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EP

EMPIRE PETROLEUM CORP (EP)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 was operationally mixed: oil volumes grew 1% sequentially and 22% YoY, but lower realized pricing (-3% QoQ, -13% YoY) and EOR-related optimization issues drove a wider net loss and negative adjusted EBITDA; management expects the EOR issues to be resolved by Q2 2025 .
  • Product revenue was $10.08M (down 7% QoQ, up 2% YoY), total revenue was $10.09M; GAAP diluted EPS was ($0.13), and adjusted EBITDA was ($0.26)M, deteriorating sequentially from roughly breakeven in Q3 .
  • Liquidity and balance sheet flexibility improved: the revolver was increased to $20M in Q4, immediately providing over $11M in additional capacity; EP also completed an oversubscribed $10.0M rights offering at $5.05 per share in Q4 .
  • Strategic execution continued: EP filed a provisional patent for hydrocarbon vaporization technology, with initial field results showing >700% production uplift during a 30‑day peak using temporary solutions; Texas drilling infrastructure was completed with first drilling expected in 2025; NDIC granted approvals to convert additional injectors and five new horizontals in Feb 2025, supporting the EOR-led growth plan .

What Went Well and What Went Wrong

  • What Went Well

    • Oil mix and volumes: Net oil sales rose to 1,581 Bbl/d (+1% QoQ, +22% YoY), with oil comprising 67% of Boe/d, supporting revenue resilience despite price headwinds .
    • Technology and early field results: EP filed a provisional patent tied to hydrocarbon vaporization; initial 30-day peak results showed “more than a 700% increase in Starbuck production” using temporary solutions, with final fabrication 30% complete and IP development targeted in 90–120 days .
    • Liquidity strengthened: The revolver was upsized to $20M, providing >$11M additional capacity immediately; the November 2024 oversubscribed rights offering raised $10.0M at $5.05 .

  • What Went Wrong

    • Profitability pressure: Adjusted EBITDA fell to ($0.26)M in Q4 from ($0.06)M in Q3, reflecting lower realized prices and EOR-related production optimization issues that management cites as non-recurring but impactful .
    • Pricing headwinds: Realized price per Boe declined 3% QoQ to $46.48 (down 13% YoY), pressuring revenue and margins despite higher oil volumes .
    • EOR near-term drag: Converting producing wells to injectors and EOR commissioning reduced near-term production; management acknowledged the Q4 loss was “primarily related to operational challenges on the initial production optimization associated with the EOR in North Dakota” .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Product Revenue ($M)$9.90 $10.89 $10.08
Total Revenue ($M)$11.17 $11.38 $10.09
Net Loss ($M)($4.80) ($3.64) ($4.19)
Diluted EPS ($)($0.20) ($0.12) ($0.13)
Adjusted EBITDA ($M)($2.92) ($0.06) ($0.26)

Operational KPIs and unit economics:

KPIQ2 2024Q3 2024Q4 2024
Net equivalent sales (Boe/d)2,638 2,460 2,356
Net oil sales (Bbl/d)1,761 1,573 1,581
Realized price ($/Boe)$53.26 $48.12 $46.48
LOE ($/Boe)$31.41 $29.75 $27.13
DD&A+Accretion ($/Boe)$13.20 $13.72 $13.90
Total G&A ($/Boe)$12.27 $17.54 $19.52

Additional items:

  • Year-end 2024 proved reserves: 9.2 MMBoe; standardized measure at 10%: $98.4M; future net cash flows (undiscounted): ~$156.4M .
  • 2024 capex: ~$42.2M (primarily North Dakota); 12/31/24 cash: ~$2.3M; ~$8.7M available on credit facility at year-end (before subsequent upsizing) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
EOR Phase 1 commissioning/steady stateQ4’24–Q1’25Q4’24 commissioning; steady state expected Q1’25 “Complete final equipment portion” to restore production to original levels; anticipate growth as technology is implemented Maintained timing; clarified near-term production rebuild
North Dakota development permits2025Not previously specifiedNDIC approval for five new horizontal permits in Feb 2025 New permits expand 2025 drilling optionality
Texas drilling2025“Expanding technical focus,” planning; opportunities in Texas Initial infrastructure completed; new drilling program expected to begin in 2025 Progressed from planning to execution
Liquidity (revolver)Q4’24$10M facility (prior) Facility increased to $20M; >$11M immediate additional capacity Raised borrowing capacity
Quantitative financial guidance (revenue/margins/OpEx/tax)2025Not providedNot providedNo formal quantitative guidance

