EMPIRE PETROLEUM CORP
For the period ended Jun 30, 2026. Filed Aug 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.
Jun 30, 2026 · Filed Aug 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 2026-03-31; filed 2026-05-14.
0001104659-26-061187
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-14.
0001104659-26-097162
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 66 previous paragraphs and 89 current paragraphs.
43 unchanged; 19 reworded; 20 added; 4 removed; 0 previous and 7 current paragraphs rearranged.
Tables are not compared: 4 previous and 7 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 (20)
Current report
Cash used in operating activities increased period over period primarily due to lower production volumes.
Current report
Total product revenues for the three months ended June 30, 2026 increased compared to the prior year primarily due to a higher realized oil price per barrel from general market pricing trends partially offset by lower production volumes year over year.
Current report
Net oil sales volumes were approximately 116,000 Bbls for the three months ended June 30, 2026, a decrease over the same period in the prior year primarily due to natural decline and certain wells within North Dakota being down for our steam unit performance enhancement projects which began in the second quarter of 2026.
Current report
Realized oil prices for the three months ended June 30, 2026, were $58.26 per barrel, while realized prices for the same period in the prior year were $58.92 per barrel, a decrease of approximately 1% including the impact of the Company’s hedging contracts. The average oil price per barrel excluding the effect of net settlements received (paid) for the three months ended June 30, 2026, was $94.72. There were no impacts to prior period pricing due to no open hedging contracts during the period.
Current report
Interest expense slightly decreased for the three months ended June 30, 2026, compared to the same period in 2025 due to a lower average outstanding balance and interest rate on the Company’s Credit Facility offset by additional equipment and vehicle notes.
Current report
Loss on Derivatives
Current report
The $1.6 million loss on derivatives for the three months ended June 30, 2026, is primarily due to higher market prices relative to our outstanding commodity derivative positions.
Current report
Six Months Ended June 30, 2026 and 2025
Current report
Results of Operations
Current report
Revenues
Current report
Total product revenues for the six months ended June 30, 2026, increased compared to the prior year primarily due to a higher realized oil price per barrel from general market pricing trends partially offset by lower production volumes year over year.
Current report
Realized oil prices for the six months ended June 30, 2026, were $61.57 per barrel, while realized prices for the same period in the prior year were $62.84 per barrel, a decrease of approximately 2% including the impact of the Company’s hedging contracts. The average realized oil price per barrel excluding the effect of net settlements received (paid) for the six months ended June 30, 2026, was $80.12. There were no impacts to prior period pricing due to no open hedging contracts during the period.
Current report
Realized natural gas prices for the six months ended June 30, 2026, were $(0.94) per Mcf, while realized prices for the same period in the prior year were $1.76 per Mcf. This is primarily due to the depressed natural gas prices in the second quarter of 2026 in New Mexico leading to below zero prices as deductions exceeded the natural gas prices.
Current report
Realized NGLs prices for the six months ended June 30, 2026, were $17.35 per barrel, while realized prices for the same period in the prior year were $12.98 per barrel, an increase of approximately 34% driven by an increase in overall market prices year over year.
Current report
Production and ad valorem taxes were slightly lower for the six months ended June 30, 2026, compared to the same period in 2025 primarily due to prior period adjustments during the period.
Current report
Depreciation, Depletion, Amortization and Accretion
Current report
Stock-based Compensation
Current report
Interest Expense
Current report
Loss on Derivatives
Current report
The $4.2 million loss on derivatives for the six months ended June 30, 2026, is primarily due to higher market prices relative to our outstanding commodity derivative positions.
Removed paragraphs (4)
Previous report
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 report
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
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 report
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.
Reworded paragraphs (19)
Previous wording
Our primary business is the optimization and development of oil and gas interests. We have incurred losses from operations in 2026 and 2025. There is no assurance that we will be profitable or obtain the funds necessary to finance our future operations.
Current wording
Our primary business is the optimization and development of oil and gas properties. We have incurred losses from operations in 2026 and 2025. There is no assurance that we will be profitable or obtain the funds necessary to finance our future operations.
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 three months ended March 31, 2026.
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 six months ended June 30, 2026.
Previous wording
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 wording
As noted below, our working capital is negative as of June 30, 2026, which is primarily the result of previous and unforeseen operational costs and lower production. As of June 30, 2026, we had approximately $3.1 million in cash on hand and approximately $2.0 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. Mr. Mulacek also holds a warrant certificate issued in connection with a 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 in May 2026.
Previous 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.
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. Energy Evolution and PIE, both related parties of Empire, 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 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.
