Cover
Cover | 6 Months Ended |
Jun. 30, 2021shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Quarterly Report | true |
Document Transition Report | false |
Document Period End Date | Jun. 30, 2021 |
Document Fiscal Period Focus | Q2 |
Document Fiscal Year Focus | 2021 |
Current Fiscal Year End Date | --12-31 |
Entity File Number | 001-16653 |
Entity Registrant Name | EMPIRE PETROLEUM CORP |
Entity Central Index Key | 0000887396 |
Entity Tax Identification Number | 73-1238709 |
Entity Incorporation, State or Country Code | DE |
Entity Address, Address Line One | 2200 South Utica Place |
Entity Address, Address Line Two | Suite 150 |
Entity Address, City or Town | Tulsa |
Entity Address, State or Province | OK |
Entity Address, Postal Zip Code | 74114 |
City Area Code | 539 |
Local Phone Number | 444-8002 |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 65,661,634 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Current Assets: | ||
Cash | $ 1,016,877 | $ 157,695 |
Accounts Receivable | 3,600,234 | 1,251,634 |
Oil Inventory | 1,690,674 | 531,309 |
Prepaids | 191,839 | 281,895 |
Total Current Assets | 6,499,624 | 2,222,533 |
Property and equipment: | ||
Oil and Natural Gas Properties, Successful Efforts | 44,967,979 | 22,711,445 |
Less: Accumulated Depreciation, Depletion and Impairment | (15,880,231) | (15,148,444) |
Oil and natural gas properties, successful efforts, net | 29,087,748 | 7,563,001 |
Other Property and Equipment, net | 1,245,715 | 662,017 |
Total Property and Equipment, net | 30,333,463 | 8,225,018 |
Investment in Related Party | 1,250,000 | |
Sinking Fund (Note 7) | 3,850,000 | |
Other Assets | 1,156,642 | 802,050 |
Total Assets | 43,089,729 | 11,249,601 |
Current Liabilities: | ||
Accounts Payable | 2,363,312 | 1,937,743 |
Accrued Expenses | 3,712,549 | 2,697,831 |
Unrealized Loss on Oil and Natural Gas Derivatives | 187,474 | 5,749 |
Embedded Conversion Option | 6,126,961 | |
Contingent Payment (see Note 6) | 40,000 | |
Current Portion of Lease Liability | 145,433 | 89,769 |
Notes Payable to Related Party, net of discount | 5,614,789 | |
Current Portion of Long-term Notes Payable, net of discount | 1,526,404 | 1,301,618 |
Total Current Liabilities | 19,676,922 | 6,072,710 |
Long-Term Notes Payable | 8,443,407 | 7,719,703 |
Long Term Lease Liability | 684,426 | 534,009 |
Asset Retirement Obligations | 20,488,906 | 15,364,217 |
Total Liabilities | 49,293,661 | 29,690,639 |
Stockholders' Deficit: | ||
65,661,634 and 24,892,277 Shares Issued and Outstanding, Respectively | 65,661 | 24,892 |
Common Stock Subscribed | ||
Additional Paid-in Capital | 40,617,930 | 22,152,451 |
Accumulated Deficit | (46,887,523) | (40,618,381) |
Total Stockholders' Deficit | (6,203,932) | (18,441,038) |
Total Liabilities and Stockholders' Deficit | $ 43,089,729 | $ 11,249,601 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares | Jun. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Common stock par value | $ 0.001 | $ 0.001 |
Common stock shares authorized | 150,000,000 | 150,000,000 |
Common stock shares issued | 65,661,634 | 24,892,277 |
Common stock shares outstanding | 65,661,634 | 24,892,277 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Revenue: | ||||
Oil Sales | $ 4,058,449 | $ 887,901 | $ 6,120,493 | $ 2,174,288 |
Natural Gas Sales | 372,178 | 67,558 | 681,062 | 85,532 |
Natural Gas Liquids Sales | 425,480 | 473,392 | ||
Other Revenue | 45,357 | 39,070 | 82,975 | 49,109 |
Net Realized and Unrealized Gain (Loss) on Derivatives | (182,034) | (402,374) | (539,949) | 2,106,671 |
Total Revenue | 4,719,430 | 592,155 | 6,817,973 | 4,415,600 |
Costs and Expenses: | ||||
Operating | 2,312,932 | 723,535 | 3,730,942 | 2,189,490 |
Taxes - Production | 418,681 | 60,569 | 588,513 | 144,528 |
Depletion, Depreciation & Amortization | 565,333 | 486,568 | 745,873 | 754,585 |
Impairment of Oil and Natural Gas Properties | 800,452 | |||
Accretion of Asset Retirement Obligation | 270,155 | 257,043 | 554,620 | 355,997 |
General and Administrative | 3,220,101 | 1,914,406 | 4,126,149 | 2,443,390 |
Total Cost and Expenses | 6,787,202 | 3,442,121 | 9,746,097 | 6,688,442 |
Operating Loss | (2,067,772) | (2,849,966) | (2,928,124) | (2,272,842) |
Other Income and (Expense): | ||||
Gain on Sale of Assets | 1,143,760 | |||
Other Expense | (435,584) | (435,584) | ||
Interest Expense | (2,768,606) | (123,219) | (2,905,434) | (256,088) |
Net Loss | $ (5,271,962) | $ (2,973,185) | $ (6,269,142) | $ (1,385,170) |
Net Loss per Common Share, Basic & Diluted | $ (0.09) | $ (0.14) | $ (0.14) | $ (0.07) |
Weighted Average Number of Common Shares Outstanding, | ||||
Basic & Diluted | 60,707,380 | 21,392,277 | 46,405,985 | 21,222,387 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS DEFICIT (UNAUDITED) - USD ($) | Common Stock [Member] | Common Stock Subscribed [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Balances, March 31, 2020 at Dec. 31, 2019 | $ 20,367 | $ 18,823,926 | $ (23,782,948) | $ (4,938,655) | |
Balance, share at Dec. 31, 2019 | 20,367,277 | ||||
Net Loss | 1,588,015 | 1,588,015 | |||
Conversion of Convertible Notes | $ 1,025 | 101,475 | 102,500 | ||
Conversion of Convertible Notes (in shares) | 1,025,000 | ||||
Balances, June 30, 2020 at Mar. 31, 2020 | $ 21,392 | 18,925,401 | (22,194,933) | (3,248,140) | |
Shares, Issued, Ending Balance at Mar. 31, 2020 | 21,392,277 | ||||
Balances, March 31, 2020 at Dec. 31, 2019 | $ 20,367 | 18,823,926 | (23,782,948) | (4,938,655) | |
Balance, share at Dec. 31, 2019 | 20,367,277 | ||||
Net Loss | (1,385,170) | ||||
Balances, June 30, 2020 at Jun. 30, 2020 | $ 21,392 | 19,331,651 | (25,168,118) | (5,815,075) | |
