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What changed in EMPIRE PETROLEUM CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of EMPIRE PETROLEUM CORP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+285 added−233 removedSource: 10-K (2026-03-13) vs 10-K (2025-03-27)

Top changes in EMPIRE PETROLEUM CORP's 2025 10-K

285 paragraphs added · 233 removed · 156 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

36 edited+6 added−5 removed34 unchanged
Biggest changeFor the Years Ended December 31, 2024 2023 Production and operating data: Net sales volumes: Oil (Bbl) 581,159 487,869 Natural gas (Mcf) 916,955 854,274 Natural gas liquids (Bbl) 150,091 136,013 Total (Boe) 884,076 766,261 Average price per unit: Oil (1) $ 71.44 $ 75.19 Natural gas $ 0.37 $ 2.02 Natural gas liquids $ 14.21 $ 12.21 Total (Boe) $ 49.76 $ 52.29 Operating costs and expenses per Boe: Lease operating expense (excluding workovers) $ 24.46 $ 21.70 Workovers $ 6.71 $ 15.65 Total Lease operating expense $ 31.16 $ 37.36 Production and ad valorem taxes $ 4.26 $ 3.97 Depreciation, depletion, amortization and accretion $ 12.74 $ 6.33 General & administrative (excluding stock-based compensation) $ 14.23 $ 15.71 Stock-based compensation $ 2.44 $ 4.10 Total General & administrative $ 16.67 $ 19.81 (1) Excludes the effect of net cash receipts from (payments on) derivatives.
Biggest changeBecause of normal production declines, increased or decreased production due to future acquisitions, divestitures, and development, fluctuations in commodity prices and the effects of acquisitions or divestitures, the historical information presented below should not be interpreted as being indicative of future results. ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ ​ 2025 ​ ​ ​ 2024 Production and Operating Data: ​ ​ ​ ​ ​ ​ Net Production Volumes: ​ ​ ​ ​ ​ ​ Oil (Bbl) ​ 524,646 ​ 581,159 Natural gas (Mcf) ​ 860,599 ​ 916,955 Natural gas liquids (Bbl) ​ 150,224 ​ 150,091 Total (Boe) ​ 818,303 ​ 884,076 ​ ​ ​ ​ ​ ​ ​ Average Price per Unit: ​ ​ ​ ​ Oil (1) ​ $ 60.32 ​ $ 71.44 Natural gas ​ $ 1.04 ​ $ 0.37 Natural gas liquids ​ $ 10.76 ​ $ 14.21 Total ​ $ 41.75 ​ $ 49.76 ​ ​ ​ ​ ​ ​ ​ Operating Costs and Expenses per Boe: ​ ​ ​ ​ Lease operating expense (excluding workovers) ​ $ 28.15 ​ $ 24.46 Workovers ​ $ 2.68 ​ $ 6.70 Total Lease operating expense ​ $ 30.83 ​ $ 31.16 Production and ad valorem taxes ​ $ 3.49 ​ $ 4.26 Depreciation, depletion, amortization and accretion ​ $ 15.56 ​ $ 12.74 General and administrative (excluding stock-based compensation) ​ $ 14.66 ​ $ 14.23 Stock-based compensation ​ $ 1.74 ​ $ 2.44 Total General and administrative ​ $ 16.40 ​ $ 16.67 (1) Excludes the effect of net cash receipts from (payments on) commodity derivatives for the year ended December 31, 2024.
To accomplish its mission, we plan to execute the following business strategies: ● Cost-effectively optimize well production ● Reduce unit operating costs and improve margins ● Target proved developed producing acquisitions in predictable fields that have historically had low production decline and long lives ● Focus on high-quality assets that add scale and provide synergies to our existing portfolio and core areas of operation We operate as a single operating segment.
To accomplish our mission, we plan to execute the following business strategies: ● Cost-effectively optimize well production ● Reduce unit operating costs and improve margins ● Target proved developed producing acquisitions in predictable fields that have historically had low production decline and long lives ● Focus on high-quality assets that add scale and provide synergies to our existing portfolio and core areas of operation We operate as a single operating segment.
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.
Empire has 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.
We also have 15 royalty interest (“RI”) wells with an average overriding royalty interest (“ORRI”) of 0.6%. Empire New Mexico’s assets primarily produce oil with accompanying natural gas and NGLs production. Empire New Mexico’s properties are located in Grayburg/San Andres (primary source of production), Queen-Seven Rivers-Yates, Devonian, Abo, Blineberry, Tubb, and Drinkard formations.
We also have 18 royalty interest (“RI”) wells with an average overriding royalty interest (“ORRI”) of 0.6%. Empire New Mexico’s assets primarily produce oil with accompanying natural gas and NGLs production. Empire New Mexico’s properties are located in Grayburg/San Andres (primary source of production), Queen-Seven Rivers-Yates, Devonian, Abo, Blineberry, Tubb, and Drinkard formations.
Meekins has been with CG&A since 1989 and graduated from Texas A&M University in 1987 with a bachelor’s degree in petroleum engineering. He is a registered professional engineer in Texas and has more than 30 years of experience in the estimation and evaluation of oil and natural gas reserves.
Meekins has been with CG&A since 1989 and graduated from Texas A&M University in 1987 with a bachelor’s degree in petroleum engineering. He is a registered professional engineer in Texas and has more than 35 years of experience in the estimation and evaluation of oil and natural gas reserves.
Therefore, we encourage investors, the media and others interested in our company to review the information we post on the social media channels listed in the “Investor Relations” section of our website. 6 Properties We are an independent operator in four geographic areas in the United States.
The information we post on social media could be deemed to be material information. Therefore, we encourage investors, the media and others interested in our company to review the information we post on the social media channels listed in the “Investor Relations” section of our website. Properties We are an independent operator in four geographic areas in the United States.
For additional information, see Note 18 – Segment Reporting of Notes to Consolidated Financial Statements.
For additional information, see Note 17 – Segment Reporting of Notes to Consolidated Financial Statements.
For 2024, 78% of revenues from oil, natural gas, and NGLs sales were to four customers. For 2023, 70% of revenues from oil, natural gas, and NGLs sales were to four customers. No other purchaser accounted for more than 10% of our total revenues during the respective periods.
For 2025, 66% of revenues from oil, natural gas, and NGLs sales were to three customers. For 2024, 78% of revenues from oil, natural gas, and NGLs sales were to four customers. No other purchaser accounted for more than 10% of our total revenues during the respective periods.
In the fourth quarter of 2024, the Company initiated a return-to-production program on four wells primarily focused on facility work on the existing saltwater disposal system. 7 Empire Louisiana Empire Louisiana includes 7 gross (5 net) producing wells and three saltwater disposal wells in the Miocene, Frio, Cockfield, and Wilcox formations. Empire Louisiana’s assets primarily produce oil.
In the fourth quarter of 2024, the Company initiated a return-to-production program on four wells primarily focused on facility work on the existing saltwater disposal system and completed the program in 2025. Empire Louisiana Empire Louisiana includes 7 gross (5 net) wells and three saltwater disposal wells in the Miocene, Frio, Cockfield, and Wilcox formations.
Empire Texas Empire Texas includes approximately 119 gross (106 net) producing wells on approximately 43,000 gross (30,000 net) acres as well as 77 miles of gathering lines and pipelines with related facilities and equipment. Empire Texas owns concentrated acreage and stacked pay in the historically prolific East Texas Basin.
Empire Texas Empire Texas includes approximately 118 gross (105 net) wells on approximately 43,000 gross (30,000 net) acres as well as 49 miles of gathering lines and pipelines with related facilities and equipment. Empire Texas owns concentrated acreage and stacked pay in the historically prolific East Texas Basin.
The two new primary target zones of development have been successfully cored and the cores are under analysis. The data will then be added to a future development plan while the vertical wells have been placed in production during 2024.
The two new primary target zones of development have been successfully cored and the cores are under analysis. The data will then be added to a future development plan while the vertical wells are producing.
All prices and costs associated with operating wells were held constant in accordance with SEC guidelines. Prices of $71.66 per barrel of oil, $0.95 per Mcf and $24.54 per barrel of NGLs were utilized at December 31, 2024.
All prices and costs associated with operating wells were held constant in accordance with SEC guidelines. Prices of $61.55 per barrel of oil, $1.76 per Mcf and $21.07 per barrel of NGLs were utilized at December 31, 2025. Prices of $71.66 per barrel of oil, $0.95 per Mcf and $24.54 per barrel of NGLs were utilized at December 31, 2024.
Estimates of economically recoverable oil and natural gas reserves depend on several variable factors, including but not limited to historical production from the area compared with production from other producing areas, and assumptions about: reservoir size; the effects of regulations by governmental agencies; future oil and natural gas prices; future operating costs; severance and excise taxes; operational risks; development costs; and workover and remedial costs.
Estimates of economically recoverable oil and natural gas reserves depend on several variable factors, including but not limited to historical production from the area compared with production from other producing areas, and assumptions about: reservoir size; the effects of regulations by governmental agencies; future oil and natural gas prices; future operating costs; severance and excise taxes; operational risks; development costs; and workover and remedial costs. 8 Table of Contents Some or all of these assumptions may vary considerably from actual results.
We do not transport, refine or process the oil we produce. We sell our produced oil under contracts using market-based pricing, which is adjusted for differentials based upon oil quality. We sell our natural gas and NGLs under purchase contracts using market-based pricing, which is primarily sold at the lease location.
We sell our produced oil under contracts using market-based pricing, which is adjusted for differentials based upon oil quality. We sell our natural gas and NGLs under purchase contracts using market-based pricing, which is primarily sold at the lease location.
Our sales of crude oil are affected by the availability, terms, and cost of transportation. The transportation of oil in common carrier pipelines is also subject to rate regulation. The Federal Energy Regulatory Commission (“FERC”), regulates interstate oil pipeline transportation rates under the Interstate Commerce Act. Intrastate oil pipeline transportation rates are subject to regulation by state regulatory commissions.
The transportation of oil in common carrier pipelines is also subject to rate regulation. The Federal Energy Regulatory Commission (“FERC”), regulates interstate oil pipeline transportation rates under the Interstate Commerce Act. Intrastate oil pipeline transportation rates are subject to regulation by state regulatory commissions.
The following table represents our oil and natural gas reserves: Oil Natural Gas NGLs Total (MBbl) (MMcf) (MBbl) MBoe Proved developed at December 31, 2024 7,001 6,064 1,215 9,227 Proved developed at December 31, 2023 6,924 6,104 1,171 9,112 Net proved reserves were calculated using an unweighted arithmetic average of the first-day-of-the-month price within the 12-month period for the year.
The following table represents our oil and natural gas reserves: ​ ​ ​ ​ ​ ​ ​ ​ ​ Oil ​ ​ ​ Natural Gas ​ ​ ​ NGLs ​ ​ ​ Total ​ (MBbls) ​ (MMcf) ​ (MBbls) ​ MBoe Proved developed at December 31, 2025 5,878 ​ 4,300 1,030 7,625 Proved developed at December 31, 2024 7,001 6,064 1,215 9,227 ​ Net proved reserves were calculated using an unweighted arithmetic average of the first-day-of-the-month price within the 12-month period for the year.
Empire North Dakota Empire North Dakota includes approximately 232 gross (108 net) producing or injection wells on 24,480 gross (18,480 net) acres in North Dakota and western Montana. We also have smaller nonoperating interests in 106 gross (less than 1 net) vertical wells. These properties primarily produce oil with some related gas production.
Empire North Dakota Empire North Dakota includes approximately 243 gross (118 net) wells on 24,200 gross (18,200 net) acres in North Dakota and western Montana. We also have smaller nonoperating interests in 105 gross (less than 1 net) vertical wells. These properties primarily produce oil with some related gas production.
While the loss of these purchasers may result in a temporary interruption in sales of, or a lower price for, our production, we believe that the loss of these purchasers would not have a material adverse effect on our operations, as there are alternative purchasers in our producing regions. 9 Competition The oil and natural gas industry in the areas in which we operate is highly competitive.
While the loss of these purchasers may result in a temporary interruption in sales of, or a lower price for, our production, we believe that the loss of these purchasers would not have a material adverse effect on our operations, as there are alternative purchasers in our producing regions.
Marketing Arrangements We market our oil and natural gas in accordance with standard energy industry practices. This marketing effort endeavors to obtain the combined highest netback and most secure market available at that time. We sell oil production at the lease locations to third-party purchasers via truck transport or pipeline.
This marketing effort endeavors to obtain the combined highest netback and most secure market available at that time. We sell oil production at the lease locations to third-party purchasers via truck transport or pipeline. We do not transport, refine or process the oil we produce.
Prices of $75.45 per barrel of oil, $1.51 per Mcf and $9.82 per barrel of NGLs were utilized at December 31, 2023. 8 Reserve Estimation Process Reserve estimation is a subjective process as the underground accumulations of crude oil and natural gas cannot be measured in an exact manner, and the accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment.
