Starbuck Drilling Program in North Dakota
Providing Solid Results
Driving Further Asset Development Efforts
Across Remaining Attractive Portfolio, Including Near-Term Focus on
New Mexico and Texas
Empire Petroleum (NYSE American: EP) (“Empire” or the
“Company”), an oil and gas company with producing assets in New
Mexico, North Dakota, Montana, Texas and Louisiana, today provided
an update on its program to further develop its Starbuck Field
located in North Dakota (the “Starbuck Drilling Program”). In
addition, the Company announced preliminary operational and
financial results for Q4 2023. Empire expects 2024 to be a year of
progress as it continues to advance the Starbuck Drilling Program
and begins technical work for production uplift opportunities in
New Mexico and Texas.
ASSET DEVELOPMENT UPDATE
The Starbuck Drilling Program’s first well came online in
December 2023 and a total of four wells in the Upper Charles
Formation have been placed on production. As of today, collectively
all four wells have over 18,000 feet of horizontal pay and the
Company is currently optimizing completions while increasing the
core production through its enhanced oil recovery (“EOR”) program.
Production since the purchase of the Starbuck Field has increased
over 500%, with a goal of growth of 2,000% to 5,000% by the end of
2024.
At this time, the Company has one rig in the Starbuck Field
drilling a fifth horizontal well, which is to be followed by
completing the horizontal lateral in two previously drilled
vertical wells with a radius into the target zone of development.
As the Starbuck Field is strategically designed for EOR production,
the Company anticipates EOR development to begin in Q2 2024 with
the goal of providing a meaningful increase in production beginning
as soon as the second half of 2024 and going forward.
Empire has also logged five vertical pilot wells to help
identify additional pay and extend existing reservoirs, which has
confirmed three additional primary zones of interest and two
secondary zones of interest. In addition, the Company has drilled a
vertical appraisal well in the Starbuck Field to core two new
target zones for development. The two new primary target zones of
development have been successfully cored as of this press release
and the cores have just been delivered for analysis. The data will
then be added to the development plan while the vertical well will
be placed on production in Q1 2024.
Complementing these efforts, Empire has begun its technical work
for production uplift opportunities on its New Mexico and Texas
assets, including a pilot drilling program in New Mexico that is
expected to begin later in 2024.
Q4 2023 PRELIMINARY RESULTS
Production and Expenses. The Company’s Q4 2023 total production
is estimated at 185,000 barrels of oil equivalent or approximately
2,011 barrels of oil equivalent per day (BOE/D) (approximately 64%
oil), with estimated production revenue of approximately $9.9
million. Lease operating expenses including workovers trended
higher than prior quarters and reflect a higher level of
compliance-related activities. The Company’s general and
administrative expenses are expected to be higher on a sequential
basis in Q4 2023 resulting from legal costs regarding financing and
operations. The Company is continuing its closing process and
analysis of its results including the finalization of proved oil
and gas reserves and would note that the 12-month trailing average
WTI price for 2023 is $78/barrel versus $94/barrel in 2022 and
natural gas is $2.64 per MMBtu for 2023 versus $6.36 per MMBtu in
2022.
Capital Investments. The Company expects its incurred capital
expenditures from Q4 2023 to be approximately $18 million to $20
million. The bulk of the expenditures are related to the Starbuck
Drilling Program. For 2024 to date, the Company estimates it has
incurred Starbuck Drilling Program capital expenditures of between
$7 million and $9 million.
Liquidity and Capital Resources. As of December 31, 2023, the
Company’s working capital is expected to be a deficit of
approximately $5 million, which is primarily driven by payables
related to the Starbuck Drilling Program. The Company’s
availability under its new credit facility was $5.5 million at
December 31, 2023. An additional $2.7 million has been borrowed
under the new credit facility during Q1 2024.