Shares, Issued, Ending Balance at Jun. 30, 2020 | 21,392,277 | ||||
Balances, March 31, 2020 at Mar. 31, 2020 | $ 21,392 | 18,925,401 | (22,194,933) | (3,248,140) | |
Balance, share at Mar. 31, 2020 | 21,392,277 | ||||
Net Loss | (2,973,185) | (2,973,185) | |||
Stock Compensation Expense | 406,250 | 406,250 | |||
Balances, June 30, 2020 at Jun. 30, 2020 | $ 21,392 | 19,331,651 | (25,168,118) | (5,815,075) | |
Shares, Issued, Ending Balance at Jun. 30, 2020 | 21,392,277 | ||||
Balances, March 31, 2020 at Dec. 31, 2020 | $ 24,892 | 22,152,451 | (40,618,381) | (18,441,038) | |
Balance, share at Dec. 31, 2020 | 24,892,277 | ||||
Net Loss | (997,180) | (997,180) | |||
Warrants Exercised | $ 23,628 | 3,325,424 | 3,349,052 | ||
Warrants Exercised (in shares) | 23,628,185 | ||||
Issuance of Common Stock and Warrants | $ 8,995 | (13,000) | 3,139,655 | 3,135,650 | |
Issuance of Common Stock and Warrants (in shares) | 8,995,458 | ||||
Balances, June 30, 2020 at Mar. 31, 2021 | $ 57,515 | (13,000) | 28,617,530 | (41,615,561) | (12,953,516) |
Shares, Issued, Ending Balance at Mar. 31, 2021 | 57,515,920 | ||||
Balances, March 31, 2020 at Dec. 31, 2020 | $ 24,892 | 22,152,451 | (40,618,381) | (18,441,038) | |
Balance, share at Dec. 31, 2020 | 24,892,277 | ||||
Net Loss | (6,269,142) | ||||
Balances, June 30, 2020 at Jun. 30, 2021 | $ 65,661 | 40,617,930 | (46,887,523) | (6,203,932) | |
Shares, Issued, Ending Balance at Jun. 30, 2021 | 65,661,634 | ||||
Balances, March 31, 2020 at Mar. 31, 2021 | $ 57,515 | (13,000) | 28,617,530 | (41,615,561) | (12,953,516) |
Balance, share at Mar. 31, 2021 | 57,515,920 | ||||
Net Loss | (5,271,962) | (5,271,962) | |||
Warrants Exercised | $ 5,446 | 13,000 | 3,968,411 | 3,986,857 | |
Warrants Exercised (in shares) | 5,445,714 | ||||
Stock Compensation Expense | 406,250 | 406,250 | |||
Warrants Issued with Unsecured Convertible Notes | 544,824 | 544,824 | |||
Unsecured Convertible Note Conversion | $ 1,200 | 1,498,800 | 1,500,000 | ||
Unsecured Convertible Note Convertible Notes (in shares) | 1,200,000 | ||||
Right to Buy Issued with Unsecured Convertible Notes | 989,115 | 989,115 | |||
Shares and Warrants Issued for Secured Convertible Note | $ 1,500 | 4,593,000 | 4,594,500 | ||
Shares and Warrants Issued for Secured Convertible Note (in shares) | 1,500,000 | ||||
Balances, June 30, 2020 at Jun. 30, 2021 | $ 65,661 | $ 40,617,930 | $ (46,887,523) | $ (6,203,932) | |
Shares, Issued, Ending Balance at Jun. 30, 2021 | 65,661,634 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Cash Flows From Operating Activities: | ||
Net Loss | $ (6,269,142) | $ (1,385,170) |
Adjustments to Reconcile Net Loss to Net Cash | ||
Gain on Sales of Assets | (1,143,760) | |
Stock Compensation Expense | 406,250 | 406,250 |
Right to Buy Issuance Costs | 989,115 | |
Unrealized Loss on Embedded Conversion Option | 596,284 | |
Amortization of Discount on Convertible Notes | 2,579,915 | |
Amortization of Loan Issue Costs | 14,587 | 29,172 |
Changes in Right of Use Assets, net | 6,428 | |
Depreciation, Depletion and Amortization | 745,873 | 754,585 |
Impairment of Oil and Natural Gas Properties | 800,452 | |
Accretion of Asset Retirement Obligation | 554,620 | 355,997 |
Cash paid to Ovintiv (see Note 4) | (850,000) | |
Loss relating to Ovintiv Purchase Deposit (see Note 4) | 725,000 | |
Forgiveness of Payroll Protection Plan loan | (160,700) | |
Change in Operating Assets and Liabilities: | ||
Accounts Receivable | (2,348,605) | 54,662 |
Unrealized Loss (Gain) on Oil and Natural Gas Derivative Instruments | 181,725 | (1,062,775) |
Inventory | (840,819) | 56,124 |
Prepaids | 90,056 | 46,294 |
Other Assets | (206,907) | 8,366 |
Accounts Payable | 425,567 | (6,005) |
Accrued Expenses | 724,402 | 66,521 |
Net Cash Used In Operating Activities | (2,511,351) | (1,144,287) |
Cash Flows from Investing Activities: | ||
Acquisition of Oil and Natural Gas Properties | (17,869,779) | (506,000) |
Purchase of Other Fixed Assets | (83,811) | |
Investment in Related Party | (1,250,000) | |
Sinking Fund Deposit | (3,850,000) | |
Proceeds From Sale of Oil and Natural Gas Properties | 1,160,400 | |
Net Cash Provided by (Used in) Investing Activities | (23,053,590) | 654,400 |
Cash Flows from Financing Activities: | ||
Proceeds from Debt Issued | 19,599,850 | 925,700 |
Principal Payments of Debt | (3,647,286) | (150,000) |
Proceeds from Stock and Warrant Issuance | 10,471,559 | |
Net Cash Provided by Financing Activities | 26,424,123 | 775,700 |
Net Change in Cash | 859,182 | 285,813 |
Cash - Beginning of Period | 157,695 | |
Cash - End of Period | $ 1,016,877 | $ 285,813 |
BASIS OF PRESENTATION AND GOING
BASIS OF PRESENTATION AND GOING CONCERN | 6 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION AND GOING CONCERN | 1. BASIS OF PRESENTATION AND GOING CONCERN The accompanying unaudited condensed consolidated financial statements of Empire Petroleum Corporation ("Empire" or the "Company") have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the Company's financial position, the results of operations, and the cash flows for the interim period are included. All adjustments are of a normal, recurring nature. Operating results for the interim period are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The information contained in this Form 10-Q should be read in conjunction with the audited financial statements and related notes for the year ended December 31, 2020 which are contained in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on March 31, 2021. The Company has incurred significant losses in recent years. The continuation of the