Reserve Estimation Process Reserve estimation is a subjective process as the underground accumulations of crude oil and natural gas cannot be measured in an exact manner, and the accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment.
In addition to competition for drilling, pressure pumping and workover equipment, we are also affected by the availability of related equipment and materials. The oil and natural gas industry periodically experiences shortages of drilling and workover rigs, equipment, pipe, materials, and personnel, which can delay workover and exploration activities and cause significant price increases.
The oil and natural gas industry periodically experiences shortages of drilling and workover rigs, equipment, pipe, materials, and personnel, which can delay workover and exploration activities and cause significant price increases. We are unable to predict the timing or duration of any such shortages.
Due to these seasonal fluctuations, results of operations for individual quarterly periods may not be indicative of the results realized on an annual basis.
Demand for natural gas is traditionally higher in the winter, resulting in higher natural gas prices during the first and fourth quarters. Due to these seasonal fluctuations, results of operations for individual quarterly periods may not be indicative of the results realized on an annual basis.
Regulation of GHGs could also result in a reduction in demand for and production of oil and natural gas. Additionally, to the extent that unfavorable weather conditions are exacerbated by global climate change or otherwise, the Company properties may be adversely affected to a greater degree than previously experienced.
Additionally, to the extent that unfavorable weather conditions are exacerbated by global climate change or otherwise, the Company properties may be adversely affected to a greater degree than previously experienced. 10 Table of Contents Our sales of crude oil are affected by the availability, terms, and cost of transportation.
Our reserves database is updated and maintained by our Senior Reserves Engineer who has the appropriate technical qualifications to maintain and assist in the preparation of reserve estimates. The Senior Reserves Engineer has over 40 years of industry experience, a degree in engineering from Tulane University in 1978, a licensed professional, and holds several memberships in professional petroleum engineer organizations.
The Senior Reserves Engineer has over 40 years of industry experience, a degree in engineering from Tulane University in 1978, is a licensed professional, and holds several memberships in professional petroleum engineer organizations. Once the reserves database has been appropriately updated, Empire will meet with CG&A who will then review the relevant information and validate the estimates.
Our team is broadly experienced in oil and natural gas operations and follows a strategy of outsourcing most accounting, human resources, and other non-core functions. Office Locations Our corporate headquarters are at 2200 South Utica Place, Suite 150, Tulsa, Oklahoma, with field offices in North Dakota, Texas, and New Mexico. 11
Office Locations Our corporate headquarters are at 2200 South Utica Place, Suite 150, Tulsa, Oklahoma, with field offices in North Dakota, Texas, and New Mexico. ​ 11 Table of Contents
Empire operates the following wholly-owned subsidiaries in its areas of operations: ● Empire New Mexico LLC (“Empire New Mexico”), consisting of the following entities: ○ Empire New Mexico LLC d/b/a Green Tree New Mexico ○ Empire EMSU LLC ○ Empire EMSU-B LLC ○ Empire AGU LLC ○ Empire NM Assets LLC ● Empire North Dakota (“Empire North Dakota”), consisting of the following entities: ○ Empire North Dakota LLC (“Empire North Dakota”) ○ Empire ND Acquisition LLC (“Empire NDA”) ● Empire Texas (“Empire Texas”), consisting of the following entities: ○ Empire Texas LLC ○ Empire Texas Operating LLC ○ Empire Texas GP LLC ○ Pardus Oil & Gas Operating, LP (owned 1% by Empire Texas GP LLC and 99% by Empire Texas LLC) ● Empire Louisiana LLC (“Empire Louisiana”) Empire was incorporated in the state of Delaware in 1985.
Empire operates primarily from the following wholly-owned subsidiaries in its areas of operations: ● Empire New Mexico LLC (“Empire New Mexico”) ● Empire North Dakota LLC (“Empire North Dakota”) ● Empire Texas LLC (“Empire Texas”) ● Empire Louisiana LLC (“Empire Louisiana”) Empire was incorporated in the state of Delaware in 1985.
It is not uncommon for the neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment.
It is not uncommon for the neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment. Although CERCLA currently excludes petroleum from its definition of “hazardous substance,” state laws affecting our operations may impose clean-up liability relating to petroleum and petroleum related products.
Many of these competitors have financial, technical and personnel resources substantially larger than ours. As a result, our competitors may be able to pay more for desirable properties, or to evaluate, bid for and purchase a greater number of properties or prospects than our financial or personnel resources will permit.
As a result, our competitors may be able to pay more for desirable properties, or to evaluate, bid for and purchase a greater number of properties or prospects than our financial or personnel resources will permit. ​ 9 Table of Contents In addition to competition for drilling, pressure pumping and workover equipment, we are also affected by the availability of related equipment and materials.
Once the reserves database has been appropriately updated, Empire will meet with CG&A who will then review the relevant information and validate the estimates. CG&A will work with the Senior Reserves Engineer to resolve any differences in reserve estimates. CG&A will then finalize the reserve report once any differences are resolved and provide a final report to the Company.
CG&A will work with the Senior Reserves Engineer to resolve any differences in reserve estimates. CG&A will then finalize the reserve report once any differences are resolved and provide a final report to the Company. Marketing Arrangements We market our oil and natural gas in accordance with standard energy industry practices.
As is common in the industry in which we operate, we selectively participate in drilling and developmental activities in non-operated properties. Decisions to participate in non-operated properties are made after technical and economic analysis of the projects which also considers the operating expertise and historical track record of the operators.
As is common in the industry in which we operate, we selectively participate in drilling and developmental activities in non-operated properties.
Although CERCLA currently excludes petroleum from its definition of “hazardous substance,” state laws affecting our operations may impose clean-up liability relating to petroleum and petroleum related products. 10 Our oil and natural gas operations are also subject to numerous federal, state and local laws and regulations relating to environmental protection.
Our oil and natural gas operations are also subject to numerous federal, state and local laws and regulations relating to environmental protection.
At December 31, 2024 and 2023, we had approximately 1,072 gross (748 net) producing and injection wells. We have no firm delivery commitments for oil or natural gas.
There are no impacts for the year ended December 31, 2025, as there were no open commodity derivatives during the period. ​ At December 31, 2025, we had approximately 1,077 gross (753 net) wells. We have no firm delivery commitments for oil or natural gas.
In the fourth quarter of 2023, the Company commenced a program to further develop its Starbuck Field located in North Dakota (the “Starbuck Drilling Program”). The Starbuck Drilling Program’s first well came online in December 2023 and a total of 13 wells in the Upper Charles formation have been placed in production as of the filing date of this report.
In 2024, Empire completed a program strategically designed for EOR production to further develop our Starbuck Field located in North Dakota (the “Starbuck Drilling Program”). The Starbuck Drilling Program has a total of 13 wells in the Upper Charles formation placed in production through this program.
We encounter strong competition from numerous parties, ranging generally from small independent producers to major integrated companies. We primarily encounter significant competition in acquiring properties. At higher commodity prices, we also face competition in contracting for oil field services, rigs, pressure pumping and workover equipment, and securing trained personnel.
Competition The oil and natural gas industry in the areas in which we operate is highly competitive. We encounter strong competition from numerous parties, ranging generally from small independent producers to major integrated companies. We primarily encounter significant competition in acquiring properties.
The Company is currently optimizing completions while increasing the core production through its enhanced oil recovery (“EOR”) program. As the Starbuck Field is strategically designed for EOR production, the Company has experienced an increase in production throughout 2024 which is anticipated to continue into 2025.
The Company is currently optimizing completions while increasing the core production of the additional program wells. The addition of these wells have resulted in increased production throughout 2025 which is anticipated to continue into 2026.
Accordingly, we believe that access to oil pipeline transportation services generally will be available to us to the same extent as to our competitors. Employees At December 31, 2024, we had 63 full-time employees, not including contract personnel and outsourced service providers.
Accordingly, we believe that access to oil pipeline transportation services generally will be available to us to the same extent as to our competitors. Seasonality of Business Weather conditions often affect the demand for, and prices of, natural gas and can also delay oil and natural gas production.
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The information we post on social media could be deemed to be material information.
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Decisions to participate in non-operated properties are made after technical and economic analysis of the projects which also considers the operating expertise and historical track record of the operators. 6 Table of Contents Empire New Mexico Empire New Mexico includes approximately 709 gross (525 net) wells on 48,000 gross (41,000 net) acres in Lea County, New Mexico.
Removed
Empire New Mexico Empire New Mexico was formed when we purchased producing assets from XTO in May 2021. These assets are located in Lea County, New Mexico, and include approximately 714 gross (529 net) producing and injection wells on a contiguous and consolidated acreage position consisting of 48,000 gross (41,000 net).
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Empire Louisiana’s assets primarily produce oil. ​ ​ ​ ​ ​ 7 Table of Contents Production and Operating Data The following table sets forth a summary of our production and operating data.
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Production and Operating Data The following table sets forth a summary of our production and operating data. Because of normal production declines, increased or decreased production due to future acquisitions, divestitures, and development, fluctuations in commodity prices and the effects of acquisitions or divestitures, the historical information presented below should not be interpreted as being indicative of future results.
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Our reserves database is updated and maintained by our Senior Reserves Engineer who has the appropriate technical qualifications to maintain and assist in the preparation of reserve estimates.
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Some or all of these assumptions may vary considerably from actual results.
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At higher commodity prices, we also face competition in contracting for oil field services, rigs, pressure pumping and workover equipment, and securing trained personnel. Many of these competitors have financial, technical and personnel resources substantially larger than ours.
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We are unable to predict the timing or duration of any such shortages. Seasonality of Business Weather conditions often affect the demand for, and prices of, natural gas and can also delay oil and natural gas production. Demand for natural gas is traditionally higher in the winter, resulting in higher natural gas prices during the first and fourth quarters.
Added
Regulation of GHGs could also result in a reduction in demand for and production of oil and natural gas.
Added
Employees At December 31, 2025, we had 61 full-time employees, not including contract personnel and outsourced service providers. Our team is broadly experienced in oil and natural gas operations and follows a strategy of outsourcing most accounting, human resources, and other non-core functions.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

64 edited+72 added−18 removed139 unchanged
Biggest changeAt the international level, the United Nations ("UN") sponsored the "Paris Agreement" requires member states to submit non-binding, individually-determined reduction goals known as Nationally Determined Contributions every five years after 2020.
Biggest changeAt the international level, the United Nations (“UN”) sponsored the “Paris Agreement” requires member nations to submit non-binding, individually-determined reduction goals known as Nationally Determined Contributions every five years; however, in January 2025, the current U.S. administration re-withdrew the United States from the Paris Agreement, and in January 2026, the Trump administration announced that the United States was withdrawing from the United Nations Framework Convention on Climate Change and the various climate related programs under this Framework.
Increases in the level of indebtedness could have adverse effects on our financial condition and results of operations, including: · imposing additional cash requirements on us in order to support interest payments, which reduces the amount we have available to fund our operations and other business activities; 13 · increasing the risk that we may default on our debt obligations; · increasing our vulnerability to adverse changes in general economic and industry conditions, economic downturns and adverse developments in our business; · limiting our ability to sell assets, engage in strategic transactions or obtain additional financing for working capital, capital expenditures, general corporate and other purposes; · limiting our flexibility in planning for or reacting to changes in our business and the industry in which we operate; and · increasing our exposure to a rise in interest rates, which will generate greater interest expense.
Increases in the level of indebtedness could have adverse effects on our financial condition and results of operations, including: ● imposing additional cash requirements on us in order to support interest payments, which reduces the amount we have available to fund our operations and other business activities; ● increasing the risk that we may default on our debt obligations; ● increasing our vulnerability to adverse changes in general economic and industry conditions, economic downturns and adverse developments in our business; ● limiting our ability to sell assets, engage in strategic transactions or obtain additional financing for working capital, capital expenditures, general corporate and other purposes; ● limiting our flexibility in planning for or reacting to changes in our business and the industry in which we operate; and ● increasing our exposure to a rise in interest rates, which will generate greater interest expense.
These factors include, but are not limited to, the following: · changes in global supply and demand for oil and natural gas, which could be negatively affected by concerns about public health crises, pandemics and epidemics, such as the COVID-19 pandemic; · the price and quantity of imports of foreign oil and natural gas; · political conditions, including trade or other economic sanctions, armed conflict in Ukraine and the Middle East, the price cap on Russian oil and embargoes, in or affecting other oil-producing activity; · the level of global oil and natural gas exploration and production activity; · the level of global oil and natural gas inventories; · weather conditions, including extreme climatic events; · technological advances affecting energy consumption; and · the price and availability of alternative fuels.
