0001104659-26-027675
SEC filingEmpire Petroleum Corporation reported a challenging FY 2025 with a net loss of $72.1 million, driven by a significant $51.3 million impairment charge on oil and gas properties. Total revenue declined to $34.2 million from $44.0 million in FY 2024, primarily due to lower average realized prices for oil and NGLs and decreased oil production volumes. The company generated negative operating cash flow of $3.9 million and ended the year with negative working capital of $16.2 million, raising substantial doubt about its ability to continue as a going concern. Management's plans to alleviate this doubt rely on continued financial support from its two largest stockholders, Phil Mulacek and Energy Evolution Master Fund, Ltd.
Empire Petroleum Corporation reported a net loss of $72.1 million for FY 2025, a significant deterioration from the $16.2 million net loss in FY 2024. This was primarily driven by a $51.3 million impairment charge on oil and gas properties, reflecting lower commodity price expectations and changes in development plans. Total revenue declined to $34.2 million from $44.0 million in the prior year, representing a 22.3% decrease. The company's operating loss widened to $71.3 million from $13.7 million in FY 2024. Production volumes decreased to 818,303 Boe from 884,076 Boe, with oil production down 9.7% to 524,646 barrels. Average realized prices declined across all commodities: oil to $60.32/barrel (from $71.44), natural gas to $1.04/Mcf (from $0.37), and NGLs to $10.76/barrel (from $14.21).
The company operates as a single segment focused on oil and natural gas exploration and production. Revenue consists entirely of product sales from oil, natural gas, and NGLs. The 22.3% year-over-year revenue decline resulted from both lower production volumes and reduced commodity prices. Oil sales decreased to $31.6 million from $41.5 million, natural gas sales increased to $0.9 million from $0.3 million, and NGLs sales decreased to $1.6 million from $2.1 million. The company sold 66% of its oil, natural gas, and NGLs revenues to three customers during FY 2025. Geographic concentration exists in New Mexico, North Dakota, Montana, Texas, and Louisiana, with all proved reserves located in these areas.
The company's cost structure showed mixed results. Lease operating expense decreased to $25.2 million from $27.5 million, primarily due to lower workover costs ($2.2 million in FY 2025 vs. $5.9 million in FY 2024). Production and ad valorem taxes decreased to $2.9 million from $3.8 million, consistent with lower revenues. Depreciation, depletion, amortization and accretion increased to $12.7 million from $11.3 million. General and administrative expenses (excluding stock-based compensation) decreased slightly to $12.0 million from $12.6 million. The $51.3 million impairment charge represented the most significant impact on profitability, reflecting assessment of property carrying values against future cash flow expectations in the current pricing environment.
Operating activities used $3.9 million in cash during FY 2025, compared to generating $6.2 million in the prior year. Investing activities used $4.6 million, primarily for capital expenditures on oil and natural gas properties. Financing activities provided $7.5 million, including borrowings on the credit facility and proceeds from related party notes and equity offerings. The company ended the year with $1.2 million in cash, total assets of $65.9 million, and total liabilities of $70.5 million. Working capital was negative $16.2 million, and total stockholders' equity showed a deficit of $4.6 million. Total indebtedness was approximately $16.2 million, with $2.5 million available under the credit facility as of December 31, 2025.
The company faces substantial doubt about its ability to continue as a going concern due to negative working capital and insufficient expected operating cash flow. Management's plans to alleviate this doubt rely on continued financial support from its two largest stockholders, Phil Mulacek (24.5% ownership) and Energy Evolution Master Fund, Ltd. (30.8% ownership), who have indicated willingness to provide additional funding. The company entered into hedging positions for approximately 90% of estimated oil production for the remaining three quarters of 2026 at a blended price of $72.26. Key risk factors include commodity price volatility, concentration of operations in limited geographic areas, customer concentration, regulatory changes, and the need for additional capital to fund operations and growth plans.