Company as a going concern is dependent upon the ability of the Company to attain future profitable operations and/or additional debt or equity financing until profitable operations are achieved. The ultimate recoverability of the Company's investment in oil and natural gas interests is dependent upon the existence and discovery of economically recoverable oil and natural gas reserves, the ability of the Company to obtain necessary financing to further develop the interests, and the ability of the Company to attain future profitable production. As of June 30, 2021, the Company had $ 1,016,877 of cash and working capital deficit of $ 13,177,298. The Company has proved reserves which have been acquired within the last two years. The Company plans to continue to look for oil and natural gas investments and will use a combination of debt and equity financing to fund potential acquisitions. The Company expects to also incur costs related to evaluating and acquiring oil and natural gas acquisitions for the foreseeable future. It is expected that management will attempt to raise additional capital for future investment and working capital opportunities. However, there can be no assurances the Company will be able to refinance or restructure its existing indebtedness, raise sufficient capital to fund its strategic development plans, and meet its various capital needs. As a result of these uncertainties, management has concluded there is substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements have been prepared on the basis of United States generally accepted accounting principles applicable to a company with continuing operations, which assume that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its obligations in the normal course of operations. Management believes the going concern assumption to be appropriate for these financial statements. If the going concern assumption were not appropriate for these financial statements, then adjustments might be necessary to adjust the carrying value of assets and liabilities and reported expenses. The Company’s impairment assessment of proved and unproved mineral properties is based on several factors including oil and gas spot market prices and estimated futures prices that existed at June 30, 2021. In 8,671,303 In the event crude oil or natural gas prices decline significantly, there is the risk that, among other things: the Company’s revenues, cash flows and profitability may decline substantially, which could also indirectly impact expected production by reducing the amount of funds available to acquire future mineral interests; • reserves relating to the Company’s proved properties may become uneconomic to produce resulting in impairment of proved properties; and • operators and other working interest owners are unable to execute their drilling and exploration programs resulting in lower production or inability to prove reserves on unproved properties The occurrence of certain of these events may have a material adverse effect on the Company's business, results of operations and financial condition. In early March 2020 there was a global outbreak of COVID-19 which has continued and resulted in changes in global supply and demand of certain mineral and energy products. These changes, including the magnitude and length of the economic downturn and any potential resulting direct and indirect negative impact to the Company cannot be determined, but they could have a prospective material impact to the Company’s acquisition and project development activities, and cash flows and liquidity. As of June 30, 2021, the Company had twenty nine employees. No independent Board members received compensation from the Company in the first six months of 2020; in 2021 independent Board members were compensated $ 33,000 84,000 227,000 116,000 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of consolidation Use of estimates in the preparation of financial statements Interim financial statements Certain disclosures have been condensed in or omitted from these condensed consolidated financial statements. Accordingly, these condensed notes to the condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020. Inventory Convertible Debt The Company accounts for conversion options embedded in a host instrument in accordance with ASC 815, Derivatives and Hedging ("ASC 815). ASC 815 requires a reporting entity to bifurcate conversion options embedded in convertible debt and to account for them as a free standing derivative when the embedded feature is not clearly and closely related to the host instrument and meets the definition of a derivative and does not qualify for the scope exception from derivative accounting. For conversion options embedded in a host instrument which are required to be bifurcated and qualify for the scope exception from derivative accounting are accounted for under other models as required by ASC 470-20, Debt with Conversion and Other Options. Revenue recognition 2,800,000 800,000 Fair value measurements Impairment of oil and natural gas properties - The fair value of asset retirement obligations is included in proved oil and natural gas properties with a corresponding liability. The fair value was determined based on a discounted cash flow model, which included assumptions of the estimated current abandonment costs, discount rate, inflation rate and timing associated with the incurrence of these costs. The inputs used to value oil and natural gas properties for impairments and asset retirement obligations require significant judgment and estimates made by management and represent Level 3 inputs. Embedded conversion feature Investment in related party – Financial instruments and other- Related Party Transactions Related Party Disclosures |