These factors include, but are not limited to, the following: ● changes in global supply and demand for oil and natural gas, which could be negatively affected by concerns about public health crises, pandemics and epidemics, such as the COVID-19 pandemic; ● the price and quantity of imports of foreign oil and natural gas; ● political conditions, including trade or other economic sanctions, armed conflicts in Venezuela, Ukraine and the Middle East, the price cap on Russian oil and embargoes, affecting other oil-producing activity; ● the level of global oil and natural gas exploration, production activity and inventories; ● weather conditions, including extreme climatic events; ● technological advances affecting energy consumption; and ● the price and availability of alternative fuels.
Additionally, utilization of any NOL depends on many factors, including our ability to generate future taxable income, which cannot be assured. At December 31, 2024, we had a full tax valuation allowance recorded on the NOLs.
Additionally, utilization of any NOL depends on many factors, including our ability to generate future taxable income, which cannot be assured. At December 31, 2025, we had a full tax valuation allowance recorded on the NOLs.
Limitation of investments in and financings for fossil fuel energy companies could result in the restriction, delay or cancellation of drilling programs or development or production activities. Policy makers have also advocated for expanding existing, or creating new, reporting and disclosure requirements regarding GHG emissions and other climate-related matters.
Limitation of investments in and financings for fossil fuel energy companies could result in the restriction, delay or cancellation of drilling programs or development or production activities. 19 Table of Contents Policy makers have also advocated for expanding existing, or creating new, reporting and disclosure requirements regarding GHG emissions and other climate-related matters.
Disruptions in the financial markets or otherwise may impact these counterparties and affect their ability to fulfill their existing obligations and their willingness to enter into future transactions with us. In addition, we are exposed to the risk of financial loss from trade, joint interest billing and other receivables.
Disruptions in the financial markets or otherwise may impact these counterparties and affect their ability to fulfill their existing obligations and their willingness to enter into future transactions with us. 21 Table of Contents In addition, we are exposed to the risk of financial loss from trade, joint interest billing and other receivables.
Our ability to meet our debt obligations and reduce our level of indebtedness depends on future performance, which is affected by general economic conditions and financial, business and other factors, many of which are outside of the scope of management’s control. Our business requires substantial capital expenditures.
Our ability to meet our debt obligations and reduce our level of indebtedness depends on future performance, which is affected by general economic conditions and financial, business and other factors, many of which are outside of the scope of management’s control. 13 Table of Contents Our business requires substantial capital expenditures.
At December 31, 2024, all of our total estimated proved reserves were attributable to properties located in these areas.
At December 31, 2025, all of our total estimated proved reserves were attributable to properties located in these areas.
Former President Biden issued several executive orders focused on addressing climate change, including items that may impact costs to produce, or demand for, oil and gas. There are also increasing financial risks for fossil fuel producers as shareholders currently invested in fossil-fuel energy companies may elect in the future to shift some or all of their investments into other sectors.
There have been several executive orders focused on addressing climate change, including items that may impact costs to produce, or demand for, oil and gas. There are also increasing financial risks for fossil fuel producers as shareholders currently invested in fossil-fuel energy companies may elect in the future to shift some or all of their investments into other sectors.
Certain of these counterparties or their successors may experience insolvency, liquidity problems or other issues and may not be able to meet their obligations owed to us, particularly during a depressed or volatile commodity price environment. Any such default may result in us being forced to cover the costs of those obligations and liabilities. ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
Certain of these counterparties or their successors may experience insolvency, liquidity problems or other issues and may not be able to meet their obligations owed to us, particularly during a depressed or volatile commodity price environment. Any such default may result in us being forced to cover the costs of those obligations and liabilities.
We have six shares of Series A Voting Preferred Stock currently issued and outstanding. The Series A Voting Preferred Stock was issued in connection with the strategic investment in us by Energy Evolution. For so long as the Series A Voting Preferred Stock is outstanding, our board of directors will consist of six directors.
The Series A Voting Preferred Stock was issued in connection with the strategic investment in us by Energy Evolution. For so long as the Series A Voting Preferred Stock is outstanding, our board of directors will consist of six directors.
In the event that we were to undergo any further “ownership change”, our NOLs generated prior to an ownership change would be subject to further annual limitations, which could defer or eliminate our ability to utilize these tax losses against future taxable income.
In the event that we were to undergo any further “ownership change”, our NOLs generated prior to an ownership change would be subject to further annual limitations, which could defer or eliminate our ability to utilize these tax losses against future taxable income. The credit risk of our counterparties could adversely affect us.
At December 31, 2024, we had approximately $35.8 million of federal NOLs generated in prior years that could offset against future taxable income, however, $2.4 million of the NOLs were limited as of December 31, 2024 due to ownership changes. NOLs created prior to 2018 have a 20-year expiration period and NOLs arising after 2017 have an indefinite life.
At December 31, 2025, we had approximately $59.7 million of federal NOLs generated in prior years that could offset against future taxable income, however, approximately $1.1 million of the NOLs were limited as of December 31, 2025, due to ownership changes. NOLs created prior to 2018 have a 20-year expiration period and NOLs arising after 2017 have an indefinite life.
For the year ended December 31, 2024, the Company sold 78% of its oil, natural gas, and NGLs revenues to four customers. No other customer made up more than 10%.
For the year ended December 31, 2025, the Company sold 66% of its oil, natural gas, and NGLs revenues to three customers. No other customer made up more than 10%.
The emissions fee and funding provisions of the law could increase operating costs within the oil and natural gas industry and accelerate the transition away from fossil fuels, which could in turn adversely affect our business and results of operations.
Such efforts could increase operating costs within the oil and natural gas industry and accelerate the transition away from fossil fuels, which could in turn adversely affect our business and results of operations.
These provisions could discourage an acquisition of us or other change in control transactions and thereby negatively affect the price that investors might be willing to pay in the future for our common stock. Holders of our outstanding Series A Voting Preferred Stock have effective control of our board of directors.
These provisions could discourage an acquisition of us or other change in control transactions and thereby negatively affect the price that investors might be willing to pay in the future for our common stock.
The loss of this capital could have a material adverse effect on our business, especially our growth plans. 14 If we are unable to comply with the covenants in our agreements governing our indebtedness, including the Credit Facility, there could be a default under the terms of such agreements, which could result in an acceleration of payment of funds that we have borrowed.
If we are unable to comply with the covenants in our agreements governing our indebtedness, including the Credit Facility, there could be a default under the terms of such agreements, which could result in an acceleration of payment of funds that we have borrowed.
There can be no assurance that any insurance will be adequate to cover our losses or liabilities. We cannot predict the continued availability of insurance, or its availability at premium levels that justify its purchase. Hedging transactions may expose us to risk of financial loss or limit participation in commodity price increases and involve other risks.
We cannot predict the continued availability of insurance, or its availability at premium levels that justify its purchase. Hedging transactions may expose us to risk of financial loss or limit participation in commodity price increases and involve other risks.
The ultimate impact of GHG emissions-related agreements, legislation and measures on our company’s financial performance is highly uncertain because we are unable to predict with certainty, for a multitude of individual jurisdictions, the outcome of political decision-making processes and the variables and tradeoffs that inevitably occur in connection with such processes.
The ultimate impact of GHG emissions-related agreements, legislation and measures on our company’s financial performance is highly uncertain because we are unable to predict with certainty, for a multitude of individual jurisdictions, the outcome of political decision-making processes and the variables and tradeoffs that inevitably occur in connection with such processes. 22 Table of Contents Any change to government regulation or administrative practices may have a negative impact on our ability to operate and our profitability.
Our actual production, revenues and expenditures with respect to reserves will likely be different from estimates and the differences may be material. 12 As required by the SEC, the estimated discounted future net cash flows from proved reserves are based on the average previous twelve months first-of-month prices preceding the date of the estimate and costs as of the date of the estimate, while actual future prices and costs may be materially higher or lower.
As required by the SEC, the estimated discounted future net cash flows from proved reserves are based on the average previous twelve months first-of-month prices preceding the date of the estimate and costs as of the date of the estimate, while actual future prices and costs may be materially higher or lower.
Although these laws and regulations have not had a material adverse effect on our financial condition or results of operations, there can be no assurance that we will not be required to make material expenditures in the future.
These regulations subject us to increased operating costs and potential liability associated with the use and disposal of hazardous materials. Although these laws and regulations have not had a material adverse effect on our financial condition or results of operations, there can be no assurance that we will not be required to make material expenditures in the future.
We depend greatly on the efforts of our executive officers and other key employees to manage our operations. The loss or unavailability of any of our executive officers or other key employees could have a material adverse effect on our business. We have had material weaknesses in our internal control over financial reporting in prior fiscal years.
The loss or unavailability of any of our executive officers or other key employees could have a material adverse effect on our business. We depend greatly on the efforts of our executive officers and other key employees to manage our operations.
Alternatively, if a court were to find the choice of forum provision contained in our bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions. The credit risk of our counterparties could adversely affect us.
Alternatively, if a court were to find the choice of forum provision contained in our bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions. ITEM 1B. UNRESOLVED STAFF COMMENTS. None. ​
As dependence on digital technologies has increased, cyber incidents, including deliberate attacks or unintentional events, have also increased. A cyber-attack could include gaining unauthorized access to digital systems for the purposes of misappropriating assets or sensitive information, corrupting data, causing operational disruption, or result in denial-of-service on websites.
A cyber-attack could include gaining unauthorized access to digital systems for the purposes of misappropriating assets or sensitive information, corrupting data, causing operational disruption, or result in denial-of-service on websites.
The success and timing of development, exploitation and exploration activities on properties operated by others depend upon a number of factors that may be outside our control, including but not limited to the timing and amount of capital expenditures; the operator’s expertise and financial resources; the approval of other participants in drilling wells; and the selection of technology. 20 Where we are not the majority owner or operator of a particular oil and natural gas project, we may have no control over the timing or amount of capital expenditure associated with the project.
The success and timing of development, exploitation and exploration activities on properties operated by others depend upon a number of factors that may be outside our control, including but not limited to the timing and amount of capital expenditures; the operator’s expertise and financial resources; the approval of other participants in drilling wells; and the selection of technology.
Actual future net cash flows also will be affected by factors such as: · the amount and timing of actual production; · levels of future capital spending; · increases or decreases in the supply of or demand for oil, natural gas, and NGLs; and · changes in governmental regulations or taxation.
Actual future net cash flows also will be affected by factors such as: ● the amount and timing of actual production; ● levels of future capital spending; ● increases or decreases in the supply of or demand for oil, natural gas, and NGLs; and ● changes in governmental regulations or taxation. 12 Table of Contents Accordingly, estimates included in this report of future net cash flows may be materially different from the future net cash flows that are ultimately received.
As a result of this concentration, we are exposed to the impact of our sales if one of these customers fails to meet their obligations or ceases its relationship with the Company.
As a result of this concentration, we are exposed to the impact of our sales if one of these customers fails to meet their obligations or ceases its relationship with the Company. The loss in revenues may result in a disruption in the Company’s cash flows limiting the ability to meet its obligations or investing in capital projects.
The price of our common stock may fluctuate significantly, which could negatively affect us and the holders of our common stock. Our common stock trades on the NYSE American. The trading price of our common stock may fluctuate significantly in response to a number of factors, many of which are beyond our control.
The trading price of our common stock may fluctuate significantly in response to a number of factors, many of which are beyond our control.
These types of charges will reduce our earnings and stockholders’ equity and could adversely affect our stock price. 17 We periodically assess our properties for impairment based on future estimates of proved and unproved reserves, oil and natural gas prices, production rates and operating, development and reclamation costs based on operating budget forecasts.
We periodically assess our properties for impairment based on future estimates of proved and unproved reserves, oil and natural gas prices, production rates and operating, development and reclamation costs based on operating budget forecasts.
The increasing attention to climate change may result in further claims or investigations against us, and heightened societal or political pressures may increase the possibility that liability could be imposed on us in such matters without regard to our causation of, or contribution to, the asserted damage or violation, or to other mitigating factors. 19 As a final note, climate change could have an effect on the severity of weather (including hurricanes, droughts and floods), sea levels, water availability and quality, and meteorological patterns.
The increasing attention to climate change may result in further claims or investigations against us, and heightened societal or political pressures may increase the possibility that liability could be imposed on us in such matters without regard to our causation of, or contribution to, the asserted damage or violation, or to other mitigating factors.
The lack of availability or the lack of capacity on these systems and facilities could result in the curtailment of production or the delay or discontinuance of drilling plans. These are risks for which we generally will not maintain insurance.
The lack of availability or the lack of capacity on these systems and facilities could result in the curtailment of production or the delay or discontinuance of drilling plans.
We operate or participate in oil and natural gas leases with third-parties who may not be able to fulfill their commitments to our projects.
These are risks for which we generally will not maintain insurance. 20 Table of Contents We operate or participate in oil and natural gas leases with third-parties who may not be able to fulfill their commitments to our projects.
