# Empire Petroleum Corp: Form 10-Q for the period ended Mar 31, 2026

- Company: [Empire Petroleum Corp](/companies/ep.md) (CIK 887396)
- Form: 10-Q
- Filed: 2026-05-14
- Accepted by EDGAR: May 14, 2026, 16:16 ET
- Period: 2026-03-31
- Accession: 0001104659-26-061187
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/887396/000110465926061187/ep-20260331x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/887396/000110465926061187/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2026-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2026-01-01 to 2026-03-31 | $5.1m | us-gaap:Revenues |
| Operating income | 3 months, 2026-01-01 to 2026-03-31 | −$5.6m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2026-01-01 to 2026-03-31 | $480.0k | us-gaap:InterestExpenseNonoperating |
| Net income | 3 months, 2026-01-01 to 2026-03-31 | −$6.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2026-01-01 to 2026-03-31 | −$0.18 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2026-01-01 to 2026-03-31 | −$0.18 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2026-01-01 to 2026-03-31 | 36,003,701 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2026-01-01 to 2026-03-31 | −$970.0k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2026-03-31 | $8.8m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2026-03-31 | $17.3m | us-gaap:AssetsCurrent |
| Total assets | at 2026-03-31 | $78.0m | us-gaap:Assets |
| Current liabilities | at 2026-03-31 | $29.3m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2026-03-31 | $74.3m | us-gaap:Liabilities |
| Current portion of debt | at 2026-03-31 | $954.0k | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2026-03-31 | $3.7m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 19,845 characters.

FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q, including this section, includes certain statements that may be deemed “forward-looking statements” within the meaning of federal securities laws. 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. Such statements are subject to a number of assumptions, risks and uncertainties and could be affected by a number of distinct factors, including Empire’s failure to secure short and long-term financing necessary to sustain and grow its operations, increased competition, changes in the markets in which Empire participates, the technology utilized by Empire, new legislation regarding environmental matters, general economic conditions including inflation, tariffs and interest rates, and uncertainties associated with legal and regulatory matters. These risks and other risks that could affect Empire’s business are more fully described in reports Empire files with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2025. Actual results may vary materially from the forward-looking statements. Empire undertakes no duty to update any of the forward-looking statements in this Form 10-Q.

### Overview

Our primary business is the optimization and development of oil and gas interests. We have incurred losses from operations in 2026 and 2025. There is no assurance that we will be profitable or obtain the funds necessary to finance our future operations.

We seek to increase shareholder value by growing reserves, production, revenues, and cash flow from operating activities by executing our mission to use highly skilled personnel to thoughtfully and expertly spend capital to realize reserves on producing properties as well as further develop fields.

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.

### Concentration

A majority of the Company’s producing properties and oil and natural gas reserves are located within three areas of the United States. Because of the concentration, the Company is exposed to the impact of regional supply and demand factors, processing or transportation capacity constraints, severe weather events, water shortages, and government regulations specific to the geographic area. The Company sells a large portion of its oil and natural gas production to a few customers. 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.

### 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.

### Properties

We are an independent operator in four geographic areas in the United States. For our operated properties, we manage and influence production using a combination of experienced field personnel and third-party service providers to execute our mission. Our producing properties have reasonably predictable production profiles and cash flows, subject to commodity price and cost fluctuations. 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.

### 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. Due to these seasonal fluctuations, results of operations for individual quarterly periods may not be indicative of the results realized on an annual 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.

### Critical Accounting Estimates

The preparation of financial statements in conformity with US GAAP requires management to use judgment to make estimates and assumptions that affect certain amounts reported in the unaudited interim consolidated financial statements. As additional information becomes available, these estimates and assumptions are subject to change and thus impact amounts reported in the future. Because estimates and assumptions require significant judgment, future actual results could differ from those estimates and could have a significant impact on our results of operations, financial position and cash flows. 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 three months ended March 31, 2026.

LIQUIDITY AND CAPITAL RESOURCES

### General

Empire’s primary sources of short-term liquidity are cash and cash equivalents, net cash provided by operating activities, our Credit Facility and issuance of debt or equity securities. Empire’s short- and long-term liquidity requirements consist primarily of capital expenditures, acquisitions of oil and natural gas properties, payments of contractual obligations, and working capital obligations. Funding for these requirements may be provided by any combination of Empire’s sources of liquidity. 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.