INVESTMENT IN RELATED PARTY
INVESTMENT IN RELATED PARTY | 6 Months Ended |
Jun. 30, 2021 | |
Investment In Related Party | |
INVESTMENT IN RELATED PARTY | 3. INVESTMENT IN RELATED PARTY Concurrent with the acquisition and financing of the XTO properties (See Notes 7 and 11), the Company made an investment in Energy Evolution Fund LP, an affiliate of Energy Evolution Ltd, a related party, in the amount of $ 1,250,000 August 19, 2021 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 4. PROPERTY AND EQUIPMENT On January 27, 2020, the Company purchased lease interests in approximately 4,936 500,000 In February, 2020, the Company in two transactions sold all of its interest in leases of approximately 337 1,160,400 1,143,760 On April 6, 2020 the Company purchased oil and natural gas properties in Texas (see Note 6). In May, 2021 the Company purchased oil and natural gas properties in New Mexico (see Note 7). NYMEX strip prices experienced significant volatility in 2020, resulting in a significant decrease in value of the Company’s economically recoverable proved oil and natural gas reserves. As such, the carrying amount of the Company’s proved oil and natural gas properties exceeded the expected undiscounted future net cash flows for certain leases, resulting in impairment charges against earnings of $ 800,452 The aggregate capitalized costs of oil and natural gas properties as of June 30, 2021, are as follows: Proved producing wells $ 18,632,940 Proved undeveloped 2,232,358 Lease, well and gathering equipment 4,913,874 Asset retirement obligation 18,696,199 Unproved leasehold costs 492,608 Gross capitalized costs 44,967,979 Less: accumulated depreciation, depletion and impairment (15,880,231 ) $ 29,087,748 Other property and equipment consists of operating lease asset (See Note 11), vehicles, office furniture and equipment. Other property and equipment, at cost $ 1,347,631 Less: accumulated depreciation (101,916 ) Oher property and equipment, net $ 1,245,715 |
OVINTIV OIL AND NATURAL GAS PRO
OVINTIV OIL AND NATURAL GAS PROPERTIES | 6 Months Ended |
Jun. 30, 2021 | |
Ovintiv Oil And Natural Gas Properties | |
OVINTIV OIL AND NATURAL GAS PROPERTIES | 5. OVINTIV OIL AND NATURAL GAS PROPERTIES On March 3, 2020 the Company entered into a Purchase and Sale Agreement (“the Ovintiv Agreement”) with Ovintiv USA, Inc. and several related companies to purchase certain oil and natural gas properties in Montana and North Dakota. The purchase price was $ 8,500,000 January 1, 2020 April 30, 2020 The Company made an $ 850,000 50,000 725,000 |
ACQUISITION OF PARDUS OIL AND N
ACQUISITION OF PARDUS OIL AND NATURAL GAS PROPERTIES | 6 Months Ended |
Jun. 30, 2021 | |
Extractive Industries [Abstract] | |
ACQUISITION OF PARDUS OIL AND NATURAL GAS PROPERTIES | 6. ACQUISITION OF PARDUS OIL AND NATURAL GAS PROPERTIES On April 6, 2020 the Company, through its wholly owned subsidiary, Empire Texas, entered into a Purchase and Sale Agreement (“the Pardus Agreement”) with Pardus Oil & Gas, LLC and Pardus Oil & Gas Operating GP, LLC to purchase certain oil and natural gas properties in Texas comprising 139 gross wells and approximately 30,000 net acres, 77.3 miles of gathering lines and pipelines and related facilities and equipment, and all general and limited partner interest in Pardus Oil & Gas Operating, LP. 1,584,042 40,000 1,624,042 April 7, 2020 The following table sets forth the Company's purchase price allocation: Fair Value of Assets Acquired Accounts receivable $ 100,208 Inventory of oil in tanks 147,297 Deposits 378,000 Equipment and gathering lines 109,200 Oil and natural gas properties 10,397,821 Total Assets Acquired $ 11,132,526 Fair Value of Liabilities Assumed Accounts payable – trade $ 20,455 Note payable – current 378,000 Royalty suspense 1,185,587 Asset retirement obligations 9,508,484 Total liabilities assumed $ 11,092,526 Purchase Price $ 40,000 The fair values of assets acquired and liabilities assumed were based on the following key inputs: Oil and natural gas properties The value of oil and gas properties was based on an allocation of the purchase price which included assignment of values to the other identifiable assets acquired and liabilities assumed. The fair value of asset retirement obligations are included in proved oil and natural gas properties with a corresponding liability in the table above. The fair value was determined based on a discounted cash flow model, which included assumptions of the estimated current abandonment costs, discount rate, inflation rate and timing associated with the incurrence of these costs. The inputs used to value oil and natural gas properties and asset retirement obligations require significant judgment and estimates made by management and represent non-recurring Level 3 inputs Financial instruments and other The fair values determined for accounts payable - trade were equivalent to the carrying value due to their short-term nature and include liabilities primarily related to well activity prior to close. Inventory acquired as a part of the acquisition was based on oil in tanks at the date of acquisition multiplied by the day’s spot price. |
ACQUISITION OF XTO OIL AND NATU
ACQUISITION OF XTO OIL AND NATURAL GAS PROPERTIES | 6 Months Ended |
Jun. 30, 2021 | |
Acquisition Of Xto Oil And Natural Gas Properties | |