A substantial or extended decline in oil or natural gas prices may materially and adversely affect our future business, financial condition, results of operations, liquidity or ability to finance planned capital expenditures.
A substantial or extended decline in oil or natural gas prices may materially and adversely affect our future business, financial condition, results of operations, liquidity or ability to finance planned capital expenditures. 16 Table of Contents Competition for assets, materials, people and capital can be significant. Strong competition exists in all sectors of the oil and gas industry.
We are subject to a variety of federal, state and local governmental laws and regulations related to the storage, use, discharge and disposal of toxic, volatile or otherwise hazardous materials. These regulations subject us to increased operating costs and potential liability associated with the use and disposal of hazardous materials.
We are subject to various environmental risks, and governmental regulation relating to environmental matters. We are subject to a variety of federal, state and local governmental laws and regulations related to the storage, use, discharge and disposal of toxic, volatile or otherwise hazardous materials.
A full Section 382 analysis was prepared in 2024, and it was determined that our NOLs were subject to limitations under Section 382.
A full Section 382 analysis was prepared in 2023, and it was determined that our NOLs were subject to limitations under Section 382. There has been no significant changes to ownership since the analysis was prepared.
As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities.
As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities. A cyber incident involving our information systems and related infrastructure, or that of our business partners, could disrupt our business plans and negatively impact our operations.
If we breach our covenants and cannot obtain a waiver from the required lender, we would be in default and the lender could exercise its rights, as described above, and we could be forced into bankruptcy or liquidation.
If we breach our covenants and cannot obtain a waiver from the required lender, we would be in default and the lender could exercise its rights, as described above, and we could be forced into bankruptcy or liquidation. 14 Table of Contents We may not be able to generate cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations.
The challenges involved in the integration process may include retaining key employees and maintaining employee morale, addressing differences in business cultures, processes and systems and developing internal expertise regarding acquired properties. 18 Our operations are subject to a series of risks arising out of the threat of climate change that could result in increased operating costs, limit the areas in which we may conduct oil, natural gas, and NGLs exploration and production activities, and reduce demand for the oil, natural gas, and NGLs we produce.
Our operations are subject to a series of risks arising out of the threat of climate change that could result in increased operating costs, limit the areas in which we may conduct oil, natural gas, and NGLs exploration and production activities, and reduce demand for the oil, natural gas, and NGLs we produce.
These markets will likely continue to be volatile in the future. The prices we receive for our production, and the levels of our production, depend on numerous factors beyond our control.
The prices we receive for our production, and the levels of our production, depend on numerous factors beyond our control.
We may incur impairment charges in the future, which could have a material adverse effect on our results of operations for the periods in which such charges are recorded.
The Company recorded total impairment loss of $51.3 million for the year ended December 31, 2025, as a result of our annual analysis. We may incur further impairment charges in the future, which could have a material adverse effect on our results of operations for the periods in which such charges are recorded.
Accordingly, the holder(s) of our Series A Voting Preferred Stock have effective control of our board of directors for so long as the voting rights of the Series A Voting Preferred Stock remain in effect. 23 Our bylaws provide that the Court of Chancery of the State of Delaware (or if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware) will be the exclusive forum for certain legal actions between us and our stockholders.
Our bylaws provide that the Court of Chancery of the State of Delaware (or if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware) will be the exclusive forum for certain legal actions between us and our stockholders.
The price we receive for our oil and natural gas production heavily influences our revenue, profitability, access to capital and future rate of growth. Oil and natural gas are commodities and, therefore, their prices are subject to wide fluctuations in response to relatively minor changes in supply and demand. Historically, the markets for oil and natural gas have been volatile.
Oil and natural gas are commodities and, therefore, their prices are subject to wide fluctuations in response to relatively minor changes in supply and demand. Historically, the markets for oil and natural gas have been volatile. These markets will likely continue to be volatile in the future.
Also, institutional lenders may decide not to provide funding for fossil fuel energy companies based on climate change related concerns, which could affect our access to capital for potential growth projects. 15 General Operations The oil and natural gas industry is highly competitive, and our size may put us at a disadvantage in competing for resources.
Also, institutional lenders may decide not to provide funding for fossil fuel energy companies based on climate change related concerns, which could affect our access to capital for potential growth projects. General Operations Liquidity and capital constraints could adversely affect our operations and financial conditions.
While we are still awaiting resolution of the review of the SEC climate change rules, we are continuing to assess its potential impact and expect heightened disclosure requirements given that reporting frameworks on GHG emissions and other climate-related metrics are still maturing and often require the use of numerous assumptions and judgments.
We anticipate the costs and other risks with any such disclosure requirements to be particularly heightened, given that reporting frameworks on GHG emissions and other climate-related metrics are still maturing and often require the use of numerous assumptions and judgments.
In recent years, Congress has considered legislation to reduce emissions of GHGs, including methane, a primary component of natural gas, and carbon dioxide, a byproduct of the burning of natural gas.
These efforts have included consideration of cap-and-trade programs, carbon taxes, GHG disclosure obligations and regulations that directly limit GHG emissions from certain sources. In recent years, Congress has considered legislation to reduce emissions of GHGs, including methane, a primary component of natural gas, and carbon dioxide, a byproduct of the burning of natural gas.
We have not declared or paid any dividends on our common stock. We currently intend to retain future earnings to fund the development and growth of our business, to repay indebtedness and for general corporate purposes, and therefore, do not anticipate paying any cash dividends on our common stock in the foreseeable future.
We currently intend to retain future earnings to fund the development and growth of our business, to repay indebtedness and for general corporate purposes, and therefore, do not anticipate paying any cash dividends on our common stock in the foreseeable future. 24 Table of Contents Provisions of our certificate of incorporation and bylaws and Delaware law may inhibit a takeover, which could limit the price investors might be willing to pay in the future for our common stock.
The full impact of these actions is uncertain at this time, and it is unclear what additional initiatives may be adopted or implemented that may have adverse effects upon our operations. 21 The adoption of legislation or regulatory programs to reduce emissions of GHGs could require us to incur increased operating costs, such as costs to purchase and operate emissions control systems, to acquire emissions allowances or to comply with new regulatory or reporting requirements.
The adoption of legislation or regulatory programs to reduce emissions of GHGs could require us to incur increased operating costs, such as costs to purchase and operate emissions control systems, to acquire emissions allowances or to comply with new regulatory or reporting requirements.
Unless reserves are replaced, production and estimated reserves will decline, which may adversely affect our financial condition, results of operations and/or cash flows. Producing oil and natural gas reservoirs are generally characterized by declining production rates that may vary depending upon reservoir characteristics and other factors.
Producing oil and natural gas reservoirs are generally characterized by declining production rates that may vary depending upon reservoir characteristics and other factors.
Furthermore, different reserve engineers may make different estimates of reserves and cash flows based on the same data.
Furthermore, different reserve engineers may make different estimates of reserves and cash flows based on the same data. Our actual production, revenues and expenditures with respect to reserves will likely be different from estimates and the differences may be material.
If properties we acquire do not produce as projected or have liabilities we were unable to identify, we could experience a decline in our reserves and production, which could adversely affect our business, financial condition and results of operations.
If properties we acquire do not produce as projected or have liabilities we were unable to identify, we could experience a decline in our reserves and production, which could adversely affect our business, financial condition and results of operations. 18 Table of Contents Many of our properties are in areas that may have been partially depleted or drained by offset wells and certain of our wells may be adversely affected by actions we or other operators may take when drilling, completing, or operating wells that we or they own.
Hence, we may be at a competitive disadvantage to companies with larger financial resources than ours. A substantial or extended decline in oil and natural gas prices may adversely affect our business, financial condition or results of operations and our ability to meet our capital expenditure obligations and financial commitments.
A substantial or extended decline in oil and natural gas prices may adversely affect our business, financial condition or results of operations and our ability to meet our capital expenditure obligations and financial commitments. The price we receive for our oil and natural gas production heavily influences our revenue, profitability, access to capital and future rate of growth.
Accordingly, estimates included in this report of future net cash flows may be materially different from the future net cash flows that are ultimately received. Therefore, the estimates of discounted future net cash flows in this report should not be construed as accurate estimates of the current market value of our proved reserves.
Therefore, the estimates of discounted future net cash flows in this report should not be construed as accurate estimates of the current market value of our proved reserves. Unless reserves are replaced, production and estimated reserves will decline, which may adversely affect our financial condition, results of operations and/or cash flows.
Management may be required to dedicate significant time and effort to the integration process, which could divert its attention from other business opportunities and concerns.
Management may be required to dedicate significant time and effort to the integration process, which could divert its attention from other business opportunities and concerns. The challenges involved in the integration process may include retaining key employees and maintaining employee morale, addressing differences in business cultures, processes and systems and developing internal expertise regarding acquired properties.
The loss in revenues may result in a disruption in the Company’s cash flows limiting the ability to meet its obligations or investing in capital projects. 16 Our insurance policies may not adequately protect us against certain unforeseen risks. In accordance with customary industry practice, we maintain insurance against some, but not all, of the risks described in this report.
Our insurance policies may not adequately protect us against certain unforeseen risks. In accordance with customary industry practice, we maintain insurance against some, but not all, of the risks described in this report. There can be no assurance that any insurance will be adequate to cover our losses or liabilities.
If forecasted prices for oil, natural gas, and NGLs decrease, we may be required to take significant future write-downs of the financial carrying values of our properties in the future. Accounting rules require that we periodically review the carrying value of our proved and unproved properties for possible impairment.
Accounting rules require that we periodically review the carrying value of our proved and unproved properties for possible impairment.
Our total indebtedness at December 31, 2024, was $11.3 million. At December 31, 2024, commitments from a financial institution under a Revolving Credit Facility (the “Credit Facility”) with Empire North Dakota and Empire NDA were approximately $19.8 million, of which approximately $8.7 million was unused and approximately $11.1 million was outstanding.
At December 31, 2025, remaining commitments from a financial institution under a revolving loan agreement (the “Credit Facility”) with Empire North Dakota, Empire ND Acquisition LLC and Empire Texas Development LLC was $16.8 million, of which approximately $2.5 million was unused as of December 31, 2025.
Moreover, many of our contract counterparties have become subject to increasing governmental oversight and regulations in recent years, which could adversely affect the cost and availability of our hedging arrangements. We are subject to various environmental risks, and governmental regulation relating to environmental matters.
Moreover, many of our contract counterparties have become subject to increasing governmental oversight and regulations in recent years, which could adversely affect the cost and availability of our hedging arrangements. 17 Table of Contents If forecasted prices for oil, natural gas, and NGLs decrease, we may be required to take significant future write-downs of the financial carrying values of our properties in the future.
Unproved properties are evaluated at the lower of cost or fair market value.
Unproved properties are evaluated at the lower of cost or fair market value. These types of charges will reduce our earnings and stockholders’ equity and could adversely affect our stock price.
A cyber incident involving our information systems and related infrastructure, or that of our business partners, could disrupt our business plans and negatively impact our operations. 22 The loss or unavailability of any of our executive officers or other key employees could have a material adverse effect on our business.
The loss or unavailability of any of our executive officers or other key employees could have a material adverse effect on our business. The price of our common stock may fluctuate significantly, which could negatively affect us and the holders of our common stock. Our common stock trades on the NYSE American.
There is no assurance that such permits, leases, licenses, and approvals will not contain terms and provisions which may adversely affect our exploration and development activities. Other A cyber incident could result in information theft, data corruption, operational disruption and/or financial loss.
There is no assurance that such permits, leases, licenses, and approvals will not contain terms and provisions which may adversely affect our exploration and development activities. We are subject to complex federal, state, local and other laws and regulations that could adversely affect the cost, manner or feasibility of conducting our operations or expose us to significant liabilities.
As a result, we cannot predict the scope of any final methane regulatory requirements or the cost to comply with such requirements. However, given the long-term trend toward increasing regulation, future federal GHG regulations of the oil and natural gas industry remain a significant possibility.
In the United States, no comprehensive climate change legislation has been implemented at the federal level. However, given the long-term trend toward increasing regulation, future federal GHG regulations of the oil and natural gas industry remain a significant possibility.
In April 2024, the SEC stayed the effectiveness of these rules pending the completion of a judicial review of certain legal challenges.
In April 2024, the SEC stayed the effectiveness of these rules pending the completion of a judicial review of certain legal challenges, and the current U.S. administration has declined to defend the rules in the legal challenges, which has resulted in a stay of the challenges that will remain in effect until the rules are withdrawn or the government resumes its defense of the rules.
The oil and natural gas industry is highly competitive where our properties and operations are concentrated. We compete with major integrated and larger independent oil and natural gas companies in seeking to acquire desirable oil and natural gas properties and leases and for the equipment and services required to develop and operate properties.
