Empire Petroleum Corporation

What they do

Empire Petroleum is an independent energy company that acquires and optimizes developed oil and natural gas properties. It operates as a single segment through wholly-owned subsidiaries in New Mexico, North Dakota, Texas, and Louisiana, with a focus on cost-effective well production optimization and low-decline, long-life assets. The company primarily produces oil with associated natural gas and NGLs.

Revenue drivers

• Empire New Mexico — Approximately 709 gross (525 net) wells on 48,000 gross acres in Lea County, primarily producing oil from Grayburg/San Andres and other formations.
• Empire North Dakota — Approximately 243 gross (118 net) wells on 24,200 gross acres, primarily oil from Madison, Bakken, and other formations, plus interests in 105 vertical wells.
• Texas natural gas development program — Q1-2026 activity focused on reactivation and recompletion of wells, with three wells reactivated and five in progress, increasing field compression capacity by over 500% to approximately 3 MMcfd contributing early production.

Recent performance

For Q1 2026, Empire reported revenue of $5.1 million and net production of 1,880 Boe/d (66% oil). The company had a net loss of $72.1 million in 2025, with annual revenue of $34.2 million, down from $43.6 million in 2024. Operating cash flow was negative $3.9 million in 2025. As of March 31, 2026, total assets were $78.0 million, total liabilities $74.3 million, and shareholder equity $3.7 million.

Strategy

Empire's stated strategy is to grow reserves and cash flow cost-effectively by optimizing well production and reducing unit operating costs. Management focuses on acquiring proved developed producing properties in predictable, low-decline fields. In Q1-2026, the company advanced its Texas natural gas development program, thermal recovery operations in North Dakota (Starbuck), and participation in a Louisiana three-well development program.

Risks

• Going concern risk — The company has substantial doubt about its ability to continue as a going concern due to negative working capital and insufficient expected operating cash flow.
• Liquidity constraints — The revolving credit facility with Equity Bank is being reduced monthly by $0.25 million, limiting future access to capital.
• Customer concentration — A large portion of oil and natural gas production is sold to a few customers, and loss of any could disrupt cash flows.
• Operational disruptions — Q1-2026 production was impacted by operational issues in North Dakota and New Mexico and weather-related force majeure in Texas.

Outlook

Management expects production to recover in Q2-2026 after Q1 disruptions. They anticipate continued negative working capital for the next 12 months but are relying on committed financial support from related parties Phil Mulacek and Energy Evolution. A subscription rights offering in March 2026 raised approximately $10.0 million in gross proceeds, and management believes these actions are sufficient to meet obligations for the next 12 months.