ACQUISITION OF XTO OIL AND NATURAL GAS PROPERTIES | 7. ACQUISITION OF XTO OIL AND NATURAL GAS PROPERTIES On March 12, 2021 the Company, through its wholly owned subsidiary Empire New Mexico, entered into a purchase and sale agreement with XTO Holdings, LLC (a subsidiary of ExxonMobil) (the “Seller’) to acquire, among other things, certain oil and natural gas properties in New Mexico. The purchase price was $ 17,800,000 1,780,000 May 14, 2021 January 1, 2021 The XTO acquisition has been accounted for as an asset acquisition using the acquisition method of accounting under FASB ASC 805, Business Combinations (“ASC 805”). Under the accounting for asset acquisitions, the acquisition is recorded using a cost accumulation and allocation model under which the cost of the acquisition is allocated on a relative fair value basis to the assets acquired and liabilities assumed. For asset acquisitions under ASC 805, acquisition-related transaction costs are capitalized as a component of the cost of the assets acquired. As a condition of the sale, the Company purchased a $ 5,000,000 3,750,000 3,750,000 4 100,000 1,250,000 The following table sets forth the Company's preliminary purchase price allocation: Preliminary Fair Value of Assets Acquired Inventory of oil in tanks 318,546 Vehicles 179,156 Asset retirement obligation 6,117,709 Oil and natural gas properties 17,662,402 Total Preliminary Assets Acquired $ 24,277,813 Preliminary Fair Value of Liabilities Assumed Royalty suspense 290,325 Asset retirement obligations 6,117,709 Total Preliminary Liabilities Assumed $ 6,408,034 Purchase Price $ 17,869,779 The value of oil and gas properties was based on an allocation of the purchase price which included assignment of values to the other identifiable assets acquired and liabilities assumed. The value of inventory, vehicles, and royalty suspense was based on carrying value at the time of the acquisition. The fair value of asset retirement obligations are included in proved oil and natural gas properties with a corresponding liability in the table above. The fair value was determined based on a discounted cash flow model, which included assumptions of the estimated current abandonment costs, discount rate, inflation rate and timing associated with the incurrence of these costs. |
JOINT DEVELOPMENT AGREEMENT
JOINT DEVELOPMENT AGREEMENT | 6 Months Ended |
Jun. 30, 2021 | |
Joint Development Agreement | |
JOINT DEVELOPMENT AGREEMENT | 8. JOINT DEVELOPMENT AGREEMENT On August 6, 2020 the Company, through its wholly owned subsidiary, Empire Texas, entered into a joint development agreement (the “JDA”) with Petroleum & Independent Exploration, LLC and related entities (“PIE”), a related party (See Note 14), dated August 1, 2020. Under the terms of the JDA, PIE will perform recompletion or workover on specified mutually agreed upon wells (“Workover Wells”) owned by Empire Texas. To fund the work, PIE entered into a term loan agreement with Empire Texas dated August 1, 2020, whereby PIE will loan up to $ 2,000,000 6 August 7, 2024 446,000 As part of the JDA, Empire Texas will assign to PIE a combined 85% working and revenue interest in the Workover Wells; an assignment was completed in October 2020 for the initial three Workover Wells. Of the assigned interest, 70% working and revenue interest will be used to repay the obligations under the term loan agreement. Once the term loan is repaid, PIE will reassign a 35% working and revenue interest to Empire Texas in each of the Workover Wells and retain a 50% working and revenue interest In addition, PIE and Empire entered into a Securities Purchase Agreement (“Securities Agreement”) whereby PIE purchased for $525,000 (a) 3,500,000 shares of Empire common stock, (b) warrants to purchase 2,625,000 shares of Empire common stock at an exercise price of $0.20 per share, (c) warrants to purchase 1,800,000 shares of Empire common stock at an exercise price of $0.25 per share, (d) warrants to purchase 8,136,518 shares of Empire common stock at an exercise price of $0.10 per share, and (e) warrants to purchase up to 11,066,667 shares of Empire common stock at an exercise price of $0.141 per share, pursuant to various vesting provisions as detailed in the Securities Agreement. 3,349,052 |
COMMODITY DERIVATIVE FINANCIAL
COMMODITY DERIVATIVE FINANCIAL INSTRUMENTS | 6 Months Ended |
Jun. 30, 2021 | |
Investments, All Other Investments [Abstract] | |
COMMODITY DERIVATIVE FINANCIAL INSTRUMENTS | 9. COMMODITY DERIVATIVE FINANCIAL INSTRUMENTS The Company uses derivative financial instruments to manage its exposure to commodity price fluctuations. Commodity derivative instruments are used to reduce the effect of volatility of price changes on the oil and natural gas the Company produces and sells. The Company does not enter into derivative financial instruments for speculative or trading purposes. The Company’s derivative financial instruments consist of oil swaps. The Company does not designate its derivative instruments to qualify for hedge accounting. Accordingly, the Company reflects changes in the fair value of its derivative instruments in its condensed consolidated statements of operations as they occur. Unrealized gains and losses related to the swap contracts are recognized and recorded as an asset or liability on the Company’s condensed consolidated balance sheets. The following table summarizes the net realized and unrealized amounts reported in earnings related to the commodity derivative instruments for the three and six months ended June 30, 2021 and 2020: Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020 Gain (loss) on derivatives: Oil derivatives $ (182,034 ) (402,374 ) $ (539,949 ) $ 2,106,671 Natural gas derivatives — — — — Total $ (182,034 ) (402,374 ) $ (539,949 ) $ 2,106,671 The following represents the Company’s net cash receipts from (payments on) derivatives for the three and six months ended June 30, 2021 and 2020: Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020 Net cash received from payments on derivatives Oil derivatives $ (230,279 ) $ 510,609 $ (358,224 ) $ 1,043,894 Natural gas derivatives — — — — Total $ (230,279 ) $ 510,609 $ (358,224 ) $ 1,043,894 The following table sets forth the Company’s outstanding derivative contracts at June 30, 2021. The Company has no outstanding natural gas derivatives. 3 rd 4 th 2021 Oil Swaps: Quarterly volume (MBbl) 5.20 — Price per Bbl $ 38.25 — |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