We compete with major integrated and independent oil and gas companies for the acquisition of oil and gas leases and properties. We also compete for the equipment, materials, services and personnel required to explore, develop and operate properties, such as drilling rigs, well materials and oilfield services.
If such effects were to occur, our development and production operations have the potential to be adversely affected.
As a final note, climate change could have an effect on the severity of weather (including hurricanes, droughts and floods), sea levels, water availability and quality, and meteorological patterns. If such effects were to occur, our development and production operations have the potential to be adversely affected.
Removed
Many of our competitors have financial and other resources that are substantially greater than ours, which makes acquisitions of acreage or producing properties at economic prices difficult. Significant competition also exists in attracting and retaining technical personnel, including geologists, geophysicists, engineers, landmen and other specialists, as well as financial and administrative personnel.
Added
Our total indebtedness at December 31, 2025, was approximately $16.2 million which includes the debt portion of a related party convertible note, our revolver, and miscellaneous notes primarily related to equipment and vehicles (Note 7).
Removed
Many of our properties are in areas that may have been partially depleted or drained by offset wells and certain of our wells may be adversely affected by actions we or other operators may take when drilling, completing, or operating wells that we or they own.
Added
The loss of this capital could have a material adverse effect on our business, especially our growth plans.
Removed
In the United States, no comprehensive climate change legislation has been implemented at the federal level. However, following the U.S.
Added
Our ability to make future scheduled payments on or to refinance our debt obligations, including any future debt obligations, depends on our financial position, results of operations and cash flows. We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal and interest on our indebtedness.
Removed
Supreme Court finding that GHG emissions constitute a pollutant under the Clean Air Act, the EPA has adopted regulations that, among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources in the United States, impose new standards reducing methane emissions from oil and gas operations through limitations on venting and flaring and the implementation of enhanced emission leak detection and repair requirements, and together with the United States Department of Transportation, implement GHG emissions limits on vehicles manufactured for operation in the United States.
Added
If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investment decisions and capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness. Furthermore, these alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.
Removed
The federal regulation of methane emissions from oil and natural gas facilities has been subject to considerable attention in recent years. In December 2023, the EPA finalized new and updated rules for both new and existing sources.
Added
Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial position at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.
Removed
The final rules make existing regulations more stringent, expand the scope of source types covered by the rules and require states to develop plans to reduce methane and volatile organic compound emissions from existing sources. These new rules have been subject to legal challenges. The Trump Administration may seek to revise or repeal these rules.
Added
Any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would be a default (if not waived) and would likely result in a reduction of our credit rating, which could harm our ability to seek additional capital or restructure or refinance our indebtedness.
Removed
Former President Biden signed an executive order calling for the development of a “climate finance plan” and, separately, the Federal Reserve has joined the Network for Greening the Financial System (“NGFS”), a consortium of financial regulators focused on addressing climate-related risks in the financial sector.
Added
As of December 31, 2025, we had a negative working capital of $16.2 million which is expected to continue in the near future. Our ability to pay our expenses and fund our working capital needs, including current outstanding payables, and debt obligations will depend on our future performance, which will be affected by financial, business, economic, regulatory and other factors.
Removed
These efforts have included consideration of cap-and-trade programs, carbon taxes, GHG disclosure obligations and regulations that directly limit GHG emissions from certain sources.
Added
We will not be able to control many of these factors, such as commodity prices, other economic conditions and governmental regulation. While we have $2.5 million available remaining on our Credit Facility as of year-end, the remaining commitment amount continues to decrease monthly by $0.25 million (Note 7).

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur cybersecurity program consists of policies, procedures, systems, controls and technology designed to help prevent, identify, detect and mitigate cybersecurity risk and will be based on a cybersecurity framework, such as the National Institute of Standards and Technology (“NIST”) Cybersecurity framework. 24 To protect our IT systems and information from cybersecurity risks, we use and continue to implement various security tools that help prevent, identify, escalate, investigate, resolve, and recover from identified cybersecurity vulnerabilities and incidents in a timely manner.
Biggest changeIt is based on cybersecurity frameworks like the NIST Cybersecurity framework. 26 Table of Contents To protect our IT systems and information from cybersecurity risks, we use and continue to implement various security tools that help prevent, identify, escalate, investigate, resolve, and recover from identified cybersecurity vulnerabilities and incidents in a timely manner.
This should lead to an educated, informed, and prepared workforce, with an awareness of potential cybersecurity threats, how they may occur, and how to report and escalate such matters. Our cybersecurity strategy focuses on implementing effective and efficient controls, technologies, and other processes to assess, identify, and manage material cybersecurity risks to our IT systems and information.
This should lead to an educated, informed, and prepared workforce that possess an awareness of potential cybersecurity threats, how they may occur, and how to report and escalate such matters. Our cybersecurity strategy focuses on implementing effective and efficient controls, technologies, and other processes to assess, identify, and manage material cybersecurity risks to our IT systems and information.
Governance Our Audit Committee has oversight of our cybersecurity risk processes, as part of its overall oversight of our risk management program. Our Chief Executive Officer is informed about and facilitates prevention, detection, mitigation, and remediation efforts through regular communication and reporting from our IT Director.
Governance Our Audit Committee has oversight of our cybersecurity risk processes, as part of its overall oversight of our risk management program. Our Chief Executive Officer is informed about and facilitates prevention, detection, mitigation, and remediation efforts through regular communication and reporting from our Vice President of IT.
These include monitoring and detection programs, network security measures, firewall monitoring devices and multi-factor authentication which are all overseen by our IT Director, who possesses the necessary expertise to implement the appropriate tools and processes to effectively manage cybersecurity risks.
These include monitoring and detection programs, network security measures, firewall monitoring devices and multi-factor authentication which are all overseen by our Vice President of IT and the IT team, who possesses the necessary expertise to implement the appropriate tools and processes to effectively manage cybersecurity risks.
With over 30 years of experience in the oil and natural gas industry, our IT Director has 12 years of cybersecurity experience where he has led several teams introducing cybersecurity initiatives and implementing robust frameworks and response plans against cyber threats.
With over 30 years of experience in the oil and natural gas industry, our Vice President of IT has 15 years of cybersecurity experience and has led several teams that have introduced cybersecurity initiatives resulting in secure and robust implementations of security frameworks and response plans against cyber threats.
Employee awareness of cybersecurity risks and threats is also an important part of an effective control environment. We periodically communicate to employees about this cybersecurity awareness. We are working on an implementation plan to require each of our employees to complete an annual information security training course, in addition to other training requirements.
Employee awareness of cybersecurity risks and threats is also an important part of an effective control environment. We periodically communicate to employees about this cybersecurity awareness. We implemented an annual cybersecurity training course required by each employee, and plan to continue to implement additional training requirements in the future.
Risk Management and Strategy Overview We continue the process of designing and implementing a formal risk-based approach to cybersecurity which aligns with corporate strategy, risk management and governance, and adaptable information technology (“IT”) infrastructure.
Risk Management and Strategy Overview We continue to design and implement formal risk-based approaches to cybersecurity which aligns with corporate strategy, risk management and governance, and adaptable information technology (“IT”) infrastructure. Our cybersecurity program consists of policies, procedures, systems, controls and technology designed to help prevent, identify, detect and mitigate cybersecurity risk.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 25 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 26 Item 6. Reserved 26 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 27 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 35 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 27 ​ ​ ​ ​ PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 28 Item 6. Reserved 28 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 37 Item 8.
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Financial Statements and Supplementary Data 35 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 35 Item 9A. Controls and Procedures 35 Item 9B. Other Information 36 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 36 PART III Item 10. Directors, Executive Officers and Corporate Governance 37 Item 11. Executive Compensation 37 Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 37 Item 13. Certain Relationships and Related Transactions and Director Independence 37 Item 14. Principal Accountant Fees and Services 37 PART IV Item 15. Exhibits and Financial Statement Schedules 38 Item 16.
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Form 10-K Summary 40 Signatures 41 2 FORWARD-LOOKING STATEMENTS Certain statements in this Annual Report on Form 10-K constitute "forward-looking statements” within the meaning Section 27A of the Securities Act of 1933, as amended (the "Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act”).
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Additionally, forward-looking statements may be made orally or in press releases, conferences, reports, on our website or otherwise, in the future by us or on our behalf.
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All statements, other than statements of historical facts, which address activities, events, or developments that Empire expects, believes, or anticipates will or may occur in the future, including future sources of financing and other possible business developments, are forward-looking statements.
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By their very nature, forward-looking statements require management to make assumptions that may not materialize or that may not be accurate. Forward-looking statements are subject to known and unknown risks and uncertainties and other factors that may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such forward-looking statements.
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Factors that could cause actual results to differ materially from the results discussed in such forward-looking statements include, but are not limited to, those discussed in Item 1A (“Risk Factors”) and elsewhere in this Form 10-K and in other documents that we file with or furnish to the Securities and Exchange Commission (the “SEC”), and the following: · changes in oil, natural gas and natural gas liquids prices and the demand for oil, natural gas and natural gas liquids; · our ability to replace reserves and efficiently develop current reserves; · uncertainties inherent in estimating oil and gas reserves; · management’s ability to execute our business plan; · delays and other difficulties related to producing oil, natural gas and natural gas liquids; · delays and other difficulties related to regulatory and governmental approvals and restrictions; · availability of sufficient capital to execute management’s business plan, including future cash flows from operations, available borrowing capacity under revolving credit facilities, from our two largest stockholders and otherwise; · management's ability to make acquisitions on economically acceptable terms and management's ability to integrate acquisitions; · weather and environmental conditions; · unforeseen engineering, mechanical or technological difficulties in working over wells; · costs of operations and operating hazards; · competition from other natural resource companies; · unanticipated reductions in the borrowing base under the revolving credit facility we are party to; · the availability of sufficient pipeline and other transportation facilities and equipment to carry our production to market and the impact of these facilities on our realized prices; · our ability to retain key members of senior management and key technical and financial employees; · the identification of and severity of adverse events and governmental responses to these or other environmental events; · future Environmental, Social and Governance compliance developments and increased attention to such matters which could adversely affect our ability to raise equity and debt capital; · the effect of our derivative activities; · impacts of public health crises, pandemics and epidemics, such as the coronavirus pandemic ("COVID-19"); · A cyber incident involving our information systems and related infrastructure, or that of our business partners; · the effects of governmental and environmental regulation; and · general economic conditions including inflation, tariffs and interest rates.
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All forward-looking statements are expressly qualified in their entirety by the cautionary statements in this section and elsewhere in this Form 10-K. Other than as required by applicable securities laws, we undertake no 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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Readers should not place undue reliance on these forward-looking statements. All forward-looking statements speak only as of the date of this report or, if earlier, as of the date they were made. 3 GLOSSARY OF TERMS The following are abbreviations and definitions of certain terms used within this Annual Report on Form 10-K. ASC – Accounting Standards Codification.
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ASU – Accounting Standards Update. Basin – A large natural depression on the earth’s surface in which sediments, generally brought by water, accumulate. Bbl – One barrel or 42 U.S. gallons liquid volume of oil or other liquid hydrocarbons.
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Boe – Barrel of oil equivalent, determined using a ratio of six Mcf of natural gas equal to one barrel of oil equivalent. The ratio does not assume price equivalency and, given price differentials, the price for a barrel of oil equivalent for natural gas differs significantly from the price for a barrel of oil.
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A barrel of NGLs also differs significantly in price from a barrel of oil. CG&A – Cawley, Gillespie & Associates, Inc.
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Completion – The process of treating a drilled well followed by the installation of permanent equipment for the production of oil or natural gas, or in the case of a dry hole, the reporting of abandonment to the appropriate agency. DD&A – Depreciation, depletion and amortization.
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Development Well – A well drilled within the proved area of an oil or gas reservoir to the depth of a stratigraphic horizon known to be productive. EPA – United States Environmental Protection Agency. ESG – Environmental, Social and Governance.
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Exploratory Well – A well drilled to find and produce oil or gas in an unproved area, to find a new reservoir in a field previously found to be productive of oil or gas in another reservoir, or to extend a known reservoir. Generally, a well that is not a development well, a service well, or a stratigraphic test well.
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FASB – Financial Accounting Standards Board. Federal Deposit Insurance Corporation or FDIC – An independent agency created by the Congress to maintain stability and public confidence in the nation’s financial system. The FDIC insures deposits; examines and supervises financial institutions for safety, soundness, and consumer protection; makes large and complex financial institutions resolvable; and manages receiverships.
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Field – An area consisting of a single reservoir or multiple reservoirs all grouped on or related to the same individual geological structural feature and/or stratigraphic condition. GHG – Greenhouse gas. LOE – Lease Operating Expense, a current period expense incurred to operate a well. MBbls – One thousand barrels of crude oil or other liquid hydrocarbons.