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2–Q3 2024)Current Period (Q4 2024)Trend
EOR & TechnologyQ2: Completed first-stage EOR horizontals; EOR infra targeted by Q3’24; 3D/2D seismic completed May; largest production gains from Starbuck . Q3: Converted three wells to injectors; prepared and then submitted patent; commissioning EOR equipment in Q4’24; steady state Q1’25 .Provisional patent filed; initial 30-day peak showed >700% production increase at Starbuck using temporary solutions; final design 30% complete; IP development in 90–120 days .Execution progressing; near-term deployment, promising early results
Production trajectoryQ2: Boe/d +20% QoQ to 2,638; oil +23% QoQ . Q3: Boe/d 2,460 as injector conversions and temporary shut-ins reduced output .Boe/d 2,356 (−4% QoQ) with oil +1% QoQ; management expects restoration as final EOR equipment comes online .Near-term dip from EOR conversion; guided rebound
Liquidity/capitalQ2: $20.66M rights offering closed; $9.3M cash; ~$0.7M availability . Q3: $10M rights offering planned and later oversubscribed; ~$0.2M availability at 9/30 .Revolver increased to $20M with >$11M added capacity; $10M rights offering completed at $5.05 .Materially improved flexibility
Regulatory/legalQ2–Q3: Ongoing New Mexico trespass actions; EOR permits/injector conversions in ND .Additional NDIC approvals to convert injectors; five new ND drilling permits in Feb 2025; NM actions continue .Continued regulatory progress; legal actions ongoing
Regional strategyQ2: Focus on ND near-term; planning NM pilot in 2025 . Q3: Expanded technical focus to Texas .Texas infrastructure completed; 2025 drilling expected .Texas moving from planning to execution in 2025

Management Commentary

  • “As an emerging, agile company, Empire Petroleum has a unique ability to pivot quickly as we receive new data and insights… allowing us to efficiently allocate capital and resources to the most promising opportunities…” — Phil Mulacek, Chairman .
  • “We continue to build on our progress in Starbuck… we are actively integrating new information to refine our approach… We are confident this level of adaptability positions us well for long-term success.” — Mike Morrisett, President & CEO .

Q&A Highlights

  • No Q4 2024 earnings call transcript was available in our document set; therefore, no Q&A details could be reviewed [earnings-call-transcript search returned none for the period].

Estimates Context

  • S&P Global consensus estimates for Q4 2024 EPS and revenue were unavailable (no estimate counts surfaced in our pull). As a result, there is no beat/miss determination versus consensus for this quarter; comparisons are made versus prior periods and the company’s own disclosures [GetEstimates showed no consensus fields populated for EPS/revenue; only actuals present].

Key Takeaways for Investors

  • Near-term profitability remains pressured: Q4 adjusted EBITDA was ($0.26)M amid lower realized pricing and EOR-related optimization issues; management views these issues as non-recurring with resolution expected by Q2 2025 .
  • Oil-led volume strength provides a base for recovery: oil volumes rose 22% YoY in Q4 and oil mix was 67% of Boe/d, partially offsetting pricing pressure; restoration of converted injectors should aid output as EOR ramps .
  • Technology could be a differentiator: provisional patent filed; initial field results indicate >700% production uplift at Starbuck during a 30-day peak using temporary solutions, with IP maturation expected over the next 90–120 days — a potential medium-term catalyst if replicated at scale .
  • Balance sheet flexibility improved: the revolver increase to $20M and oversubscribed $10M rights offering expand funding runway for ND EOR and 2025 Texas drilling .
  • 2025 operational pipeline is visible: NDIC approvals for additional injectors and five new horizontals (Feb 2025), finishing EOR Phase 1 equipment, and first Texas wells in 2025 provide multiple catalysts for production growth .
  • Cost trends mixed: LOE per Boe improved sequentially to $27.13, but total G&A per Boe rose to $19.52; sustained LOE discipline and scaling volumes will be important to margin normalization .
  • Without Street coverage, trading may focus on self-help milestones: in absence of consensus, stock reaction likely hinges on tangible EOR performance, Texas spud timing, and sequential EBITDA inflection as EOR stabilizes [GetEstimates showed no consensus; operations-driven catalysts per company updates].