DEBT | 10. DEBT The following table represents the Company’s outstanding debt June 30, 2021 December 31, 2020 Senior Revolver Loan Agreement $ 7,669,500 $ 8,124,000 2020 SBA Payroll Protection Plan loan — 160,700 2021 SBA Payroll Protection Plan loan 106,850 — Unsecured Promissory Note – Pardus — 378,000 PIE Joint Development Agreement loan, related party 462,959 315,273 Various Vehicle and Equipment notes 242,379 57,935 Secured Convertible Note, related party (see Note 11) 13,450,000 — Unsecured Convertible Notes (see Note 11) 1,743,000 — Total Debt 23,674,688 9,035,908 Unamortized Debt Issue Costs — (14,587 ) Unamortized Discount (8,090,088 ) — Total Debt net of Debt Issue Costs and Discount 15,584,600 9,021,321 Less current maturities 7,141,193 1,301,618 Total Long-Term Debt $ 8,443,407 $ 7,719,703 On March 10, 2021 the Company entered into the Third Amendment to its Senior Revolver Loan Agreement (“the Amended Agreement”) with CrossFirst Bank (“CrossFirst”). The Amended Agreement commitment amount is $ 8,520,000 180,000 June 30, 2021 20,000,000 Prime plus 150 basis points 4.75 March 27, 2022 80 EBITDAX to interest expense of at least 3:1 and funded debt to EBITDAX of 6:1 on a trailing twelve-month basis and reducing quarterly to 4:1 as of March 31, 2022 and thereafter. 7,669,500 March 27, 2024 During 2016 and 2017, the Company issued $ 260,000 157,500 1,575,000 102,500 1,025,000 All of the Senior Unsecured Promissory Notes have been converted to common stock of the Company as of June 30, 2020. On April 1, 2020, in conjunction with the purchase of assets from Pardus Oil & Gas, LLC (see Note 5), the Company entered into a unsecured promissory note agreement with the seller in the amount of $ 378,000 The note was payable in one installment on April 1, 2021 and bears interest at the one-year LIBOR rate (1% as of June 30, 2021). On May 5, 2020, the Company received an SBA Payroll Protection Plan (“PPP”) loan for $ 160,700 May 5, 2022 1 In June, 2021 the Company was informed that the SBA had forgiven the entire loan balance. In August 2020, concurrent with the Joint Development Agreement with Petroleum and Independent Exploration, LLC (“PIE”), a related party, the Company entered into a term loan agreement dated August 1, 2020, whereby PIE will loan up to $ 2,000,000 6 August 7, 2024 In addition, the Company assigned a 70% working and revenue interest to PIE in the designated wells which will be applied to repayment of the loan. On April 30,2021 the Company received a Second Draw SBA Payroll Protection Plan (“PPP”) loan for $ 106,850 April 30, 2026 1 The Company has an outstanding Letter of Credit in the amount of $ 3,750,000 3,750,000 4 |
CONVERTIBLE NOTES PAYABLE
CONVERTIBLE NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES PAYABLE | 11. CONVERTIBLE NOTES PAYABLE On May 14, 2021 Empire New Mexico entered into a Senior Secured Convertible Note Agreement (the “Secured Note”) in the amount of $ 16,250,000 December 31, 2021 3.8 The Secured Note provides that up to 40% of the balance, together with accrued interest, can be converted into the Company’s common stock at the lesser of $1.25 per share or the offering price if the Company has a subsequent capital raise or an aggregate of 5,200,000 shares of common stock (without giving effect to any interest that may be converted). 0.25 if any amount is due on the Secured Note as of October 1, 2021 or the Company has not filed a registration statement with the United States Securities and Exchange Commission within 120 days of the Secured Note. If the registration statement described above is not filed within 120 days of the date of the Secured Note, Energy Evolution has the option to convert 50% of the Secured Note amount into common stock of the Company at a rate of $1.00 per share. 8,125,000 In addition, if any principal amount of the Secured Note remains outstanding on October 1, 2021, the conversion price shall be reduced by $0.25, provided the conversion price cannot be reduced by more than $0.25. no 2,800,000 The embedded conversion option has been bifurcated and accounted for separately as a derivative financial instrument. The separated derivative was initially recorded at fair value at the inception date and revalued as of June 30, 2021 resulting in a fair value of $ 5,530,677 6,126,961 596,284 As partial consideration for the issuance of the Secured Note, Energy Evolution received a closing fee of 1,500,000 3,000,000 1.00 May 14, 2022 10,125,177 5,530,677 1,500 2,773,500 1,819,500 3,000,000 2,289,966 In May, 2021 the Empire New Mexico entered into $ 3,243,000 1,500,000 May 9, 2022 5 The Unsecured Note holders may convert their notes to common stock of the Company at the lesser of $1.25 per share or the price per share offered by the Company if the Company has a future capital raise for an aggregate 2,594,400 shares of common stock (without giving effect to any interest that may be converted). (a) the 20-day weighted average price of the Common Stock trades above $3.50 per share on the OTCQB or any exchange and (b) the Registration Statement has become effective. The Unsecured Notes may be prepaid without penalty, but Empire New Mexico must provide at least 30 days’ prior written notice so the holders thereof may exercise their conversion rights. 