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MBoe – One thousand barrels of oil equivalent, determined using a ratio of six Mcf of natural gas equal to one barrel of oil equivalent. MMBoe – One million barrels of oil equivalent, determined using a ratio of six Mcf of natural gas equal to one barrel of oil equivalent. Mcf – One thousand cubic feet.
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MMcf – One million cubic feet. National Institute of Standards and Technology or NIST – An agency of the United States Department of Commerce whose mission is to promote American innovation and industrial competitiveness. Net acres or net wells – The sum of the fractional working interests owned in gross acres or gross wells.
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New York Mercantile Exchange – A commodity futures exchange owned and operated by CME Group of Chicago. NYSE American – NYSE American Stock Exchange. NGLs – Natural gas liquids measured in barrels. NGLs are made up of ethane, propane, isobutane, normal butane and natural gasoline, each of which have different uses and different pricing characteristics.
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Net revenue interest or NRI –The total revenue interest controlled by an entity in a specific oil or gas production unit, including a well, lease, or drilling unit. New Mexico Oil Conservation Division – The New Mexico Oil Conservation Division regulates oil and gas activity in New Mexico.
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The Division gathers well production data, permits new wells, enforces the division’s rules and the state’s oil and gas statutes, makes certain abandoned wells are properly plugged, and ensures the land is responsibly restored.
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Operator – An oil and gas joint venture participant that manages the joint venture, pays venture costs, and bills the venture’s non-operators for their share of venture costs. The operator is also responsible to market all oil, gas, and NGLs production, except for those non-operators who take their production in-kind.
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OTCQB – The over-the-counter (“OTC”) market exchange for the middle tier of three marketplaces for trading OTC stocks. Overriding Royalty Interest or ORRI – A royalty interest that is created out of the operating or working interest. Unlike a royalty interest, an overriding royalty interest terminates with the operating interest from which it was created or carved out of.
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Plugging and abandonment or P&A – Refers to the sealing off of fluids in the strata penetrated by a well so that the fluids from one stratum will not escape into another stratum or to the surface. 4 Proved developed producing reserves or PDP – Reserves that can be expected to be recovered from existing wells and completions with existing equipment and operating methods.
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Proved undeveloped reserves – Reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required.
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PV-10 – The present value, discounted at 10% per annum, of future net revenues (estimated future gross revenues less estimated future costs of production, development, and asset retirement costs) associated with reserves and is not necessarily the same as market value. PV-10 does not include estimated future income taxes.
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Unless otherwise noted, PV-10 is calculated using the pricing scheme required by the SEC. PV-10 of proved reserves is calculated the same as the standardized measure of discounted future net cash flows, except that the standardized measure of discounted future net cash flows includes future estimated income taxes discounted at 10% per annum.
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Reasonable Certainty – A high degree of confidence. Recompletion – The process of re-entering an existing wellbore that is either producing or not producing and completing in new reservoirs in an attempt to establish or increase existing production.
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Reservoir – A porous and permeable underground formation containing a natural accumulation of producible oil and/or natural gas that is confined by impermeable rock or water barriers and is separate from other reservoirs. Royalty Interest or RI – The mineral owner’s share of production, free of costs, but subject to severance taxes unless the lessor is a government.
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SEC – United States Securities and Exchange Commission.
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Standardized Measure – The present value of estimated future net revenue to be generated from the production of proved reserves, determined in accordance with the rules and regulations of the SEC (using prices and costs in effect as of the date of estimation), less future development, production and income tax expenses, and discounted at 10% per annum to reflect the timing of future net revenue.
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Undeveloped acreage – Lease acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil and natural gas regardless of whether such acreage contains proved reserves.
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Working interest or WI – The ownership interest, generally defined in a Joint Operating Agreement (“JOA”), that gives the owner the right to drill, produce and/or conduct operating activities on the property and share in the sale of production, subject to all royalties, overriding royalties and other burdens and obligates the owner of the interest to share in all costs of exploration, development operations and all risks in connection therewith.
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Workover – Operations on a producing or injection well to restore or increase production. WTI – West Texas Intermediate. XTO – XTO Holdings, LLC, a subsidiary of ExxonMobil. Energy equivalent is determined by using the ratio of one barrel of crude oil, condensate or NGLs to six Mcf of natural gas. 5 PART I

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+6 added−0 removed2 unchanged
Biggest changeIssuer Repurchase of Equity Securities No private or open market repurchases of common stock were made by us during the fourth quarter of 2024. Unregistered Sales of Equity Securities No such sales that have not been previously reported on a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.
Biggest changeThe issuance of such shares of common stock was not registered under the Securities Act in reliance upon the exemption from the registration requirements of that Act provided by Section 3(a)(9) thereof. No such other sales that have not been previously reported on a Quarterly Report on Form 10-Q or a Current Report on Form 8-K. ​
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our common stock is traded on the NYSE American under the symbol "EP". Stockholders At March 25, 2025, there were approximately 1,350 stockholders of record of our common stock. Dividends We have never paid cash dividends on our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our common stock is traded on the NYSE American under the symbol “EP”. Stockholders At March 11, 2026, there were approximately 1,650 stockholders of record of our common stock. Dividends We have never paid cash dividends on our common stock.
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Issuer Repurchase of Equity Securities No private or open market repurchases of common stock were made by us during the fourth quarter of 2025. Unregistered Sales of Equity Securities On November 5, 2025, Mr. Mulacek exercised 589,100 stock options at an exercise price of $1.32 per share.
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The issuance of 589,100 shares of our common stock was not registered under the Securities Act in reliance upon the exemption from the registration requirements of that Act provided by Section 4(a)(2) thereof. Mr.
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Mulacek is a sophisticated accredited investor with the experience and expertise to evaluate the merits and risks of an investment is us and the financial means to bear the risks of such an investment. On January 5, 2026, we issued 562,500 shares of common stock to Energy Evolution as consideration for the remaining 40% of certain New Mexico interest.
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For a description of this acquisition, see Note 3 of the Consolidated Financial Statements in this Annual Report on Form 10-K. The issuance of such shares of common stock was not registered under the Securities Act in reliance upon the exemption from the registration requirements of that Act provided by Section 4(a)(2) thereof.
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Energy Evolution is a sophisticated accredited investor with the experience and expertise to evaluate the merits and risks of an investment in us and the financial means to bear the risks of such an investment. On March 10, 2026, we issued 1,003,344 shares of common stock to Mr.
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Mulacek upon his conversion in full of a convertible promissory note due May 19, 2026 at a conversion price of $2.99 per share. For further information, see Note 7 of the Consolidated Financial Statements in this Annual Report on Form 10-K.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

46 edited+45 added−19 removed21 unchanged
Biggest changeSee Note 7 for further details. 28 Production and Operating Data The following table sets forth a summary of our production and operating data: For the Years Ended December 31, 2024 2023 Production and operating data: Net sales volumes: Oil (Bbl) 581,159 487,869 Natural gas (Mcf) 916,955 854,274 Natural gas liquids (Bbl) 150,091 136,013 Total (Boe) 884,076 766,261 Average price per unit: Oil (1) $ 71.44 $ 75.19 Natural gas $ 0.37 $ 2.02 Natural gas liquids $ 14.21 $ 12.21 Total (Boe) $ 49.76 $ 52.29 Operating costs and expenses per Boe: Lease operating expense (excluding workovers) $ 24.46 $ 21.70 Workovers $ 6.71 $ 15.65 Total Lease operating expense $ 31.16 $ 37.36 Production and ad valorem taxes $ 4.26 $ 3.97 Depreciation, depletion, amortization and accretion $ 12.74 $ 6.33 General & administrative (excluding stock-based compensation) $ 14.23 $ 15.71 Stock-based compensation $ 2.44 $ 4.10 Total General & administrative $ 16.67 $ 19.81 (1) Excludes the effect of net cash receipts from (payments on) derivatives. 29 Results of Operations The following table reflects our summary of operating information.
Biggest changeProduction and Operating Data The following table sets forth a summary of our production and operating data: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ ​ 2025 ​ ​ ​ 2024 Production and Operating Data: ​ ​ ​ ​ ​ ​ Net Production Volumes: ​ ​ ​ ​ ​ ​ Oil (Bbl) ​ 524,646 ​ 581,159 Natural gas (Mcf) ​ 860,599 ​ 916,955 Natural gas liquids (Bbl) ​ 150,224 ​ 150,091 Total (Boe) ​ 818,303 ​ 884,076 ​ ​ ​ ​ ​ ​ ​ Average Price per Unit: ​ ​ ​ ​ Oil (1) ​ $ 60.32 ​ $ 71.44 Natural gas ​ $ 1.04 ​ $ 0.37 Natural gas liquids ​ $ 10.76 ​ $ 14.21 Total ​ $ 41.75 ​ $ 49.76 ​ ​ ​ ​ ​ ​ ​ Operating Costs and Expenses per Boe: ​ ​ ​ ​ Lease operating expense (excluding workovers) ​ $ 28.15 ​ $ 24.46 Workovers ​ $ 2.68 ​ $ 6.70 Total Lease operating expense ​ $ 30.83 ​ $ 31.16 Production and ad valorem taxes ​ $ 3.49 ​ $ 4.26 Depreciation, depletion, amortization and accretion ​ $ 15.56 ​ $ 12.74 General and administrative (excluding stock-based compensation) ​ $ 14.66 ​ $ 14.23 Stock-based compensation ​ $ 1.74 ​ $ 2.44 Total General and administrative ​ $ 16.40 ​ $ 16.67 (1) Excludes the effect of net cash receipts from (payments on) commodity derivatives for the year ended December 31, 2024.
These additional funds may be raised through related party warrants, or a related party note payable that may or may not have conversion rights into shares of common stock of Empire. 27 Management has considered these plans in evaluating FASB ASC 205-40, Presentation of Financial Statements - Going Concern .
These additional funds may be raised through related party warrants, or a related party note payable that may or may not have conversion rights into shares of common stock of Empire. Management has considered these plans in evaluating FASB ASC 205-40, Presentation of Financial Statements - Going Concern .
In our management’s opinion, the more significant reporting areas impacted by management’s judgments and estimates are as follows: Successful Efforts Method of Accounting for Oil and Natural Gas Activities We use the successful efforts method of accounting for oil and natural gas operations.
In management’s opinion, the more significant reporting areas impacted by management’s judgments and estimates are as follows: Successful Efforts Method of Accounting for Oil and Natural Gas Activities We use the successful efforts method of accounting for oil and natural gas operations.
Valuation allowances are established to reduce deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. At December 31, 2024 and 2023, a full valuation allowance for deferred tax assets was recorded. Management applies the accounting standards related to uncertainty in income taxes.
Valuation allowances are established to reduce deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. At December 31, 2025 and 2024, a full valuation allowance for deferred tax assets was recorded. Management applies the accounting standards related to uncertainty in income taxes.
These transactions primarily occur with our two largest shareholders, Phil Mulacek and Energy Evolution, and are approved by the board of directors. See Note 14 for further discussion on related party activity during the year. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements.
These transactions primarily occur with our two largest shareholders, Phil Mulacek and Energy Evolution, and are approved by the board of directors. See Note 13 for further discussion on related party activity during the year. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements.
Overview Our primary business is the optimization and development of oil and gas interests. We have incurred losses from operations in 2024 and 2023. There is no assurance that we will be profitable or obtain funds necessary to finance our future operations.
Overview Our primary business is the optimization and development of oil and gas interests. We have incurred losses from operations in 2025 and 2024. There is no assurance that we will be profitable or obtain funds necessary to finance our future operations.
The independent petroleum engineers evaluated 100% of our estimated proved producing reserve quantities and their related future net cash flows as of December 31, 2024. Estimates prepared by others may be higher or lower than these estimates.
The independent petroleum engineers evaluated 100% of our estimated proved producing reserve quantities and their related future net cash flows as of December 31, 2025. Estimates prepared by others may be higher or lower than these estimates.
Such changes could trigger an impairment of our oil and natural gas properties and have an impact on our depletion expense prospectively. For example, a change of 10 percent in our total proved reserves could change our annual depletion expense by approximately $0.9 million.
Such changes could trigger an impairment of our oil and natural gas properties and have an impact on our depletion expense prospectively. For example, a change of 10 percent in our total proved reserves could change our annual depletion expense by approximately $1.0 million.
This process involves estimating the actual current tax exposure together with assessing temporary differences resulting from differing treatment of items, such as depreciation, amortization and certain accrued liabilities for tax and accounting purposes. Deferred tax expense or benefit represents the change in the balance of deferred tax assets or liabilities.
This process involves estimating the actual current tax exposure together with assessing temporary differences resulting from differing treatment of items, such as depreciation, amortization and certain accrued liabilities for tax and accounting purposes. 36 Table of Contents Deferred tax expense or benefit represents the change in the balance of deferred tax assets or liabilities.