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 six months of 2026, Empire incurred approximately $4.0 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
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 wording
We generally do not enter into derivative financial instruments for speculative or trading purposes. As of June 30, 2026, our remaining outstanding derivative financial instruments account for 58,000 Bbls at a blended price of $69.89 to help minimize expected pricing volatility and to strengthen forward cash flow visibility. Any additional derivative financial instruments Empire may enter into or anticipated production increases from our ongoing development projects will further strengthen Empire’s cash flows from operations.
Previous 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.
Current wording
Working capital is presented in the table below. The change of approximately $0.2 million was primarily driven by a higher cash balance partially offset by the related party accounts payable further described in Note 13 – Related Party Transactions.
Previous 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.
Current wording
Investing activities are primarily related to approximately $3.6 million of additions to oil and natural gas properties during the first six months of 2026 from the Company’s gas development program in Texas compared to $3.2 million of additions in the prior year’s first six months associated with various projects in Texas and North Dakota.
Previous wording
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.
Current wording
Financing activities in the first six 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.
Previous 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.
Current wording
For the six months ended June 30, 2026, Empire incurred approximately $4.0 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 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.
Current wording
The following table sets forth a summary of Empire’s production and operating data for the three and six months ended June 30, 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
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.
Current wording
Realized natural gas prices for the three months ended June 30, 2026, were ($4.22) per Mcf, while realized prices for the same period in the prior year were $0.93 per Mcf. This is primarily due to the depressed natural gas prices in the second quarter of 2026 in New Mexico leading to below zero prices as deductions exceeded the natural gas prices.
Previous 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.
Current wording
Realized NGLs prices for the three months ended June 30, 2026, were $21.08 per barrel, while realized prices for the same period in the prior year were $13.33 per barrel, an increase of approximately 58% driven by an increase in overall market prices year over year.
Previous 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.
Current wording
Lease operating expense was lower for the three months ended June 30, 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 primarily in New Mexico. Workover expenses were approximately $0.7 million for the three months ended June 30, 2026, compared to approximately $0.5 million for the same period in 2025
Previous wording
Production taxes were lower for the three months ended March 31, 2026, compared to the same period in 2025 as a result of the lower product revenues discussed above.
Current wording
Production and ad valorem taxes were higher for the three months ended June 30, 2026, compared to the same period in 2025 as a result of the higher product revenues discussed above.
Previous 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.
Current wording
Stock-based compensation decreased period over period due to a lower number of awards in 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
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.
Current wording
Net oil sales volumes were approximately 229,000 Bbls for the six months ended June 30, 2026, a decrease of approximately 11% over the same period in the prior year primarily due to natural decline and operational challenges in North Dakota and New Mexico.
Previous 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.
Current wording
General and administrative expense, excluding stock-based compensation, decreased for the six months ended June 30, 2026, compared to the same period in 2025 primarily due to a decrease in employee costs resulting from a lower headcount in 2026.
Previous 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.
Current wording
Cash-based interest expense increased for the six months ended June 30, 2026, compared to the same period in 2025 primarily due to additional equipment and vehicle notes partially offset by a lower average outstanding balance and interest rate on the Company’s Credit Facility. Additionally, the Company’s non-cash-based interest expense was higher for the six months ended June 30, 2026, due to the remaining unamortized discount related to the September Note being fully amortized upon full repayment during the first quarter of 2026.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
General and administrative expense, excluding stock-based compensation, decreased slightly for the three months ended June 30, 2026, compared to the same period in 2025 primarily due to a decrease in employee costs resulting from lower headcount in 2026 partially offset by additional professional fees and rent expense.
Current report — wording carried from elsewhere
The following table reflects Empire’s summary operating information for the six months ended June 30, 2026 and 2025. 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.
Current report — wording carried from elsewhere
Lease Operating Expense and Production Taxes
Current report — wording carried from elsewhere
Lease operating expense was lower for the six months ended June 30, 2026, compared to the same period in 2025 primarily due to lower overall production and efforts by the Company to reduce overall operating costs The decrease was partially offset by an increase in workover expense period over period. Workover expenses were approximately $1.3 million for the six months ended June 30, 2026, compared to approximately $0.9 million for the same period in 2025. The higher workover expense in 2026 was primarily in North Dakota from the Company’s steam unit performance enhancements and general projects in New Mexico.
Current report — wording carried from elsewhere
The decrease in DD&A for the six months ended June 30, 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 also increased slightly from prior period due to the additional interest acquired in New Mexico.
Current report — wording carried from elsewhere
General and Administrative Expense (excluding stock-based compensation)
Current report — wording carried from elsewhere
Stock-based compensation decreased period over period due to a lower number of awards in 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.