EMPIRE PETROLEUM CORP
For the period ended Mar 31, 2026. Filed May 14, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 14, 2026
EP$2.44+21.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-14.
0001104659-25-112537
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-14.
0001104659-26-061187
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 84 previous paragraphs and 66 current paragraphs.
43 unchanged; 19 reworded; 4 added; 14 removed; 8 previous and 0 current paragraphs rearranged.
Tables are not compared: 6 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
As noted below, our working capital is negative as of March 31, 2026, which is primarily the result of previous and unforeseen operational costs resulting in lower production as well as a depressed commodity pricing environment during the majority of the first quarter of 2026. As of March 31, 2026, we had approximately $8.8 million in cash on hand, primarily from the rights offering in February 2026, and approximately $2.7 million available under our Credit Facility; however, the Company’s available borrowing capacity under the Credit Facility continues to decrease due to a monthly reduction to the borrowing capacity under the Credit Facility. Empire also has access to an additional $2.0 million from a convertible note issued in September 2025 with Mr. Mulacek; however, it may only be borrowed at Mr. Mulacek’s discretion and per the terms of the agreement. Mr. Mulacek also holds a warrant certificate issued in connection with the convertible note issued in September 2025. Finally, the Company received gross proceeds of $10.0 million from a rights offering in March 2026 and the potential of up to an additional $7.5 million less agency fees from an at-the-market offering pursuant to the sales agreement entered into subsequent to the quarter end.
Current report
Hedging Positions
Current report
We generally do not enter into derivative financial instruments for speculative or trading purposes. We entered into certain oil commodity derivative positions for the remaining three quarters of 2026 at a blended price of $73.83 for total production of approximately 340,000 Bbls. These positions account for the majority of our current level of production for the remainder of 2026 to help minimize expected pricing volatility and to strengthen forward cash flow visibility. Anticipated production increases from our ongoing development projects will further strengthen Empire’s cash flows from operations.
Current report
Financing activities in the first three months of 2026 include both a $2.0 million repayment and a $3.0 million borrowing on respective related party notes with Mr. Mulacek. We also completed a rights offering in March 2026 for net proceeds of approximately $9.9 million. In addition, we paid $1.0 million of the outstanding balance of our revolving credit facility in the first quarter of 2026.
Removed paragraphs (14)
Previous report
Financing activities include $4.0 million and $5.0 million in 2025 and 2024, respectively, from promissory notes issued to Empire by various related parties offset by a $2.0 million repayment in 2025 (see Note 8). Empire had borrowings of approximately $3.0 million and $4.0 million on its Credit Facility during the same respective periods. Additionally, the Company completed its August Rights Offering in 2025 and its April Rights Offering in 2024 along with warrants to Energy Evolution that were exercised in the third quarter of 2024 (see Note 10).
Previous report
Nine Months Ended September 30, 2025 and 2024
Previous report
Results of Operations
Previous report
Revenues
Previous report
Net oil sales volumes were approximately 400,000 Bbls for the nine months ended September 30, 2025, a decrease of approximately 8% over the same period in the prior year primarily due to redrilling efforts in North Dakota.
Previous report
Realized oil prices for the nine months ended September 30, 2025, were $62.17 per barrel, while realized prices for the same period in the prior year were $73.60 per barrel, a decrease of approximately 16% due to a general decline in overall market prices.
Previous report
Realized natural gas prices for the nine months ended September 30, 2025, were $1.50 Mcf, while realized prices for the same period in the prior year were $0.38 per Mcf. The increase is due to depressed natural gas prices in New Mexico leading to below zero prices as deductions exceeded the natural gas prices.
Previous report
Realized NGLs prices for the nine months ended September 30, 2025, were $11.59 per barrel, while realized prices for the same period in the prior year were $13.87 per barrel, a decrease of approximately 16%.