On February 16, 2024, the Company entered into a $5 million
convertible bridge loan agreement with Energy Evolution Master
Fund, Ltd, (“EEF”), the Company’s largest stockholder, with an
initial amount of $2.5 million received on February 16, 2024. The
loan matures on February 15, 2026, and the interest rate of 7% is
payable in the Company’s stock on a quarterly basis. The additional
$2.5 million can be drawn anytime in the next three months at the
Company’s request.
Empire’s full fiscal year and Q4 2023 financial results are
planned for release concurrently with the filing of its Form 10-K,
which is currently estimated to be on March 28, 2024. The unaudited
results or balances noted in this press release are preliminary and
subject to adjustment. Actual results may differ materially from
these estimates.
Mike Morrisett, President & Chief Executive Officer of
Empire, commented, “We are extremely pleased to have the continued
support of our major shareholders – Phil Mulacek and EEF – who in
November 2023 invested $20 million, as described in our prior Form
8-K’s, to support our recent capital spending for the Starbuck
Drilling Program.”
Mr. Morrisett continued, “The first four wells online have
initially increased production in the Starbuck field to over 500%.
We look forward to bringing more wells online in 2024. Also to note
and described in a previous filed Form 8-K, we have recently
established a new $10 million revolver facility with a regional
bank focusing on our ongoing development efforts in North Dakota. I
would like to thank our employees, field crew, vendors and
consultants, who have worked tirelessly during the harsh winter
elements.”
Phil Mulacek, Chairman of the Board of Empire, expanded, “During
the recent development, we have learned a substantial amount about
the technical backbone of the field and reservoir, as well as
related enhanced drilling and completion techniques. The result has
been material cost reductions on a per well basis, which creates
the potential for excellent well economics within our North Dakota
operations.”
Mr. Mulacek concluded, “We are exploring the additional
formations in parallel to expand the drilling activities. Right
now, we are awaiting core results and have commissioned seismic
studies to put into place a much larger production program. We plan
on further developing the Upper Charles Formation with enhanced oil
recovery techniques and look forward to expanding the North Dakota
development in the additional target zones in the second and third
quarters of 2024. We are also excited about the development
opportunities we see in our remaining attractive asset portfolio.
This includes a near term focus on our New Mexico and Texas assets,
including the potential to begin a pilot drilling program in New
Mexico later this year. We look forward to keeping everyone
apprised of our progress.”
ABOUT EMPIRE PETROLEUM
Empire Petroleum Corporation is a publicly traded, Tulsa-based
oil and gas company with current producing assets in Texas,
Louisiana, North Dakota, Montana, and New Mexico. Management is
focused on organic growth and targeted acquisitions of proved
developed assets with synergies with its existing portfolio of
wells. More information about Empire can be found at
www.empirepetroleumcorp.com.
SAFE HARBOR STATEMENT
This release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Forward-looking
statements involve a wide variety of risks and uncertainties, and
include, without limitations, statements with respect to the
Company’s estimates, strategy and prospects. Such statements are
subject to certain risks and uncertainties which are disclosed in
the Company’s reports filed with the SEC, including its Form 10-K
for the fiscal year ended December 31, 2022, and its other filings
with the SEC. Readers and investors are cautioned that the
Company’s actual results may differ materially from those described
in the forward-looking statements due to a number of factors,
including, but not limited to, the Company’s ability to acquire
productive oil and/or gas properties or to successfully drill and
complete oil and/or gas wells on such properties, general economic
conditions both domestically and abroad, and other risks and
uncertainties related to the conduct of business by the Company.
Other than as required by applicable securities laws, the Company
does not assume a duty to update these forward-looking statements,
whether as a result of new information, subsequent events or
circumstances, changes in expectations, or otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20240222730403/en/
Empire Petroleum Corporation: Mike Morrisett, President
& CEO 539-444-8002 info@empirepetrocorp.com
Investor Relations: Al Petrie Advisors Wes Harris,
Partner 281-740-1334 wes@alpetrie.com
Empire Petroleum (AMEX:EP)
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