EP Empire Petroleum Corporation

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.

1. 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

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221114006137/en/

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