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Empire Petroleum First Quarter 2023 Results

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   |    Tuesday,May 16,2023

Empire Petroleum announced first quarter 2023 results.

Highlights

  • Increased year-over-year per day sales volumes by 4% to 2,206 barrels of oil equivalent per day ("Boe/d") (61% oil, 19% natural gas liquids ("NGLs") and 20% natural gas) from 2,112 Boe/d (60% oil, 19% NGLs, and 21% natural gas) for the first quarter of 2022;
  • Reported revenue of $10.1 million, a net loss of $2.5 million, or $0.11 per diluted share, and an Adjusted Net Loss1 of $1.9 million, or $0.08 per diluted share;
  • Generated Adjusted EBITDA1 of $0.2 million;
  • Ended first quarter of 2023 with $7.1 million of liquidity (including $6.8 million of cash) and working capital of $2.3 million; and
  • Leveraging lessons learned in 2022 from the Empire-operated Starbuck Field Pilot Project Program (the "Starbuck Program") in North Dakota, during the first quarter of 2023 the Company made further progress on its development program. Empire owns a 96% working interest and 82.6% net revenue interest in the Starbuck Program.
Empire Petroleum announced operational and financial results for the first quarter of 2023.

Mike Morrisett, President and Chief Executive Officer of Empire, commented, "While we clearly would have liked to see higher sequential pricing for crude oil and natural gas, the first quarter marked a solid start to 2023 on multiple fronts. We were pleased to record higher sales volumes both year-over-year and sequentially, as well as keep LOE and G&A per Boe substantially level excluding non-recurring items. As in the past, I want to thank our employees and business partners for their hard work and strong dedication as we continue to execute on our targeted business plan to drive organic production growth in 2023 that increases long-term cash flow generation and shareholder value."

Mr. Morrisett concluded, "Through our pilot program in North Dakota that was executed in 2022 and into 2023, we have come away with a clear direction on how to best tailor our 2023 capital spending program. This includes a combination of activities, including drilling and completions, workovers, recompletions and related infrastructure. To ensure enhancement of our development efforts, we have focused on adding depth to our technical, operations and administrative teams. All of these experienced professionals were targeted to join Empire based on their respective proven histories of success, and we feel fortunate to have them as part of our expanded team. The future of Empire is bright, and we look forward to further steady execution of our 2023 business plan that is squarely focused on driving increased value for our shareholders."

FINANCIAL AND OPERATIONAL RESULTS FOR FIRST QUARTER 2023

Net sales for the fourth quarter of 2022 were 2,206 Boe/d, including 1,336 barrels of oil per day; 442 barrels of NGLs per day, and 2,569 thousand cubic feet per day ("Mcf/d"), or 428 Boe/d, of natural gas. Contributing to the sequential increase from the fourth quarter of 2022 was an 8% increase in production for Empire's assets in North Dakota.

Empire reported $10.1 million of revenue for the first quarter of 2023 versus $10.7 million for the fourth quarter of 2022. Contributing to the decline was lower realized pricing as compared to the fourth quarter and a lower sequential loss on derivates, which was partially offset by higher sales volumes.

Lease operating expenses for the first quarter of 2023 were $6.5 million, which was a slight decrease from $6.6 million for the fourth quarter of 2022 despite increased sales volumes.

Production and ad valorem taxes for the first quarter of 2023 were $0.8 million and essentially flat with the fourth quarter 2022, and were 7.5% and 7.2% of total product revenue, respectively, for the first quarter of 2023 and fourth quarter of 2022.

General and administrative expenses, excluding share-based compensation expense, were $3.0 million, or $15.23 per Boe, in the first quarter of 2023 versus $2.7 million, or $13.65 per Boe, for the fourth quarter of 2022. Included in the first quarter of 2023 was $0.4 million, or $1.89 per Boe, of cash severance costs associated with departure of the Company's previous Chief Executive Officer. Excluding these costs, Empire's cash general and administrative expenses per Boe declined slightly.

Empire recorded a net loss for the first quarter 2023 of $2.5 million, or $0.11 per diluted share, versus a net loss of $2.3 million, or $0.10 per diluted share, in the fourth quarter of 2022. The Company posted an Adjusted Net Loss for the first quarter of 2023 of $1.9 million, or $0.08 per diluted share, versus an Adjusted Net Loss of $0.9 million, or $0.04 per diluted share, in the fourth quarter of 2022. The sequential quarterly decrease was primarily due to lower realized pricing partially offset by higher sales volumes during first quarter 2023.

Adjusted EBITDA was $0.2 million for the first quarter of 2023 compared to $1.3 million in the fourth quarter of 2022.

CAPITAL SPENDING, BALANCE SHEET & LIQUIDITY

For the three months ended March 31, 2023, the Company invested approximately $2.2 million in capital expenditures primarily related to the well enhancement project in North Dakota.

Total liquidity at the end of the first quarter of 2023 was $7.1 million, including $6.8 million of cash and approximately $0.3 million available on the Company's Credit Facility. As of March 31, 2023, the Company had total debt of $7.1 million and working capital of $2.3 million. Empire remains squarely focused on continuing to execute on its proven strategy to remain financially conservative as it executes on its 2023 development program for its current business and will continue to evaluate opportunities to expand through targeted acquisitions that provide long-term value for the Company's shareholders.


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