### Liquidity

As noted below, our working capital is negative as of March 31, 2026, which is primarily the result of previous and unforeseen operational costs resulting in lower production as well as a depressed commodity pricing environment during the majority of the first quarter of 2026. As of March 31, 2026, we had approximately $8.8 million in cash on hand, primarily from the rights offering in February 2026, and approximately $2.7 million available under our Credit Facility; however, the Company’s available borrowing capacity under the Credit Facility continues to decrease due to a monthly reduction to the borrowing capacity under the Credit Facility. Empire also has access to an additional $2.0 million from a convertible note issued in September 2025 with Mr. Mulacek; however, it may only be borrowed at Mr. Mulacek’s discretion and per the terms of the agreement. Mr. Mulacek also holds a warrant certificate issued in connection with the convertible note issued in September 2025. Finally, the Company received gross proceeds of $10.0 million from a rights offering in March 2026 and the potential of up to an additional $7.5 million less agency fees from an at-the-market offering pursuant to the sales agreement entered into subsequent to the quarter end.

Despite these transactions, the Company will require additional funds to satisfy the payables discussed above which are greater than estimated cash flow from operations over the next 12 months. Mr. Mulacek and Energy Evolution, both related parties of Empire and our largest two stockholders, 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. 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 Unaudited Interim Condensed Consolidated Financial Statements for further discussion of management’s plans.

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 the first three months of 2026, Empire incurred approximately $1.9 million of total additions to oil and natural gas properties, primarily related to the gas development program in Texas. 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.

### Hedging Positions

We generally do not enter into derivative financial instruments for speculative or trading purposes. We entered into certain oil commodity derivative positions for the remaining three quarters of 2026 at a blended price of $73.83 for total production of approximately 340,000 Bbls. These positions account for the majority of our current level of production for the remainder of 2026 to help minimize expected pricing volatility and to strengthen forward cash flow visibility. Anticipated production increases from our ongoing development projects will further strengthen Empire’s cash flows from operations.

### Working Capital

Working capital is presented in the table below. The change of approximately $4.2 million was primarily driven by a higher cash balance from the Company’s rights offering in March 2026.

*(in thousands)*

| ​ ​ | ​ ​ ​ ​ ​ | ​ ​ March 31, 2026 | ​ ​ ​ ​ ​ | ​ ​ December 31, 2025 |
| --- | --- | ---: | --- | ---: |
| Current Assets | ​ | $17,301 | ​ | $8,180 |
| Current Liabilities | ​ | 29,266 | ​ | 24,342 |
| Working Capital | ​ | $(11,965) | ​ | $(16,162) |

### Cash Flows

*(in thousands)*

| ​ ​ Cash flows provided by (used in): | ​ ​ ​ ​ ​ ​ | ​ ​ For the Three Months Ended March 31, 2026 ​ ​ | ​ ​ ​ ​ ​ | ​ ​ 2025 ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ Change ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: |
| Operating activities | ​ | $(970) | ​ | $1,613 | ​ | $(2,583) |
| Investing activities | ​ | (1,292) | ​ | (2,762) | ​ | 1,470 |
| Financing activities | ​ | 9,858 | ​ | (21) | ​ | 9,879 |

#### Operating Activities

Operating activities decreased period over period primarily due to a decrease in production period over period and lower realized commodity prices consistent with general market pricing trends.

#### Investing Activities

Investing activities are primarily related to approximately $1.2 million of cash additions to oil and natural gas properties during the first three months of 2026 as a result of the Company’s gas development program in Texas compared to approximately $2.7 million of cash additions to oil and natural gas properties during the first three months of 2025 associated with various projects in Texas and North Dakota.

#### Financing Activities

Financing activities in the first three months of 2026 include both a $2.0 million repayment and a $3.0 million borrowing on respective related party notes with Mr. Mulacek. We also completed a rights offering in March 2026 for net proceeds of approximately $9.9 million. In addition, we paid $1.0 million of the outstanding balance of our revolving credit facility in the first quarter of 2026.

### Capital Resources

#### Capital Expenditures

For the three months ended March 31, 2026, Empire incurred approximately $1.9 million of total additions to oil and natural gas properties which is primarily from the Company’s gas development program in Texas.

