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EP

EMPIRE PETROLEUM CORP (EP)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 results: product revenue $9.37M, net loss ($3.84M) or ($0.11) diluted EPS; Adjusted EBITDA improved to $0.14M from ($1.18M) in Q2, aided by higher realized price and lower LOE per Boe .
  • Volumes up sequentially: 2,398 Boe/d (+2% q/q) with oil 1,566 Bbl/d (+5% q/q); realized price rose to $42.48/Boe (+4% q/q) though still down y/y (-12%) .
  • Strategic developments: Texas inaugural drilling shifted to 2026; ND Starbuck EOR upgrades progressed, with stable output anticipated by year-end; New Mexico ROZ ruling affirmed Empire’s rights, with potential opex relief after final resolution .
  • Liquidity/capital: completed Rights Offering (~$2.5M gross) with oversubscriptions; quarter-end cash ~$4.6M and $3.3M availability on credit facility .
  • Estimate context: No S&P Global Street consensus for Q3 EPS or revenue; cannot judge beat/miss; investors should focus on sequential EBITDA inflection and the 2026 gas-weighted plan (DUCs) as the next catalysts .

What Went Well and What Went Wrong

What Went Well

  • Sequential operating momentum: Adjusted EBITDA turned slightly positive ($0.14M) from ($1.18M) in Q2; LOE fell to $5.7M and $25.99/Boe (from $6.4M and $29.78/Boe) while realized price improved to $42.48/Boe .
  • EOR reliability and 2025 exit setup: ND Starbuck EOR system upgrades progressed; management “anticipates achieving stable, sustained production levels by year-end,” supporting steadier output into 2026 .
  • Regulatory progress in NM: Commission Order R-24004 affirmed the ROZ and Empire’s exclusive rights; multiple SWD applications denied/suspended, with management expecting opex benefits post-resolution .
  • Management tone: “Empire continues to execute with precision and discipline…building operational flexibility by progressing a series of drilled-but-uncompleted (DUC) wells…to efficiently transition into higher-value gas development in 2026” – Chairman Phil Mulacek .

What Went Wrong

  • Y/Y headwinds persisted: product revenue down 14% y/y on weaker oil/NGL pricing; realized oil price down 15% and NGL down 33% y/y, pressuring margins despite q/q improvement .
  • Continued net losses: Q3 net loss ($3.84M) vs. ($3.64M) in Q3-24; interest expense ticked up with higher average borrowings and additional equipment/vehicle notes .
  • Texas start deferred: the inaugural Texas drilling program moved from late-2025 to 2026, pushing out potential volume/cash flow inflection from that program .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Product Revenue ($USD Millions)$10.892 $8.992 $8.747 $9.374
Total Revenue ($USD Millions)$11.377 $9.002 $8.754 $9.388
Net Loss ($USD Millions)($3.641) ($4.221) ($5.056) ($3.844)
Diluted EPS ($)($0.12) ($0.12) ($0.15) ($0.11)
Adjusted Net Loss ($USD Millions)($3.829) ($4.253) ($5.231) ($3.934)
Adjusted EBITDA ($USD Thousands)($56) ($553) ($1,181) $137
Net Equivalent Sales (Boe/d)2,460 2,049 2,357 2,398
Net Oil Sales (Bbls/d)1,573 1,329 1,493 1,566
Realized Price ($/Boe)$48.12 $48.76 $40.78 $42.48

KPIs and Unit Costs

KPIQ3 2024Q1 2025Q2 2025Q3 2025
LOE ($USD Millions)$6.734 $5.766 $6.387 $5.735
LOE ($/Boe)$29.75 $31.27 $29.78 $25.99
Production & Ad Valorem Taxes ($USD Millions)$0.984 $0.712 $0.768 $0.755
DD&A + Accretion ($USD Millions)$3.106 $2.752 $3.110 $3.328
G&A ex-SBC ($/Boe)$16.06 $17.34 $13.55 $13.06
Mix: Oil / NGL / Gas (%)n/a65 / 17 / 18 63 / 19 / 18 65 / 19 / 16

Note: Adjusted EBITDA presented in thousands consistent with non-GAAP reconciliation tables .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Texas inaugural drilling start2025Commence in Q4-2025 Start in 2026 Lowered/Deferred
ND Starbuck EOR run-rate2025Reach steady-state by end of Q4-2025 “Stable, sustained production levels by year-end” (2025) Maintained (clarified)
2026 development focus2026Progress toward multi-zone horizontal development; DUCs not emphasized Build flexibility via ~dozen DUCs; gas-led development strategy Enhanced detail (execution path)
NM ROZ legal/regulatory2025+Awaiting NMOCD ruling; expect opex relief post-resolution Commission Order affirmed ROZ; multiple SWD denials/suspensions; seeking further revocations; expect opex benefits post-final decision Positive progress
Quantitative financial guidance2025-2026Not provided in prior releases Not provided in Q3 release; qualitative outlook only No change

Earnings Call Themes & Trends

Note: A Q3-2025 earnings call transcript was not available in our document system or on Seeking Alpha’s EP transcript page as of this report . Themes below reflect disclosures across Q1–Q3 press releases.