Previous report
Lease operating expense was lower for the nine months ended September 30, 2025, compared to the same period in 2024 primarily due to lower workover costs. Lease operating expense includes approximately $1.2 million of workover expense for the nine months ended September 30, 2025, compared to approximately $5.3 million for the same period in 2024. The higher workover expense in 2024 was primarily in New Mexico as Empire continued work in the region to enhance and maintain production.
Previous report
Depreciation, Depletion, Amortization and Accretion
Previous report
The higher DD&A for the nine months ended September 30, 2025, compared to the same period in 2024 is primarily due to the acquisition of additional working interest in New Mexico and the impact of the capitalized costs associated with the new drilling activity as part of our Starbuck Drilling Program in North Dakota, partially offset by lower production volumes period over period. Accretion also increased slightly from prior period due to the new drilling activity and additional interest.
Previous report
General and administrative expense, excluding stock-based compensation, increased for the nine months ended September 30, 2025, compared to the same period in 2024 primarily due to an increase in salaries and benefits period over period associated with an increase in employee headcount offset by lower professional fees for the same period over period.
Previous report
Stock-based Compensation
Previous report
Interest Expense
Reworded paragraphs (19)
Previous wording
The Company’s producing properties and oil and natural gas reserves are all located in Louisiana, New Mexico, North Dakota, Montana, and Texas. Because of the concentration, the Company is exposed to the impact of regional supply and demand factors, processing or transportation capacity constraints, severe weather events, water shortages, and government regulations specific to the geographic area. The Company also sells a large portion of its oil and natural gas production to a few customers, which increases the risk of temporary sales interruption or a lower price for production if one of these purchasers were lost.
Current wording
A majority of the Company’s producing properties and oil and natural gas reserves are located within three areas of the United States. Because of the concentration, the Company is exposed to the impact of regional supply and demand factors, processing or transportation capacity constraints, severe weather events, water shortages, and government regulations specific to the geographic area. The Company sells a large portion of its oil and natural gas production to a few customers. As a result of this concentration, we are exposed to the impact of our sales if one of these customers fails to meet their obligations or ceases its relationship with the Company. The loss in revenues may result in a disruption in the Company’s cash flows limiting the ability to meet its obligations or investing in capital projects.
Previous wording
The preparation of financial statements in conformity with US GAAP requires management to use judgment to make estimates and assumptions that affect certain amounts reported in the unaudited interim consolidated financial statements. As additional information becomes available, these estimates and assumptions are subject to change and thus impact amounts reported in the future. Because estimates and assumptions require significant judgment, future actual results could differ from those estimates and could have a significant impact on our results of operations, financial position and cash flows. We re-evaluate our estimates and assumptions at least on a quarterly basis and periodically update the estimates used in the preparation of the financial statements based on management’s latest assessment of the current and projected business and general economic environment. There have been no significant changes to Empire’s critical accounting estimates during the nine months ended September 30, 2025.
Current wording
The preparation of financial statements in conformity with US GAAP requires management to use judgment to make estimates and assumptions that affect certain amounts reported in the unaudited interim consolidated financial statements. As additional information becomes available, these estimates and assumptions are subject to change and thus impact amounts reported in the future. Because estimates and assumptions require significant judgment, future actual results could differ from those estimates and could have a significant impact on our results of operations, financial position and cash flows. We re-evaluate our estimates and assumptions at least on a quarterly basis and periodically update the estimates used in the preparation of the financial statements based on management’s latest assessment of the current and projected business and general economic environment. There have been no significant changes to Empire’s critical accounting estimates during the three months ended March 31, 2026.
