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EP

EMPIRE PETROLEUM CORP (EP)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 saw higher production but materially weaker pricing, driving lower financials: product revenue of $8.747M, diluted EPS of ($0.15), and Adjusted EBITDA of ($1.181M). Realized price fell 16% sequentially and 23% YoY, overwhelming a 15% QoQ increase in Boe/d .
  • Management reiterated operational momentum: EOR modifications in North Dakota targeted for completion and steady-state output by Q4 2025; Texas inaugural drilling campaign slated to begin in Q4 2025 .
  • Rights offering concluded fully subscribed, yielding ~$2.5M gross proceeds (with potential ~$2.5M more from warrant exercises), bolstering near-term liquidity and funding optimization initiatives .
  • No formal quantitative guidance was issued; commentary emphasized expected commodity price recovery over the next 4–6 quarters, positioning Empire to benefit via focused production increases .

What Went Well and What Went Wrong

What Went Well

  • Production restored across key assets; net equivalent sales rose 15% QoQ to 2,357 Boe/d and oil volumes increased 12% QoQ to 1,493 Bbls/d, reflecting improving execution in North Dakota EOR operations .
  • Cost discipline evident: LOE declined vs prior year (Q2 2025 $6.387M vs $7.543M in Q2 2024), with workover expense down to $0.5M from $1.6M YoY .
  • Capital and liquidity actions: fully subscribed rights offering (~$2.5M proceeds, warrants expiring Nov 18, 2025) and cash on hand of ~$2.3M with ~$4.0M credit facility availability at quarter-end .
    “We were pleased to restore and maintain production across key assets… We remain focused on executing our development plans and maintaining cost discipline” — Mike Morrisett, President & CEO .

What Went Wrong

  • Pricing headwinds drove the quarter: realized price per Boe fell to $40.78 (−16% QoQ; −23% YoY), compressing revenue (−3% QoQ; −32% YoY) and margins despite higher volumes .
  • Profitability deteriorated: net loss widened to ($5.056M), Adjusted Net Loss to ($5.231M), and Adjusted EBITDA to ($1.181M), reflecting weaker pricing and higher G&A versus the prior year .
  • G&A (ex-SBC) per Boe elevated versus Q2 2024 ($13.55 vs $9.80), tied to increased headcount; EOR equipment fabrication delays (rare alloys) extended the path to steady-state production .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Product Revenue ($USD Millions)$10.076 $8.992 $8.747
Total Revenue ($USD Millions)$10.087 $9.002 $8.754
Diluted EPS ($USD)($0.13) ($0.12) ($0.15)
Net Loss ($USD Millions)($4.193) ($4.221) ($5.056)
Adjusted Net Loss ($USD Millions)($4.193) ($4.253) ($5.231)
Adjusted EBITDA ($USD Millions)($0.260) ($0.553) ($1.181)
Realized Price ($/Boe)$46.48 $48.76 $40.78
Net Equivalent Sales (Boe/d)2,356 2,049 2,357
Net Oil Sales (Bbls/d)1,581 1,329 1,493
Commodity Mix (%)Q4 2024Q1 2025Q2 2025
Oil67% 65% 63%
NGLs17% 17% 19%
Natural Gas16% 18% 18%
KPIs and CostsQ4 2024Q1 2025Q2 2025
Lease Operating Expense ($USD Millions)$5.881 $5.766 $6.387
Production & Ad Valorem Taxes ($USD Millions)$0.887 $0.712 $0.768
DD&A ($USD Millions)$2.493 $2.226 $2.576
Accretion ($USD Millions)$0.520 $0.526 $0.534
G&A excl. SBC ($/Boe)$17.13 $17.34 $13.55
LOE ($/Boe)$27.13 $31.27 $29.78
Balance Sheet & Liquidity12/31/20243/31/20256/30/2025
Cash And Equivalents ($USD Millions)$2.251 $1.081 $2.293
Credit Facility Availability ($USD Millions)~$8.7 ~$7.8 ~$4.0

Performance highlights vs prior periods and year-over-year:

  • Revenue down 3% QoQ and down 32% YoY; realized price down 16% QoQ and down 23% YoY, while Boe/d rose 15% QoQ and fell 11% YoY .
  • Adjusted EBITDA fell from ($0.553M) in Q1 and $1.726M in Q2 2024 to ($1.181M); net loss widened to ($5.056M) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
North Dakota EOR steady-stateQ4 2025 targetRecovery in 3–5 quarters of steady-state operations (Q1 commentary) Expects steady-state production by end of Q4 2025, contingent on equipment reliability and seasonal stability Clarified timeline
EOR equipment modifications (rare alloys)Q4 2025Finalize patent design by end of Q2 2025 (Q1) Installation of modified rare alloys expected to be fully operational in Q4 2025; patent specs by end of Q4 2025 Pushed/updated
Texas inaugural drilling campaignQ4 2025 startDrilling readiness in H2 2025 Drilling operations to commence in Q4 2025; first pad completed, permits advancing Timing specified
NMOCD ruling on SWD permitsQ3 2025 expectedClose to resolution; ongoing litigation and >$30M costs since 2021 Expects ruling in Q3 2025; subsequent motions to revoke additional permits; aim to reduce OpEx Timing specified
Rights OfferingJuly–Aug 2025Up to ~$5.0M gross proceeds (record date July 10) Fully subscribed; ~$2.5M immediate proceeds, potential ~$2.5M via warrants (expire Nov 18, 2025) Executed