### Production and Operating Data

The following table sets forth a summary of Empire’s production and operating data for the three months ended March 31, 2026 and 2025. Because of normal production declines, increased or decreased production due to future acquisitions, divestitures, development, and fluctuations in commodity prices, the historical information presented below should not be interpreted as being indicative of future results.

| ​ ​ ​ Production and Operating Data: Net Production Volumes: | ​ ​ ​ ​ ​ ​ ​ | ​ ​ For the Three Months Ended March 31, 2026 ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ 2025 ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: |
| Oil (Bbl) |  | ​ 112,317 |  | ​ 119,635 |
| Natural gas (Mcf) |  | ​ 235,517 |  | ​ 199,868 |
| Natural gas liquids (Bbl) |  | ​ 17,628 |  | ​ 31,453 |
| Total (Boe) |  | ​ 169,197 |  | ​ 184,400 |
| ​ | ​ | ​ ​ | ​ | ​ ​ |
| Average Price per Unit: |  | ​ ​ |  | ​ ​ |
| Oil | ​ | $65.01 | ​ | $67.28 |
| Natural gas | ​ | $0.79 | ​ | $2.74 |
| Natural gas liquids | ​ | $11.18 | ​ | $12.56 |
| Total | ​ | $45.41 | ​ | $48.76 |
| ​ | ​ | ​ ​ | ​ | ​ ​ |
| Operating Costs and Expenses per Boe: | ​ | ​ | ​ | ​ |
| Lease operating expense (excluding workovers) | ​ | $26.79 | ​ | $29.18 |
| Workovers | ​ | $3.72 | ​ | $2.09 |
| Total Lease operating expense | ​ | $30.51 | ​ | $31.27 |
| Production and ad valorem taxes | ​ | $3.00 | ​ | $3.86 |
| Depreciation, depletion, amortization and accretion | ​ | $11.54 | ​ | $14.92 |
| General and administrative (excluding stock-based compensation) | ​ | $17.00 | ​ | $17.34 |
| Stock-based compensation | ​ | $1.12 | ​ | $2.88 |
| Total General and administrative | ​ | $18.12 | ​ | $20.22 |

**Bbl –** One stock tank barrel, of 42 U.S. gallons liquid volume, used herein in reference to oil, condensate, or natural gas liquids.

**Mcf –** One thousand cubic feet of natural gas.

**Boe –** One barrel of oil equivalent, a standard convention used to express oil and natural gas volumes on a comparable oil equivalent basis. Natural gas equivalents are determined under the relative energy content method by using the ratio of 6.0 Mcf of natural gas to 1.0 Bbl of oil or condensate.

### Three Months Ended March 31, 2026 and 2025

### Results of Operations

The following table reflects Empire’s summary operating information for the three months ended March 31, 2026 and 2025. 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.

*(in thousands)*

| ​ ​ | ​ ​ ​ ​ ​ | ​ ​ For the Three Months Ended March 31, 2026 | ​ ​ ​ ​ | ​ ​ 2025 | ​ ​ ​ ​ ​ | ​ ​ ​ ​ Variance | ​ ​ ​ ​ ​ | ​ ​ Percent Change |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Oil Sales | ​ | $7,302 | ​ | $8,049 | ​ | $(747) |  | (9)% |
| Gas Sales | ​ | 185 | ​ | 548 | ​ | (363) |  | (66)% |
| NGL Sales | ​ | 197 | ​ | 395 | ​ | (198) |  | (50)% |
| Total Product Revenues | ​ | 7,684 | ​ | 8,992 | ​ | ​ |  | ​ ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Lease Operating Expense | ​ | 5,160 | ​ | 5,766 | ​ | (606) |  | (11)% |
| Production and Ad Valorem Taxes | ​ | 507 | ​ | 712 | ​ | (205) |  | (29)% |
| Depreciation, Depletion, Amortization and Accretion | ​ | 1,952 | ​ | 2,752 | ​ | (800) |  | (29)% |
| General and Administrative (excluding stock-based compensation) | ​ | 2,876 | ​ | 3,197 | ​ | (321) |  | (10)% |
| Stock-Based Compensation | ​ | 189 | ​ | 531 | ​ | (342) |  | (64)% |
| Cash-Based Interest Expense | ​ | 381 | ​ | 268 | ​ | 113 |  | 42% |
| Non-Cash Interest Expense | ​ | 99 | ​ | 28 | ​ | 71 |  | NM% |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Operating Loss | ​ | (5,581) | ​ | (3,956) | ​ | (1,625) |  | 41% |
| Net Loss | ​ | (6,642) | ​ | (4,221) | ​ | (2,421) |  | 57% |

NM: A percentage calculation is not meaningful due to change in signs, a zero-value denominator or a percentage change that is greater than 200.

