Empire Petroleum (“Empire” or the “Company”), an oil and gas company with producing assets in New Mexico, North Dakota, Montana, Texas, and Louisiana, reported operational and financial results for the third quarter 2025.
THIRD QUARTER 2025 HIGHLIGHTS
Produced Q3-2025 net production volumes of 1,566 barrels of oil per day (“Bbls/d”), an increase of 5% compared to Q2-2025;
Reported 2,398 barrels of oil equivalent per day (“Boe/d”);
Boe/d is comprised of 65% oil, 19% natural gas liquids (“NGLs”), and 16% natural gas;
Empire continues to advance its enhanced oil recovery (“EOR”) efforts in the Starbuck Drilling Program (“Starbuck”) in North Dakota, where modified wellhead installations were completed during Q3-2025;
Following analysis of the previously planned rare alloy components, the Company implemented an alternative water injection system designed to reduce scaling tendencies and improve system reliability;
Empire also filed the final patent for its proprietary hydrocarbon vaporization technology, which leverages elevated temperatures and pressure differentials to increase recovery efficiency;
Empire furthered preparations for its inaugural drilling campaign in Texas, positioning additional locations to support a scalable development plan;
As part of ongoing groundwork for future horizontal development across multiple prospective pay zones, the Company finalized reprocessing of legacy seismic data;
Given current commodity prices, Empire is strategically pacing the start of drilling operations, now anticipated in 2026, to align capital development with market conditions and maximize long-term value creation;
In Q3-2025, Empire successfully completed its subscription rights offering (“Rights Offering”), generating approximately $2.5 million in gross proceeds, before transaction costs;
The Company received subscriptions for more than 100% of the securities available in the Rights Offering and accordingly, stockholders received their basic subscription privilege. Because there were not enough units to satisfy all oversubscriptions, remaining securities were allocated pro-rata, after eliminating all fractional shares, among oversubscribing stockholders;
As disclosed in previous filings, Phil E. Mulacek, Chairman of the Board of Empire and one of the Company’s largest shareholders, participated in the Rights Offering, fully subscribing to the securities corresponding to his subscription rights, and exercising his over-subscription rights to purchase his pro-rata share of the underlying securities related to the Rights Offering that remain unsubscribed.
Reported Q3-2025 total product revenue of $9.4 million, a net loss of $3.8 million, or ($0.11) per diluted share;
Adjusted EBITDA of $0.1 million for Q3-2025.
2025 OUTLOOK
“Empire continues to execute with precision and discipline as we move through the remainder of 2025,” said Phil Mulacek, Chairman of the Board. “Our operational teams are achieving measurable progress across multiple fronts, from consistent improvement in North Dakota’s EOR program to ongoing technical advancements in Texas. We remain focused on delivering operational excellence, capital efficiency, and strategic development sequencing across the portfolio. The natural gas market has shifted significantly over the past several years, with U.S. liquefied natural gas exports now exceeding approximately 18 billion cubic feet per day compared to near zero just over a decade ago, and pricing strengthening from lows near $1.35 per thousand cubic feet (“Mcf”)1 toward long-term historical averages in the $4.00-$5.00/Mcf range. As additional demand from data centers, industrial users, and exports into Mexico continues to accelerate, long-term fundamentals point toward ongoing tightening into 2026. To capitalize on this shift, Empire is building operational flexibility by progressing a series of drilled-but-uncompleted (“DUC”) wells, positioning the Company to efficiently transition into higher-value gas development in 2026. This disciplined sequencing allows us to align capital deployment with commodity signals and maximize returns as the market evolves. 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. The recent successful completion of the Rights Offering, particularly during a period of commodity price volatility, underscores the confidence and alignment of our shareholders. We greatly appreciate their continued support and belief in Empire’s long-term strategy. With these accomplishments and a constructive outlook for the broader energy market, I believe we’re well positioned to capture meaningful upside as pricing conditions stabilize. The groundwork we’re laying today is designed to position Empire for long-term success, and as we move forward, we look forward to building additional production in New Mexico, a key driver of future growth within Empire’s portfolio.”
Mike Morrisett, President and CEO, added, “Our third quarter results reflect steady operational execution and focused progress across Empire’s core assets. 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 in the area, completing pre-drill activities and advancing readiness across multiple locations. In New Mexico, we’re maintaining production and pursuing incremental improvements to maximize efficiency across our legacy unitized assets. The strong participation in our Rights Offering reflects continued confidence in Empire’s direction, and we’re deeply appreciative of that support as we work to execute on our development plan. With disciplined capital management and a clear operational roadmap, Empire is entering 2026 with momentum, flexibility, and a focused path toward scalable growth.”
North Dakota – Williston Basin:
Empire continues to execute targeted enhancements to the Starbuck EOR program in North Dakota, where system performance and production consistency have shown measurable improvement through 2025;
The Company is installing a new pipeline segment to supply higher-quality water to a dedicated circuit within the EOR system, an upgrade expected to improve reliability, minimize scaling, and reduce long-term operating costs;
In parallel, Empire has implemented multiple refinements across EOR equipment and processes, further optimizing performance and efficiency;
With these upgrades progressing and the system operating more consistently, Empire anticipates achieving stable, sustained production levels by year-end; and
The Company is also evaluating opportunities to apply its proprietary EOR model across additional assets in North Dakota, advancing a methodical, data-driven approach to long-term field development.