No formal quantitative guidance for revenue, margins, OpEx, OI&E, or tax rate was provided in Q2 2025 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
EOR program (North Dakota)Q4: injector conversions; provisional patent filed; 700% peak production increase using temporary solutions . Q1: severe winter/pipeline/EOR defects; partial restoration; recovery expected over 3–5 quarters Modified wellhead installations underway; rare alloys installation targeted Q4; steady-state by end of Q4 2025 Stabilizing; execution progressing
Texas developmentQ4: infrastructure complete; drilling program expected in 2025 . Q1: preparing for H2 2025; horizontal targets identified First pad completed; materials/rigs being secured; drilling to commence Q4 2025 Advancing toward spud
Regulatory/legal (NMOCD)Q4: ongoing actions vs trespass on NM water floods . Q1: close to resolution; >$30M incremental costs since May 2021 Ruling expected Q3 2025; plan to reduce OpEx post-resolution Near-term decision
Macro/commodity pricingQ4: price sensitivity noted . Q1: price volatility; NG rebound narrative NYMEX oil down ~10% QoQ and ~20% YoY; expectation for upward pricing over next 4–6 quarters Near-term pressure; constructive medium-term
Liquidity/capitalQ4: facility increased to $20M; rights offerings oversubscribed . Q1: $7.8M facility availability Fully subscribed rights offering; $2.3M cash; $4.0M availability Strengthened equity base

Management Commentary

  • “These material market indicators should result in lower production going forward… U.S. production has already peaked… This supports my strong belief that overall pricing is trending upward over the next four to six quarters… My decision to fully subscribe and oversubscribe in the Rights Offering reflects my strong confidence in the Company’s long-term potential.” — Phil E. Mulacek, Chairman .
  • “We were pleased to restore and maintain production across key assets during the second quarter, particularly in North Dakota. However, lower-than-expected commodity pricing impacted revenue and margins, offsetting our operational gains.” — Mike Morrisett, President & CEO .
  • Q1 context: “Extreme winter conditions and technical setbacks… temporarily disrupted operations… As of early Q2-2025, the failed pipeline has been fully replaced, and all three EOR units have been restored to service with interim solutions” .

Q&A Highlights

No earnings call transcript was located for Q2 2025; as a result, Q&A highlights and any clarifications typically provided on the call are not available.

Estimates Context

  • Wall Street consensus (S&P Global) for Q2 2025 on EP appeared unavailable; the company has limited analyst coverage. Values retrieved from S&P Global.*

Where estimates may need to adjust:

  • Given realized pricing weakness and the negative Adjusted EBITDA, near-term estimates should reflect constrained margins until pricing normalizes and EOR reaches steady-state in Q4 2025 .

Key Takeaways for Investors

  • Pricing drove the quarter: despite 15% QoQ volume growth, realized price declines led to 32% YoY revenue contraction and negative Adjusted EBITDA — monitor crude/NGL pricing trajectory into Q4 .
  • Operational cadence is improving: EOR modifications and Texas drilling pipeline point to potential production gains by Q4 2025 and through 2026, contingent on equipment reliability and timely spuds .
  • Rights offering fully subscribed adds ~$2.5M near-term capital and potential ~$2.5M via warrants, supporting balance sheet optimization while preserving credit capacity .
  • Cost actions are working: LOE down vs prior year and workover spend reduced; a favorable NMOCD ruling could further lower OpEx and improve financial performance .
  • Near-term trading lens: stock likely sensitive to commodity headlines and EOR execution milestones; watch for Q3 updates on NMOCD and fabrication progress as potential catalysts .
  • Medium-term thesis: if pricing recovers as management expects and Texas wells come online, Empire’s multi-basin footprint and EOR technology could expand volumes and margins, improving cash generation .
  • Risk checks: fabrication delays, regulatory outcomes, and pricing volatility remain principal uncertainties; G&A per Boe, while improving vs Q1, is elevated vs prior year .

Other Relevant Q2 2025 Press Releases

  • Rights Offering timeline and extensions (record date, extensions, full subscription): company press releases and SEC filings .

Non-GAAP Adjustments

  • Adjusted Net Loss and Adjusted EBITDA reconciliations exclude derivative impacts, gains/losses on asset sales, stock-based compensation, and other items; see the non-GAAP sections and detailed reconciliations .

References:

  • Q2 2025 8-K/Press Release and financials:
  • Q1 2025 8-K/Press Release and financials:
  • Q4 2024 8-K/Press Release and financials:
  • Rights Offering full subscription 8-K:
  • Company press release archive and rights offering announcements (Internet sources):

*Values retrieved from S&P Global.