#### Revenues

Revenues for the three months ended March 31, 2026, decreased compared to the prior year primarily due to lower overall production in North Dakota and New Mexico and a lower realized price across all commodities.

Net oil sales volumes were approximately 112,000 Bbls for the three months ended March 31, 2026, a slight decrease over the same period in the prior year primarily due to natural decline and operational challenges in North Dakota and New Mexico.

Realized oil prices for the three months ended March 31, 2026, were $65.01 per barrel, while realized prices for the same period in the prior year were $67.28 per barrel, a decrease of approximately 3% due to a general decline in overall market prices during the early part of first quarter 2026.

Realized natural gas prices for the three months ended March 31, 2026, were $0.79 per Mcf, while realized prices for the same period in the prior year were $2.74 per Mcf. This is primarily due to the depressed natural gas prices in the first quarter of 2026 specifically in New Mexico.

Realized NGLs prices for the three months ended March 31, 2026, were $11.18 per barrel, while realized prices for the same period in the prior year were $12.56 per barrel, a decrease of approximately 11% driven by a general decline in overall market prices.

#### Lease Operating Expense and Production Taxes

Lease operating expense was lower for the three months ended March 31, 2026, compared to the same period in 2025 primarily due to lower overall production and efforts by the Company to reduce overall operating costs. This decrease was partially offset by an increase in workover expense period over period. Workover expenses were approximately $0.6 million for the three months ended March 31, 2026, compared to approximately $0.4 million for the same period in 2025. The higher workover expense in 2026 was primarily in Texas due to the Company’s ongoing gas development program.

Production taxes were lower for the three months ended March 31, 2026, compared to the same period in 2025 as a result of the lower product revenues discussed above.

#### Depreciation, Depletion, Amortization and Accretion

The decrease in DD&A for the three months ended March 31, 2026, compared to the same period in 2025 is primarily due to the impact of impairments in the fourth quarter of 2025 and lower production volumes period over period, partially offset by the additional interests acquired in New Mexico in first-quarter 2026. Accretion increased slightly from prior period due to the additional interest acquired in New Mexico.

#### General and Administrative Expense (excluding stock-based compensation)

General and administrative expense, excluding stock-based compensation, decreased for the three months ended March 31, 2026, compared to the same period in 2025 primarily due to a decrease in employee costs resulting from lower headcount in 2026.

#### Stock-based Compensation

Stock-based compensation decreased period over period due to a lower number of awards in first quarter 2026. Empire utilizes stock-based compensation to compensate the Board, members of management, and retain talented personnel. Empire anticipates stock-based compensation to continue to be utilized in 2026 and beyond to attract and retain talented personnel and compensate Board members and consultants.

#### Interest Expense

Cash-based interest expense increased for the three months ended March 31, 2026, compared to the same period in 2025 primarily due to a higher average outstanding balance on the Company’s Credit Facility and additional equipment and vehicle notes. Additionally, the Company’s non-cash-based interest expense was higher in 2026 due to the remaining unamortized discount related to the September Note being fully amortized upon full repayment during the quarter.

## Market risk

As filed, 169 characters.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 (the “Exchange Act”) and are not required to provide this information.

## Controls and procedures

As filed, 2,504 characters.

### Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, the Company carried out an evaluation under the supervision and participation of the Company’s Principal Executive Officer/Principal Financial Officer, along with our management, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e). Based on this evaluation, the Company’s Principal Executive Officer/Principal Financial Officer concluded that the disclosure controls and procedures were effective, as of the end of the period covered by this report, in ensuring the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer (Principal Executive Officer/Principal Financial Officer), to allow timely decisions regarding required disclosure.

### Changes in Internal Control Over Financial Reporting

While we continue to implement design enhancements to our internal control procedures, we believe there were no changes to our internal control over financial reporting during the three months ended March 31, 2026, which were identified in connection with the evaluation that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

### Inherent Limitations on Effectiveness of Controls

The Company’s disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their desired objectives. Management recognizes that a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of their inherent limitations, disclosure controls and procedures and internal control over financial reporting may not prevent or detect all errors or misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Filed May 14, 2026.
Source: SEC EDGAR, the filing index for accession 0001104659-26-061187. Last ingested by Listed: Oct 27, 2026, 06:51 ET. No prices; not investment advice.