New Mexico – Permian Basin:
On September 12, 2025, the New Mexico Conservation Commission (“Commission”) issued Order No. R-24004 (the “Order”) regarding the Company’s rights to the Residual Oil Zone (“ROZ”) in the Eunice Monument South Unit’s (“EMSU”) Unitized Interval. The Commission unanimously affirmed the existence of a ROZ in the Grayburg and San Andres formations within the EMSU and confirmed Empire’s exclusive rights to produce the ROZ under the 1984 Commission Order.
Based on these findings, the Commission:
Denied Goodnight’s applications to drill five new saltwater disposal (“SWD”) wells within the boundaries of the EMSU;
Denied Goodnight’s application to increase injection volumes in an existing SWD well;
Suspended Goodnight’s four SWD wells located within the EMSU boundaries to provide Empire the opportunity to establish the CO2 EOR pilot project;
The Commission recently granted a limited request for stay and rehearing to consider (1) the authority for suspension in light of certain factual findings; and (2), the authority or discretion of the New Mexico Oil Conservation Division in implementation of the Order;
Pending the Commission’s decision, Empire plans to proceed with motions to revoke the existing permits granted to the remaining three SWD Companies disposing wastewater into the EMSU and Arrowhead Grayburg Unit Unitized Interval, while concurrently advancing litigation for trespass and damages;
As of the date of this release, the briefing and oral hearing on the rehearing has taken place, and Empire is awaiting the Commission’s decision; and
The Company expects final resolution of this matter to result in a meaningful reduction in operating expenses and contribute to improved financial performance going forward.
Texas – East Texas Basin:
Empire continues to advance its development program in Texas, maintaining readiness for its inaugural drilling campaign as part of the Company’s broader growth strategy in the region;
Technical groundwork completed to date, including seismic reprocessing, surface preparation, and location planning, has positioned the Company for efficient execution once drilling commences;
In Q4-2025, Empire will initiate re-entry and workover rig operations on the initial well location to finalize target zones for optimal lateral location, marking a key pre-drill milestone in the development timeline;
Given current commodity pricing, the Company is targeting the start of drilling operations in 2026, allowing for optimal timing and resource allocation;
The upcoming program is designed to test multiple prospective pay zones identified during the initial technical evaluation, utilizing approximately a dozen DUC wells to accelerate the Company’s 2026 gas-focused development strategy; and
Additionally, Empire is advancing horizontal gas development opportunities aimed at delivering long-term, capital-efficient production growth.
Net sales volumes for Q3-2025 were 2,398 Boe/d, including 1,566 barrels of oil per day; 456 barrels of NGLs per day, and 2,257 thousand cubic feet per day (“Mcf/d”) or 376 Boe/d of natural gas. Oil sales volumes slightly decreased compared to Q3-2024 primarily due to natural decline offset by redrilling efforts in North Dakota .
Empire reported Q3-2025 total product revenue of $9.4 million versus $10.9 million in Q3-2024. Contributing to the decrease were lower average oil and NGL realized prices. Realized oil and natural gas liquids prices decreased 15% and 33%, respectively, due to a general decline in overall market pricing.
Lease operating expenses in Q3-2025 decreased to $5.7 million versus $6.7 million in Q3-2024 primarily due to lower workover costs. Q3-2025 workover expense decreased to $0.4 million versus $1.4 million in Q3-2024. Higher workover expense in 2024 was primarily in New Mexico as Empire continued work in the region to enhance and maintain production.
Production and ad valorem taxes for Q3-2025 were $0.8 million versus $1.0 million in Q3-2024, as a result of lower product revenues.
Depreciation, Depletion, and Amortization (“DD&A”) and Accretion for Q3-2025 was $3.3 million versus $3.1 million for Q3-2024. The increase in DD&A is primarily due to the impact of capitalized costs associated with the new drilling as part of Empire’s Starbuck Drilling Program in North Dakota, partially offset by lower production volumes. Accretion increased slightly due to the new drilling activity and acquisition of working interest in New Mexico.
General and administrative expenses, excluding share-based compensation expense, was $2.9 million, or $13.06 per Boe in Q3-2025 versus $3.6 million, or $16.06 per Boe in Q3-2024. The decrease in expenses was primarily due to timing of board of director compensation and franchise taxes.
Interest expense for Q3-2025 slightly increased, compared to Q3-2024, primarily due to a higher average outstanding balance on the Company’s credit facility and additional equipment and vehicle notes.
Empire recorded a net loss of $3.8 million in Q3-2025, or ($0.11) per diluted share, versus a Q3-2024 net loss of $3.6 million, or ($0.12) per diluted share.
Adjusted EBITDA was $0.1 million for Q3-2025 compared to Adjusted EBITDA of ($0.1) million in Q3-2024.
CAPITAL SPENDING, BALANCE SHEET & LIQUIDITY
For the nine months ended September 30, 2025, Empire invested approximately $4.2 million in total capital expenditures, primarily from finalizing drilling and completions activity related to the Starbuck Drilling Program in North Dakota and continued return-to-production efforts in Texas.
As of September 30, 2025, Empire had approximately $4.6 million in cash on hand and approximately $3.3 million available on its credit facility. Empire completed a subscriptions rights offering in August 2025, which raised approximately $2.5 million of gross proceeds, before transaction costs.
UPDATED PRESENTATION
An updated Company presentation will be posted to the Company’s website under the Investor Relations section.