@empirepetrocorp.com
Investor Relations:
Al Petrie Advisors
Wes Harris, Partner
713-300-6321
wes@alpetrie.com