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. 31 Working Capital Working capital is presented in the table below.
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. 33 Table of Contents Working Capital Working capital is presented in the table below.
Our stock-based compensation decreased in 2024 due to a lower number of awards in 2024. We anticipate stock-based compensation to continue to be utilized in 2025 and beyond to attract and retain talented personnel and compensate our board members and consultants.
Stock-based Compensation We utilize stock-based compensation to compensate members of management and retain talented personnel. Our stock-based compensation decreased in 2025 due to a lower number of awards . We anticipate stock-based compensation to continue to be utilized in 2026 and beyond to attract and retain talented personnel and compensate our board members and consultants.
As of December 31, 2024, we had approximately $2.3 million in cash on hand and approximately $8.7 million available under our Credit Facility. Empire will require additional funds to satisfy the payables discussed above which are greater than estimated cash flows from operations over the next 12 months.
As of December 31, 2025, we had approximately $1.2 million in cash on hand and approximately $2.5 million available under our Credit Facility. Empire will require additional funds to satisfy the payables discussed above which are greater than estimated cash flows from operations over the next 12 months.
In 2023, we received approximately $12.5 million from stock issuances and warrant exercises. Capital Resources General Empire’s primary sources of short-term liquidity are cash and cash equivalents, net cash provided by operating activities, and issuance of debt or equity securities.
In 2024, we also received approximately $0.6 million from stock issuances and warrant exercises. Capital Resources General Empire’s primary sources of short-term liquidity are cash and cash equivalents, net cash provided by operating activities, and issuance of debt or equity securities.
Phil Mulacek and Energy Evolution, both related parties of Empire and our largest two stockholders, owning 21.2% and 31.9%, respectively, of the common shares outstanding as of December 31, 2024, 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.
Phil Mulacek and Energy Evolution, both related parties of Empire and our largest two stockholders, owning 24.5% and 30.8%, respectively, of the common shares outstanding as of December 31, 2025, 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.
Lease operating expense includes approximately $5.9 million of total workover expense for 2024 as compared to approximately $12.0 million for 2023. The higher workover expense in 2023 was primarily in New Mexico as Empire continued to work over wells in the region to enhance and maintain production.
Lease operating expense includes approximately $2.2 million of total workover expense for 2025 as compared to approximately $5.9 million for 2024. The higher workover expense in 2024 was primarily in New Mexico as Empire continued to work over wells in the region to meet state regulatory requirements and to enhance and maintain production.
We had no uncertain tax positions at December 31, 2024, or December 31, 2023. 34
We had no uncertain tax positions at December 31, 2025, or at December 31, 2024. ​
In periods subsequent to the initial measurement of the ARO, we must recognize period-to-period changes in the liability resulting from the passage of time and revisions to either the timing or the amount of the original estimate of undiscounted cash flows. Stock-Based Compensation We recognize stock-based compensation expense associated with restricted stock units and options.
In periods subsequent to the initial measurement of the ARO, we must recognize period-to-period changes in the liability resulting from the passage of time and revisions to either the timing or the amount of the original estimate of undiscounted cash flows.
Asset Retirement Obligation Asset retirement obligations (“ARO”) consist primarily of estimated future costs associated with the plugging and abandonment of oil and natural gas wells, removal of equipment and facilities from leased acreage, and land restoration in accordance with applicable local, state and federal laws.
We did not identify any impairments for the year ended December 31, 2024. Asset Retirement Obligation Asset retirement obligations (“ARO”) consist primarily of estimated future costs associated with the plugging and abandonment of oil and natural gas wells, removal of equipment and facilities from leased acreage, and land restoration in accordance with applicable local, state and federal laws.
We had a loss before income taxes for 2024 and 2023, respectively, which the tax benefit was offset by a change in the valuation allowance. For 2024 and 2023, our effective tax rates were 0% and 1%, respectively.
We had a loss before income taxes for 2025 and 2024, respectively, and a net deferred tax asset for the same periods which was offset by a change in the valuation allowance. For both 2025 and 2024, our effective tax rates were 0%.
We account for forfeitures of equity-based incentive awards as they occur. Stock-based compensation expense related to time-based restricted stock units is based on the price of our common stock on the grant date. Stock-based compensation related to options is the fair value of the option recognized over the vesting period.
Stock-based compensation expense related to time-based restricted stock units is based on the price of our common stock on the grant date. Stock-based compensation related to options is the fair value of the option recognized over the vesting period.
Mulacek and Energy Evolution are willing and able to provide these additional funds, if required, for Empire to continue to meet its obligations over the next 12 months.
Both are related parties of the Company (Note 13). Mr. Mulacek and Energy Evolution are willing and able to provide these additional funds for Empire to continue to meet its obligations over the next 12 months.
Production taxes were higher for 2024 compared to 2023 as a result of the higher product revenues discussed above. 30 Depreciation, Depletion, Amortization, Accretion and Impairment The higher DD&A in 2024 as compared to 2023 is due in part to the increase in production, the acquisition of additional working interest in New Mexico as well as the impact of the capitalized costs associated with the new drilling activity as part of our Starbuck Drilling Program in North Dakota.
Depreciation, Depletion, Amortization, Accretion and Impairment The higher DD&A in 2025 as compared to 2024 is due to the acquisition of additional working interest in New Mexico as well as the impact of the capitalized costs associated with the new drilling activity as part of our Starbuck Drilling Program in North Dakota partially offset by lower production volumes period over period.
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 year ended December 31, 2024.
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.
Management regularly evaluates potential acquisitions of properties that would enhance current core areas of operation. Liquidity and Going Concern The Company has a revolving line of credit agreement with Equity Bank which requires the Company to maintain compliance with certain financial covenants computed on a quarterly and annual basis.
Liquidity and Going Concern The Company has a revolving line of credit agreement (Note 7) with Equity Bank which requires the Company to maintain compliance with certain financial covenants computed on a quarterly and annual basis.
Additionally, as a result of increasing its revolver commitment, the Company had approximately $8.7 million remaining unused commitment as of December 31, 2024, which can be used for future obligations. However, the revolver commitment is reduced monthly by $0.25 million commencing on December 31, 2024 (See Note 7), limiting future access to capital.
To meet its obligations, the Company increased its revolver commitment to $20.0 million in November 2024 which had approximately $2.5 million remaining unused commitment as of December 31, 2025; however, the revolver commitment is reduced monthly by $0.25 million commencing on December 31, 2024 (Note 7), limiting future access to capital.
Accretion also increased slightly from prior period due to the new drilling activity. We assess our oil and gas properties for impairment when circumstances indicate the carrying value may be greater than its estimated future net cash flows. There was no impairment recorded during the years ended December 31, 2024 and 2023.
Accretion also increased slightly from prior period due to the new drilling activity. We assess our oil and gas properties for impairment when a change in circumstance occurs or indications exist that the carrying value may be greater than its estimated future net cash flows.
Management places emphasis on operating cash flow in managing our business, as operating cash flow considers the cash expenses incurred during the period and excludes non-cash expenditures not related directly to our operations.
Management places emphasis on operating cash flow in managing our business, as operating cash flow considers the cash expenses incurred during the period and excludes non-cash expenditures not related directly to our operations. Inflation The effect of inflation on the Company has generally been to increase its cost of operations and direct costs associated with oil and natural gas production.
Realized natural gas prices for 2024 were approximately $0.37 per Mcf, while realized prices for the prior year were approximately $2.02 per Mcf, a decrease in price of approximately 82%. This is primarily due to the depressed natural gas prices in the third quarter of 2024 in New Mexico.
Realized natural gas prices for 2025 were approximately $1.04 per Mcf, while realized prices for the prior year were approximately $0.37 per Mcf. The increase is primarily due to depressed natural gas prices in third quarter 2024 in New Mexico leading to below zero prices as deductions exceeded the natural gas prices.
Liquidity As noted below, our working capital is negative as of December 31, 2024, which is primarily the result of a lower cash balance due to capital spending as part of our Starbuck Drilling Program and return-to-production efforts in Texas.
Liquidity As noted below, our working capital is negative as of December 31, 2025, which is primarily the result of a lower cash balance due to a decline in market pricing and lower production and an increase in payables from capital spend projects in Texas and North Dakota.
The actual impact would depend on the specific areas impacted. 33 Impairment of Oil and Gas Properties We assess our proved properties for impairment using estimates of future undiscounted cash flows. This assessment requires significant judgment and assumptions including commodity price outlooks, estimates of reserve quantities, expected lease operating costs and capital costs.
The actual impact would depend on the specific areas impacted. ​ ​ 35 Table of Contents Impairment of Oil and Gas Properties We assess our proved properties for impairment using estimates of future undiscounted cash flows.
Interest Expense Cash-based interest expense increased slightly due to a higher outstanding balance under our Credit Facility partially offset by lower interest rates. We have minimal interest-bearing vehicle and equipment notes payable. Non-cash interest expense is primarily attributable to the conversion to equity of the related party note payable as described in Note 7 of Notes to Consolidated Financial Statements.
Interest Expense Cash-based interest expense was higher primarily due to a higher outstanding balance under our Credit Facility partially offset by a lower average interest rate. We have minimal interest-bearing vehicle and equipment notes payable.
Realized NGLs prices for 2024 were approximately $14.21 per barrel, while realized prices for the prior year were approximately $12.21 per barrel, an increase in price of approximately 16%. Lease Operating Expense and Production Taxes Lease operating expense was lower in 2024 primarily due to lower workover activities partially offset by higher expenses related to an increase in production.
Realized NGLs prices for 2025 were approximately $10.76 per barrel, while realized prices for the prior year were approximately $14.21 per barrel, a decrease in price of approximately 24% primarily due to a general decline in overall market prices. Lease Operating Expense and Production Taxes Total lease operating expense was lower in 2025 primarily due to lower workovers in 2025.
As of December 31, 2024, the Company was in compliance with all required covenants and projected to be in compliance with all debt covenants over the next 12 months. However, the Company was in default of its covenants in the third quarter of 2024 but obtained a waiver on November 12, 2024, to alleviate all prior defaults.
As of December 31, 2025, the Company was in compliance with all required covenants and projected to be in compliance with all debt covenants over the next 12 months. However, the Company carried a negative working capital of approximately $16.2 million as of December 31, 2025.
While these debt and equity transactions provided additional funding towards these projects and other obligations, the Company still carried approximately $8.9 million of negative working capital at period end and future expected operating cash flows do not sufficiently meet the Company’s obligations for the next 12 months.
An additional subscription rights offering was also announced and expected to raise gross proceeds of up to $10.0 million (Note 9). While these transactions provide additional funding towards the Company’s obligations, the Company expects to have negative working capital for the next 12 months and future expected operating cash flows do not sufficiently meet the Company’s obligations.
Each subscription right entitled the holder to purchase 0.161 shares of common stock at a subscription price of $5.00 per share per one whole share of common stock. The subscription rights were non-transferable and not listed for trading on any stock exchange or market.
Each subscription right entitled a rights holder to purchase one unit at a subscription price equal to $0.07367 per unit, each unit consisting of 0.0139 shares of the Company’s common stock and one rights warrant to purchase 0.0136 shares of the Company’s common stock equal to $5.46 per whole share.
As consideration, upon closing of the partial exercise of the Purchase Option, Empire issued Energy Evolution 600,000 shares of common stock of Empire based on an agreed upon price of $5.00 per share for an aggregate agreed upon value of $3.0 million which was 60% of the purchase price of $5.0 million under the Purchase Option.
As consideration, Empire issued 562,500 shares of common stock on January 5, 2026, which is the closing date of the letter agreement, based on an agreed upon price of $3.20 per share for an aggregate agreed upon value of $1.8 million (Note 3).
An impairment expense could result if oil and gas prices decline in the future as it may not be economic to develop some of these unproved properties. We performed an assessment as of December 31, 2024 and 2023, and did not identify any impairments, respectively.
This assessment requires significant judgment and assumptions including commodity price outlooks, estimates of reserve quantities, expected lease operating costs and capital costs. An impairment expense could result if oil and gas prices decline in the future as it may not be economic to develop some of these properties.
Although Empire expects that its sources of funding will be adequate to fund its liquidity requirements, no assurance can be given that such funding sources will be adequate to meet Empire’s future needs. 32 Capital Expenditures For 2024, Empire incurred approximately $42.2 million of additions to oil and natural gas properties which primarily reflects continued drilling and completions activity related to our Starbuck Drilling Program in North Dakota.
Capital Expenditures For 2025, Empire incurred approximately $4.6 million of total additions to oil and natural gas properties which primarily reflects the return-to-production project in Texas and continued drilling and completions activity related to our Starbuck Drilling Program in North Dakota.
Given the negative working capital and insufficient expected operating cash flow there is substantial doubt about the Company’s ability to continue as a going concern.