Previous wording
As noted below, our working capital is negative as of September 30, 2025, which is primarily the result of a lower cash balance due to capital spending as part of our Starbuck Drilling Program, return-to-production efforts in Texas and a decrease in production due to operational challenges with five wells in North Dakota during the first quarter of 2025. As of September 30, 2025, we had approximately $4.6 million in cash on hand and approximately $3.3 million available under our Credit Facility; however, the Company’s available borrowing capacity under the Credit Facility continues to decrease due to a monthly reduction to the borrowing capacity under the Credit Facility (see Note 8). Empire also entered into a promissory note and a convertible note with Phil Mulacek for up to a total aggregate available principal amount of $8.0 million, of which up to $2.0 million is still available to Empire at the discretion of Mr. Mulacek per the terms of the respective agreements. The Company also issued a warrant certificate to Mr. Mulacek (see Note 8). Finally, the Company completed a subscription rights offering in August 2025 which raised approximately $2.5 million of gross proceeds. A portion of these proceeds were used to settle the outstanding balance of the promissory note with Mr. Mulacek. Despite these transactions, the Company will require additional funds to satisfy the payables discussed above which are greater than estimated cash flow from operations over the next 12 months. Mr. Mulacek and Energy Evolution, both related parties of Empire and our largest two stockholders, have indicated that they will, and have the ability to, provide sufficient support to sustain the operating, investing, and financing activities of Empire, as necessary. Management continues to seek additional sources of capital via the debt or equity markets to improve liquidity going forward. See Liquidity and Going Concern in Note 1 of Notes to Unaudited Interim Condensed Consolidated Financial Statements for further discussion of management’s plans.
Current wording
Despite these transactions, the Company will require additional funds to satisfy the payables discussed above which are greater than estimated cash flow from operations over the next 12 months. Mr. Mulacek and Energy Evolution, both related parties of Empire and our largest two stockholders, have indicated that they will, and have the ability to, provide sufficient support to sustain the operating, investing, and financing activities of Empire, as necessary. Management continues to seek additional sources of capital via the debt or equity markets to improve liquidity going forward. See Liquidity and Going Concern in Note 1 of Notes to Unaudited Interim Condensed Consolidated Financial Statements for further discussion of management’s plans.
Previous wording
Empire expects to continue to incur costs related to drilling activities in core areas as well as future oil and natural gas acquisitions in core areas. During the first nine months of 2025, Empire incurred approximately $4.2 million of total additions to oil and natural gas properties, primarily related to the drilling program in the Starbuck field of North Dakota and return-to-production efforts in Texas. It is expected that Empire will use a combination of debt or equity issuances, cash on hand, and cash flows from operations to fund capital programs, ongoing operations, and any potential acquisitions.
Current wording
Empire expects to continue to incur costs related to drilling activities in core areas as well as future oil and natural gas acquisitions in core areas. During the first three months of 2026, Empire incurred approximately $1.9 million of total additions to oil and natural gas properties, primarily related to the gas development program in Texas. It is expected that Empire will use a combination of debt or equity issuances, cash on hand, and cash flows from operations to fund capital programs, ongoing operations, and any potential acquisitions.
Previous wording
Working capital is presented in the table below. The change of approximately $0.3 million was primarily driven by a higher cash balance substantially offset by an increase in accrued expenses.
Current wording
Working capital is presented in the table below. The change of approximately $4.2 million was primarily driven by a higher cash balance from the Company’s rights offering in March 2026.
Previous wording
Operating activities decreased period over period primarily due to a decrease in production period over period and lower realized commodity prices during 2025 consistent with general market pricing trends.
Current wording
Operating activities decreased period over period primarily due to a decrease in production period over period and lower realized commodity prices consistent with general market pricing trends.
Previous wording
Investing activities are primarily related to approximately $3.6 million of cash additions to oil and natural gas properties during the first nine months of 2025 compared to approximately $48.8 million of cash additions to oil and natural gas properties during the first nine months of 2024 associated with the Starbuck Drilling Program in North Dakota with the decline period over period due to the Company nearing completion of this project. A majority of the cash additions for 2025 relate to the Company’s return-to-production efforts in Texas.
Current wording
Investing activities are primarily related to approximately $1.2 million of cash additions to oil and natural gas properties during the first three months of 2026 as a result of the Company’s gas development program in Texas compared to approximately $2.7 million of cash additions to oil and natural gas properties during the first three months of 2025 associated with various projects in Texas and North Dakota.