1,500,000 1,200,000 The Company determined the embedded conversion features of the Unsecured Notes were equity-classified financing instrument. The fair value of the conversion feature was determined using a beneficial conversion model based on the a 60-day weighted average stock price and the maximum number of shares to be received if converted. As issuance, the amount recorded to additional paid in capital was $ 544,824 289,949 As an inducement for investors to enter into the Unsecured Convertible Notes, the Company’s Chief Executive Officer and President collectively offered to each investor the right to purchase a number of shares of common stock equal to 40 0.75 600,000 300,000 0.25 989,155 |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
LEASES | 12. LEASES As a lessee, the Company leases its corporate office headquarters in Tulsa, Oklahoma and three field offices. The leases expire between 2024 and 2027. The corporate office has an option to renew for an additional five-year term. The option to renew the lease is generally not considered reasonably certain to be exercised. Therefore, the period covered by such optional period is not included in the determination of the term of the lease and the lease payments during these periods are similarly excluded from the calculation of right-of-use lease asset and lease liability balances. The Company recognizes right-of use lease expense on a straight-line basis, except for certain variable expenses that are recognized when the variability is resolved, typically during the period in which they are paid. Variable right-of-use lease payments typically include charges for property taxes, insurance, and variable payments related to non-lease components, including common area maintenance. Right of use lease expense was $ 78,712 72,045 Supplemental balance sheet information related to the right of use leases as of June 30, 2021: Operating lease asset (included in Other Property and Equipment $ 796,940 Current portion of lease liability $ 145,433 Long term lease liability 684,426 Total right of use lease liabilities $ 829,859 The weighted average remaining term for the Company’s right of use leases is 4.7 Maturities of lease liabilities as of June 30, 2021: 2021 $ 95,920 2022 212,175 2023 215,124 2024 215,837 2025 243,260 Total lease payments 982,316 Less imputed interest (153,748 ) Total lease obligation $ 828,568 |
EQUITY
EQUITY | 6 Months Ended |
Jun. 30, 2021 | |
Equity [Abstract] | |
EQUITY | 13. EQUITY Diluted Earnings per Share ("EPS") gives effect to all dilutive potential common shares outstanding during the period. The computation of Diluted EPS does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect on losses. As a result, if there is a loss from continuing operations, Diluted EPS is computed in the same manner as Basic EPS. At June 30, 2021 and 2020, the Company had 10,000,000 5,004,167 On April 3, 2019, the Board of Directors of the Company adopted the Empire Petroleum Corporation 2019 Stock Option Plan (the "Stock Option Plan"). The total number of shares of common stock that may be issued pursuant to stock options under the Stock Option Plan is 10,000,000 2,500,000 0.33 1,250,000 625,000 April, 2029 213 2.32 5.375 812,500 406,250 On August 7, 2020 concurrently with the Joint Development Agreement with Petroleum & Independent Exploration, LLC and related entities (“PIE”), the companies entered into a Securities Purchase Agreement (“Securities Agreement”) whereby PIE purchased for $525,000 (a) 3,500,000 shares of Empire common stock, (b) warrants to purchase 2,625,000 shares of Empire common stock at an exercise price of $0.20 per share, (c) warrants to purchase 1,800,000 shares of Empire common stock at an exercise price of $0.25 per share, (d) warrants to purchase 8,136,518 shares of Empire common stock at an exercise price of $0.10 per share, and (e) warrants to purchase up to 11,066,667 shares of Empire common stock at an exercise price of $ 0.141 147 19 4 years 450,848 3,349,052 During February and March 2021, the Company issued to a group of accredited investors 8,993,858 shares of its common stock and warrants to purchase 8,993,858 shares of its common stock for $ .50 December 31, 2022 3,147,850 . The value allocated to the warrants was the fair value determined using the Black-Scholes option valuation with the following assumptions: no dividend yield, expected annual volatility of 180 %, risk free interest rate of .14 % and an expected useful life of 21 months. The fair value of the warrants of $ 2,350,407 was allocated to Paid in Capital. For the six months ended June 30, 2021, warrants for 1,547,314 In connection with the purchase of XTO assets (See Note 7) the Company issued a Senior Secured Convertible Note due December 31, 2021 16,250,000 Empire issued to Energy Evolution Ltd (i) 1,500,000 shares of common stock along with (ii) a warrant certificate to purchase up to 3,000,000 shares of common stock at an exercise price of $1.00 per Warrant Share until May 14, 2022. Under the warrant certificate, the exercise price is subject to customary downward adjustments. 