Empire Petroleum (EP) Q1 2025 earnings summary

Executive summary

• Q1-2025 net production averaged 2,049 Boe/d, with oil production at 1,329 Bbls/d; severe winter and technical setbacks in North Dakota caused a temporary 75% production drop, but restoration efforts led to a significant rebound.

• Net loss for Q1-2025 was $4.2 million, or ($0.12) per diluted share, reflecting lower oil prices, reduced production, and increased depreciation and administrative costs.

• Legal disputes in New Mexico have resulted in over $30 million in additional costs since May 2021, impacting operating expenses.

• Technical evaluation completed in Texas, with plans to begin drilling in H2 2025; infrastructure and modeling improvements in place for long-term growth.

• Negative working capital of $12.4 million at quarter-end, driven by capital spending and operational challenges.

Financial highlights

• Q1-2025 product revenue was $9.0 million, down from $10.2 million year-over-year, mainly due to lower oil sales volumes and prices.

• Adjusted EBITDA for Q1-2025 was ($0.6) million, a 24% improvement from ($0.7) million in Q1-2024.

• Lease operating expenses decreased to $5.8 million from $7.4 million year-over-year, mainly due to lower workover costs.

• General and administrative expenses (excluding share-based compensation) rose to $3.2 million, driven by increased headcount.

• Cash on hand as of March 31, 2025, was $1.1 million, with $7.8 million available on the credit facility.

Outlook and guidance

• Focus remains on stabilizing and optimizing EOR operations in North Dakota, targeting recovery over the next 3-5 quarters.

• Texas drilling program to commence in H2 2025, targeting multiple stacked pay zones for horizontal development.

• Anticipates meaningful reduction in operating expenses in New Mexico after legal resolution, expected to strengthen financial position.

• Ongoing support from major shareholders is expected to sustain operations and liquidity over the next 12 months.

• Expects to finalize patented hydrocarbon vaporization technology design by end of Q2-2025.