Given the negative working capital and insufficient expected operating cash flow there is substantial doubt about the Company’s ability to continue as a going concern. ​ ​ 29 Table of Contents Empire has committed financial support from Phil Mulacek who owns approximately 24.5% of our common stock outstanding as of December 31, 2025, and Energy Evolution, our largest stockholder, who owns approximately 30.8% of our common stock outstanding as of December 31, 2025.
Cash Flows from Investing Activities Cash flows from investing activities in 2024 include approximately $42.2 million of additions to oil and gas properties compared to approximately $25.0 million in 2023 primarily due to the development of our operations as part of our Starbuck Drilling Program in North Dakota.
Investing Activities Investing activities are primarily related to approximately $4.8 million of cash additions to oil and natural gas properties during 2025 compared to approximately $53.2 million of cash additions to oil and natural gas properties during 2024 associated with the Starbuck Drilling Program in North Dakota with the decline period over period due to the Company nearing completion of this project.
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 2024, Empire has incurred approximately $42.2 million of additions to oil and natural gas properties, primarily related to the drilling program in the Starbuck field of North Dakota.
During 2025, Empire incurred approximately $4.6 million of total additions to oil and natural gas properties, primarily related to the return-to-production project in Texas and continued drilling and completions activity in North Dakota related to our Starbuck Drilling Program.
Realized oil prices for 2024 were approximately $71.44 per barrel, while realized prices for the prior year were approximately $75.19 per barrel, a decrease in price of approximately 5%.
Realized oil prices for 2025 were approximately $60.32 per barrel, while realized prices for the prior year were approximately $71.44 per barrel, a decrease in price of approximately 16% primarily due to a general decline in overall market prices. Oil volumes were lower by approximately 10% primarily due to redrilling efforts in North Dakota and the natural decline in production.
In addition to the April Rights Offering and November Rights Offering, 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 Consolidated Financial Statements for further discussion of management’s plans.
In addition to the rights offering in August 2025, management continues to seek additional sources of capital via the debt or equity markets to improve liquidity going forward including a new convertible note with Mr. Mulacek in February 2026 and an additional rights offering announced in February 2026 which is expected to be completed in March 2026 (Note 9).
For 2023, additions to oil and natural gas properties totaled $27.0 million including $2.1 million related to acquisitions. The approximate $25.0 million not related to acquisitions primarily reflects development of our North Dakota operations. Related Party Transactions At times the Company may enter into transactions with related parties.
Management also acquired the remaining interest of certain New Mexico interests with Energy Evolution and certain undeveloped properties in North Dakota subsequent to December 31, 2025 (Note 3). For 2024, additions to oil and natural gas properties totaled $42.2 million. 34 Table of Contents Related Party Transactions At times the Company may enter into transactions with related parties.
Inflation The effect of inflation on the Company has generally been to increase its cost of operations, general and administrative costs and direct costs associated with oil and natural gas production. Business Strategy Our business strategy is to obtain long-term growth in reserves and cash flow on a cost-effective basis.
Business Strategy Our business strategy is to obtain long-term growth in reserves and cash flow on a cost-effective basis. Management regularly evaluates potential acquisitions of properties that would enhance current core areas of operation.
In addition, cash flows from financing activities in 2024 include $5.0 million from a promissory note issued by the Company to a related party and approximately $6.7 million borrowed on the Credit Facility (see Note 7). In 2024, we received approximately $0.6 million from stock issuances and warrant exercises.
A majority of the cash additions for 2025 relate to the Company’s return-to-production efforts in Texas. Financing Activities Financing activities include $4.0 million and $5.0 million in 2025 and 2024, respectively, from promissory notes issued to Empire by various related parties offset by a $2.0 million repayment in 2025 (Note 7).
Removed
The Company carried a negative working capital of approximately $8.9 million as of December 31, 2024, an overall decline of approximately $2.6 million from the previous year. Cash on hand also declined approximately $5.5 million during the same period.
Added
Working capital decreased by approximately $7.2 million from prior year primarily due to the overall pricing environment reducing operating cash flows, capital spend on various projects within Texas and North Dakota resulting in increased payables as operating cash flows decline, and lower overall production from redrilling and operational activity resulting in certain wells being down for a period of time during the period.
Removed
The overall decline in working capital and cash is primarily driven by the Starbuck Drilling Program in North Dakota which incurred substantial capital spend. Additionally, the Company initiated a return-to-production program in Texas which incurred additional unforeseen operational costs. The additional production from these projects did not fully offset the costs incurred and contributed to the overall negative financial trend.
Added
Additionally, the Company’s debt obligations continue to increase with various related parties as discussed below.
Removed
To meet its obligations, the Company increased its revolver commitment to $20.0 million in November 2024 and had two rights offerings in April and November of 2024 which raised approximately $30.5 million of capital, net of transaction costs, to help fund the capital spend projects.
Added
Further, the Company entered into a promissory note and a convertible note with Phil Mulacek in June 2025 and September 2025, respectively. Each respective note provided up to $4.0 million of available borrowing capacity. As of December 31, 2025, the promissory note had fully expired and the convertible note had $2.0 million outstanding.
Removed
Empire has committed financial support from Phil Mulacek who owns approximately 21.2% of our common stock outstanding as of December 31, 2024, and Energy Evolution, our largest stockholder who owns approximately 31.9% of our common stock outstanding as of December 31, 2024. Both are related parties of the Company (see Note 14). Mr.
Added
The Company may borrow up to an additional $2.0 million of the convertible note’s available principal at the discretion of Mr. Mulacek, per the terms of the agreement (Note 7). The Company also issued warrants to Mr. Mulacek in connection with the convertible note (Note 7).
Removed
Recent Developments Empire has completed 13 wells in North Dakota related to our Starbuck Drilling Program during the year ended December 31, 2024. On February 16, 2024, Empire issued a Promissory Note to Energy Evolution, a related party. Energy Evolution advanced Empire $5.0 million.
Added
Further, a subscription rights offering was completed in August 2025, which raised approximately $2.5 million of gross proceeds (Note 9). A portion of these proceeds were used to settle $2.0 million of the outstanding balance of the promissory note with Mr. Mulacek, per the terms of the note, during the third quarter.
Removed
On May 24, 2024, Energy Evolution elected to convert the Note to shares of common stock of Empire and received 800,000 shares under the terms of the Promissory Note. See Note 7 for further details. In April 2024, the Company completed a subscription rights offering (the "April Rights Offering”) which raised gross proceeds of approximately $20.7 million.
Added
In February 2026, the Company entered into a convertible note with Mr. Mulacek for $3.0 million to be used towards full settlement of the convertible note in September 2025 and general working capital needs. In March 2026, this note was fully converted to common shares (Note 7).
Removed
On April 9, 2024, Empire partially exercised a purchase option originally issued on August 9, 2023, (the "Purchase Option”) to acquire additional working interests in certain of Empire’s New Mexico properties from Energy Evolution.
Added
Recent Developments The following is a brief listing of developments during the year ended December 31, 2025. Additional information including subsequent events may be found elsewhere in this report.
Removed
The additional assets acquired represent approximately 60% of the total assets collectively acquired by Empire and Energy Evolution in the third quarter of 2023 (the "Option Assets”).
Added
On May 1, 2025, the Company extended its option to purchase certain New Mexico interests from Energy Evolution to allow for payment for such extension to be made in cash in lieu the issuance of the 16,800 shares of common stock.
Removed
On August 8, 2024, Empire successfully extended the Purchase Option with the issuance of 16,800 shares of common stock to Energy Evolution to obtain the right to acquire the remaining Option Assets for an exercise price of $2.0 million subject to certain adjustments and payable in cash, unless the parties agree that some or all may be paid by issuance of common stock to Energy Evolution.
Added
The Company made a cash payment to Energy Evolution on September 30, 2025 to extend the purchase option for an additional year (Note 3). On June 17, 2025, the Company issued a promissory note in the aggregate principal amount of $4.0 million to Mr. Mulacek who immediately advanced $2.0 million under the note.
Removed
The Purchase Option expires on August 9, 2026. In November 2024, Empire completed a subscription rights offering (the "November Rights Offering”) which raised gross proceeds of $10.0 million. Each subscription right entitled the holder to purchase 0.063 shares of common stock at a subscription price of $5.05 per share per one whole share of common stock.
Added
The Company may request in writing that Mr. Mulacek advance up to another $2.0 million to the Company from time to time during the period beginning 45 days and ending 90 days after June 17, 2025. The note accrues interest at 5.5% and may be repaid without penalty or premium prior to the maturity date of June 17, 2027.
Removed
The subscription rights were non-transferable and not listed for trading on any stock exchange or market. On November 18, 2024, the Company entered into the First Amendment to the Credit Facility (the “First Amendment”) to increase the initial maximum revolver commitment to $20.0 million through December 29, 2026.
Added
Per the terms of the note, in the event that the Company closes a sale of its equity, the Company shall promptly, but in no event later than five business days after receipt of the proceeds, repay the lesser of (a) the initial $2.0 million advanced (including any interest or fees thereon) or (b) the amount of the equity sale to Mr.
Removed
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.
Added
Mulacek. In the event the Company receives proceeds from the sale of any of its equity after an initial equity sale repayment and any subsequent advance, the Company shall use such proceeds to promptly repay such subsequent advance, and all accrued and unpaid interest thereon, to Mr. Mulacek.
Removed
For the Years Ended December 31, Percent 2024 2023 Change Oil revenues $ 41,515,661 $ 36,684,494 13% Natural gas revenues 343,503 1,726,754 -80% NGL revenues 2,132,666 1,660,256 28% Total product revenues 43,991,830 40,071,504 Lease operating expense 27,545,028 28,625,481 -4% Production and ad valorem taxes 3,770,078 3,044,411 24% Depreciation, depletion, amortization and accretion 11,263,010 4,852,555 132% General and administrative expense (excluding stock-based compensation) 12,581,859 12,034,185 5% Stock-based compensation 2,155,774 3,144,750 -31% Cash-based interest expense 894,282 650,637 37% Non-cash interest expense 620,987 349,790 78% Operating Loss (13,665,457 ) (11,625,091 ) 18% Net Loss (16,197,989 ) (12,469,605 ) 30% Revenues Revenues for 2024 increased compared to prior year primarily due to higher oil volumes in North Dakota due to our Starbuck Drilling Program partially offset by a slight overall decline in commodity prices.
Added
In August 2025, Empire completed an equity sale further described in Note 9 and repaid the outstanding note balance and all accrued and unpaid interest (Note 7). On June 18, 2025, the Company entered into the second amendment to the revolver loan agreement with Equity Bank.
Removed
Oil volumes were higher by approximately 93,000 barrels or 19% primarily due to new wells completed in North Dakota during the third quarter of 2024 as well as the acquisition of additional working interest in New Mexico.
Added
The amendment added Empire Texas Development LLC as a third borrower and extends the obligation security by liens on substantially all of the assets of Empire Texas Development LLC (Note 7). In August 2025, Empire completed a subscription rights offering which raised gross proceeds of $2.5 million.
Removed
General and Administrative Expense (excluding stock-based compensation) General and Administrative Expense (excluding stock-based compensation) increased primarily due to an increase in salaries and benefits associated with an increase in employee headcount. Stock-based Compensation We utilize stock-based compensation to compensate members of management and retain talented personnel.
Added
Empire distributed at no charge to holders of its common stock, as of the close of business on July 10, 2025 (the record date), one non-transferable subscription right for each whole share of common stock owned by that stockholder on the record date.
Removed
The decrease of approximately $2.6 million was primarily driven by a lower cash balance due to increased capital spending related to the Starbuck Drilling Program in North Dakota.
Added
No fractional shares of common stock are issued in the rights offering, including upon exercise of the warrants. The subscription rights were initially set to expire if they were not exercised or extended at the discretion of the Company by July 25, 2025; however, this date was subsequently extended to August 20, 2025.
Removed
As of December 31, 2024 2023 Current Assets $ 12,350,945 $ 18,744,904 Current Liabilities 21,270,471 25,049,572 Working Capital $ (8,919,526 ) $ (6,304,668 ) Cash Flows The following table summarizes our statements of cash flows: For the Years Ended December 31, Cash flows provided by (used in): 2024 2023 Change Operating activities $ 6,157,003 $ (9,887,500 ) $ 16,044,503 Investing activities (53,869,461 ) (14,767,339 ) (39,102,122 ) Financing activities 42,171,414 20,502,905 21,668,509 Cash Flows from Operating Activities The impact of higher oil production and lower workover expenses in 2024 compared to 2023 contributed to the increase in cash flows from operating activities.
Added
The warrants expired 90 days after August 20, 2025 (Note 9). On September 24, 2025, the Company issued a convertible promissory note in the aggregate principal amount of $4.0 million to Mr. Mulacek and advanced an initial $2.0 million payable in full on September 23, 2027.

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