TopicPrevious Mentions (Q1–Q2 2025)Current Period (Q3 2025)Trend
ND Starbuck EOR reliability and outputQ1: severe winter and equipment defects, partial restoration; Q2: modified wellheads, reliability improving, steady-state targeted by Q4-25 Upgrades continued; new water pipeline circuit; anticipate stable, sustained production by year-end Improving reliability toward stable base
Texas development timing and scopeQ1: 2H-2025 drilling; Q2: Q4-2025 start; multi-zone horizontal potential Start moved to 2026; seismic reprocessing finalized; re-entry/workover prep in Q4-25; plan to utilize ~dozen DUCs Deferred timing; clearer 2026 execution
NM ROZ legal/regulatoryQ1–Q2: expecting NMOCD decision; potential opex savings post resolution Commission Order R-24004 affirmed ROZ rights; multiple SWD denials/suspensions; rehearing limited scope pending; opex reduction expected Material positive progress
Commodity macro (oil/NGL/gas)Q2: lower realized prices drove weaker results Realized price up q/q but down y/y; Chairman highlighting tightening nat gas into 2026 (LNG, data centers, Mexico exports) Sequential pricing tailwind; gas constructive
Balance sheet/capitalQ1: liquidity low; Q2: launched rights offering Rights Offering completed; ~$2.5M gross; oversubscribed; cash $4.6M; revolver availability $3.3M Modest liquidity improvement

Management Commentary

  • Chairman Phil Mulacek on strategy and gas outlook: “Empire continues to execute with precision and discipline…building operational flexibility by progressing a series of drilled-but-uncompleted (‘DUC’) wells…to efficiently transition into higher-value gas development in 2026…As pricing signals continue to strengthen, we expect natural gas to play an increasingly meaningful and leading role in Empire’s development strategy and earnings growth trajectory beginning in 2026.”
  • CEO Mike Morrisett on operational progress: “In North Dakota, recent upgrades and system enhancements have improved reliability and consistency, setting the stage for stable production levels. In Texas, we continue to prepare for the launch of our first drilling program…completing pre-drill activities and advancing readiness across multiple locations.”
  • On New Mexico ROZ milestone: Commission affirmed ROZ and Empire’s exclusive rights; multiple SWD actions (denials/suspensions) taken; company expects opex benefits once finalized .

Q&A Highlights

  • No Q3-2025 earnings call transcript was available as of this report; therefore, no Q&A disclosures to summarize .

Estimates Context

  • S&P Global consensus estimates were not available for Q3-2025 EPS or revenue for EP; consequently, beat/miss versus Street cannot be determined from S&P Global data at this time.*
  • Actuals: product revenue $9.37M; diluted EPS ($0.11); Adjusted EBITDA $0.14M (sequential improvement) .
MetricQ3 2025 ConsensusQ3 2025 Actual
Revenue ($USD)N/A*$9.374M
Diluted EPS ($)N/A*($0.11)

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Sequential improvement with Adjusted EBITDA turning positive and unit costs (LOE/Boe) falling; continued y/y price pressure kept GAAP losses elevated .
  • Texas development delay to 2026 pushes out volume/cash generation from that program but aligns spend with commodity signals; the 2026 DUC-driven plan adds flexibility if gas improves .
  • New Mexico ROZ ruling is a structural positive that can reduce opex and improve asset economics once fully resolved; watch for rehearing outcome and further SWD permit actions as catalysts .
  • Liquidity modestly improved via the Rights Offering; monitor borrowing base availability, interest expense trajectory, and capex pace into 2026 .
  • For trading: near-term narrative is about cost control and EOR stabilization into year-end; medium-term thesis hinges on execution of the 2026 gas-weighted development and commodity tailwinds (LNG/data centers/Mexico exports) .
  • With no Street consensus, price reaction likely tied to operational milestones (ND steady-state, NM legal finalization) and commodity moves rather than beat/miss optics .