Previous wording
For the nine months ended September 30, 2025, Empire incurred approximately $4.2 million of total additions to oil and natural gas properties which is primarily from finalizing drilling and completions activity related to our Starbuck Drilling Program in North Dakota and continued return-to-production efforts in Texas.
Current wording
For the three months ended March 31, 2026, Empire incurred approximately $1.9 million of total additions to oil and natural gas properties which is primarily from the Company’s gas development program in Texas.
Previous wording
The following table sets forth a summary of Empire’s production and operating data for the three and nine months ended September 30, 2025 and 2024. Because of normal production declines, increased or decreased production due to future acquisitions, divestitures, development, and fluctuations in commodity prices, the historical information presented below should not be interpreted as being indicative of future results.
Current wording
The following table sets forth a summary of Empire’s production and operating data for the three months ended March 31, 2026 and 2025. Because of normal production declines, increased or decreased production due to future acquisitions, divestitures, development, and fluctuations in commodity prices, the historical information presented below should not be interpreted as being indicative of future results.
Previous wording
Revenues for the nine months ended September 30, 2025, decreased compared to the prior year primarily due to lower average oil and NGL realized pricing and lower oil production volumes.
Current wording
Revenues for the three months ended March 31, 2026, decreased compared to the prior year primarily due to lower overall production in North Dakota and New Mexico and a lower realized price across all commodities.
Previous wording
Net oil sales volumes were approximately 144,000 Bbls for the three months ended September 30, 2025, a slight decrease over the same period in the prior year primarily due to natural decline offset by redrilling efforts in North Dakota as previously discussed.
Current wording
Net oil sales volumes were approximately 112,000 Bbls for the three months ended March 31, 2026, a slight decrease over the same period in the prior year primarily due to natural decline and operational challenges in North Dakota and New Mexico.
Previous wording
Realized oil prices for the three months ended September 30, 2025, were $61.00 per barrel, while realized prices for the same period in the prior year were $71.48 per barrel, a decrease of approximately 15% due to a general decline in overall market prices.
Current wording
Realized oil prices for the three months ended March 31, 2026, were $65.01 per barrel, while realized prices for the same period in the prior year were $67.28 per barrel, a decrease of approximately 3% due to a general decline in overall market prices during the early part of first quarter 2026.
Previous wording
Realized natural gas prices for the three months ended September 30, 2025, were $0.94 per Mcf, while realized prices for the same period in the prior year were $0.04 per Mcf. This is primarily due to the depressed natural gas prices in the third quarter of 2024 in New Mexico leading to below zero prices as deductions exceeded the natural gas prices.
Current wording
Realized natural gas prices for the three months ended March 31, 2026, were $0.79 per Mcf, while realized prices for the same period in the prior year were $2.74 per Mcf. This is primarily due to the depressed natural gas prices in the first quarter of 2026 specifically in New Mexico.
Previous wording
Realized NGLs prices for the three months ended September 30, 2025, were $9.25 per barrel, while realized prices for the same period in the prior year were $13.85 per barrel, a decrease of approximately 33% driven by a general decline in overall market prices.
Current wording
Realized NGLs prices for the three months ended March 31, 2026, were $11.18 per barrel, while realized prices for the same period in the prior year were $12.56 per barrel, a decrease of approximately 11% driven by a general decline in overall market prices.
Previous wording
Lease operating expense was lower for the three months ended September 30, 2025, compared to the same period in 2024 primarily due to lower workover costs. Lease operating expense includes approximately $0.4 million of workover expense for the three months ended September 30, 2025, compared to approximately $1.4 million for the same period in 2024. The higher workover expense in 2024 was primarily in New Mexico as Empire continued work in the region to enhance and maintain production.
Current wording
Lease operating expense was lower for the three months ended March 31, 2026, compared to the same period in 2025 primarily due to lower overall production and efforts by the Company to reduce overall operating costs. This decrease was partially offset by an increase in workover expense period over period. Workover expenses were approximately $0.6 million for the three months ended March 31, 2026, compared to approximately $0.4 million for the same period in 2025. The higher workover expense in 2026 was primarily in Texas due to the Company’s ongoing gas development program.
Previous wording
The increase in DD&A for the three months ended September 30, 2025, compared to the same period in 2024 is primarily due to the impact of the capitalized costs associated with the new drilling activity as part of our Starbuck Drilling Program in North Dakota, partially offset by lower production volumes period over period. Accretion also increased slightly from prior period due to the new drilling activity and additional interest.
Current wording
The decrease in DD&A for the three months ended March 31, 2026, compared to the same period in 2025 is primarily due to the impact of impairments in the fourth quarter of 2025 and lower production volumes period over period, partially offset by the additional interests acquired in New Mexico in first-quarter 2026. Accretion increased slightly from prior period due to the additional interest acquired in New Mexico.
Previous wording
General and administrative expense, excluding stock-based compensation, decreased for the three months ended September 30, 2025, compared to the same period in 2024 primarily due to timing of board of director compensation and franchise taxes.
Current wording
General and administrative expense, excluding stock-based compensation, decreased for the three months ended March 31, 2026, compared to the same period in 2025 primarily due to a decrease in employee costs resulting from lower headcount in 2026.
Previous wording
Stock-based compensation decreased period over period due to a lower number of awards in third quarter 2025. Empire utilizes stock-based compensation to compensate the Board, members of management, and retain talented personnel. Empire anticipates stock-based compensation to continue to be utilized in 2025 and beyond to attract and retain talented personnel and compensate Board members and consultants.
Current wording
Stock-based compensation decreased period over period due to a lower number of awards in first quarter 2026. Empire utilizes stock-based compensation to compensate the Board, members of management, and retain talented personnel. Empire anticipates stock-based compensation to continue to be utilized in 2026 and beyond to attract and retain talented personnel and compensate Board members and consultants.
Previous wording
Interest expense decreased for the nine months ended September 30, 2025, compared to the same period in 2024 primarily due to certain non-cash interest expense in 2024 from the February Note further described in Note 8 partially offset by a higher average outstanding balance on the Company’s Credit Facility and additional equipment and vehicle notes.
Current wording
Cash-based interest expense increased for the three months ended March 31, 2026, compared to the same period in 2025 primarily due to a higher average outstanding balance on the Company’s Credit Facility and additional equipment and vehicle notes. Additionally, the Company’s non-cash-based interest expense was higher in 2026 due to the remaining unamortized discount related to the September Note being fully amortized upon full repayment during the quarter.
Rearranged previous paragraphs (8)
Previous report — wording carried elsewhere
Revenues for the three months ended September 30, 2025 decreased compared to the prior year primarily due to lower average oil and NGL realized pricing.
Previous report — wording carried elsewhere
Interest expense increased for the three months ended September 30, 2025 compared to the same period in 2024 primarily due to a higher average outstanding balance on the Company’s Credit Facility and additional equipment and vehicle notes.
Previous report — wording carried elsewhere
The following table reflects Empire’s summary operating information for the nine months ended September 30, 2025 and 2024. Because of normal production declines, increased or decreased drilling activity and the effects of acquisitions, the historical information presented below should not be interpreted as indicative of future results.
Previous report — wording carried elsewhere
NM: A percentage calculation is not meaningful due to change in signs, a zero-value denominator or a percentage change that is greater than 200.
Previous report — wording carried elsewhere
Lease Operating Expense and Production Taxes
Previous report — wording carried elsewhere
Production taxes were lower for the nine months ended September 30, 2025, compared to the same period in 2024 as a result of the lower product revenues discussed above.
Previous report — wording carried elsewhere
General and Administrative Expense (excluding stock-based compensation)
Previous report — wording carried elsewhere
Stock-based compensation decreased period over period due to a lower number of awards in 2025. Empire utilizes stock-based compensation to compensate the Board, members of management, and retain talented personnel. Empire anticipates stock-based compensation to continue to be utilized in 2025 and beyond to attract and retain talented personnel and compensate Board members and consultants.