10,125,177 Additionally, in conjunction with the purchase of XTO assets (See Note 7), the Company entered into $ 3,243,000 May 9, 2022 5 1.25 1,500,000 1,200,000 544,824 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 14. RELATED PARTY TRANSACTIONS The Energy Evolution Master Fund, Ltd. (“Energy Evolution”) is a related party of the Company as it beneficially owns approximately 21.4 23.58 In March 2021, the majority owner of PIE, through the exercise of warrants, became a significant shareholder of the Company’s outstanding shares of stock (See Note 12). The Company has a joint development agreement with PIE to perform recompletion or workover on specified mutually agreed upon wells (See Note 8). As of June 30, 2021, the Company has incurred obligations of $ 462,959 In connection with the purchase of XTO assets (See Note 7) the Company issued a Senior Secured Convertible Note due December 31, 2021, in the aggregate principal amount $ 16,250,000 Empire issued to Energy Evolution Ltd (i) 1,500,000 shares of common stock along with (ii) a warrant certificate to purchase up to 3,000,000 shares of common stock at an exercise price of $1.00 per warrant share until May 14, 2022. 2,800,000 56,472 Additionally, Energy Evolution Ltd, provided an Unsecured Convertible Note in the principal balance of $ 1,500,000 1,200,000 Energy Evolution, Ltd also purchased 600,000 Concurrent with the acquisition and financing of the XTO assets (See Note 7), the Company made an investment in Energy Evolution Fund LP, an affiliate of Energy Evolution Ltd, a related party, in the amount of $ 1,250,000 August 19, 2021 |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 6 Months Ended |
Jun. 30, 2021 | |
Supplemental Cash Flow Information | |
SUPPLEMENTAL CASH FLOW INFORMATION | 15. SUPPLEMENTAL CASH FLOW INFORMATION Supplemental Cash Flow Information 2021 2020 Cash Paid for Interest $ 469,638 $ 306,333 Non-cash Investing and Financing Activities: Non-cash Additions to Asset Retirement Obligations $ 6,117,709 $ 9,508,484 Unsecured Convertible Note conversion $ 1,500,000 $ — Purchases of oil and natural gas properties and deposits in accounts and notes payable, royalty suspense, and contingent payable to seller $ 290,325 $ 2,569,863 Note payable issued - PIE Agreement (see Note 8) $ 147,686 $ — Equipment purchased utilizing notes payable $ 199,226 $ — Forgiveness of PPP loan $ 160,700 $ — Shares and warrants issued for Secured Convertible Note $ 4,594,500 $ — |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 16. COMMITMENTS AND CONTINGENCIES From time to time, the Company is subject to various legal proceedings arising in the ordinary course of business, including proceedings for which the Company may not have insurance coverage. While many of these matters involve inherent uncertainty, as of the date hereof, the Company does not currently believe that any such legal proceedings will have a material adverse effect on the Company's business, financial position, results of operations or liquidity. The Company is subject to extensive federal, state and local environmental laws and regulations. These laws, among other things, regulate the discharge of materials into the environment and may require the Company to remove or mitigate the environmental effects of the disposal or release of petroleum or chemical substances at various sites. Management believes no materially significant liabilities of this nature existed as of June 30, 2021. On March 22, 2021 the Company, through its wholly owned subsidiary, Empire ND Acquisitions, LLC, entered into a purchase and sale agreement with 31 Group, LLC to acquire among other things, certain oil and gas properties in North Dakota. The purchase price was $ 900,000 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 17. SUBSEQUENT EVENTS On July 7, 2021 the Company entered into the Fourth Amendment to its Senior Revolver Loan Agreement (“the Amended Agreement”) with CrossFirst Bank (“CrossFirst”). The Amended Agreement revolver extends the maturity of the loan to March 27, 2024 7,980,000 reduced by $300,000 each calendar quarter beginning September 30, 2021. EBITDAX to interest expense of at least 3:1 and funded debt to EBITDAX of 5:1 on a trailing twelve-month basis. On July 22, 2021 the Company and 31 Group, LLC entered into a Mutual Termination Agreement which terminated the purchase and sale agreement of March 22, 2021 between the companies. (See Note 16). On August 19, 2021 the Company entered into a Mutual Termination Agreement with the Energy Evolution Fund, LP to terminate and rescind the Company’s $ 1,250,000 Between July 1, 2021 and August 23, 2021 warrants to purchase 571,429 285,714 700,000 On August 18, 2021 the Board of Directors of the Company approved the compensation plan for non-employee members of the Company’s Board of Directors. Under the plan, each non-employee Director will receive a Board fee of $ 80,000 120,000 December 31, 2021 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Principles of consolidation | Principles of consolidation |
Use of estimates in the preparation of financial statements | Use of estimates in the preparation of financial statements |
Interim financial statements | Interim financial statements Certain disclosures have been condensed in or omitted from these condensed consolidated financial statements. Accordingly, these condensed notes to the condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020. |
Inventory | Inventory |
Convertible Debt | Convertible Debt The Company accounts for conversion options embedded in a host instrument in accordance with ASC 815, Derivatives and Hedging ("ASC 815). ASC 815 requires a reporting entity to bifurcate conversion options embedded in convertible debt and to account for them as a free standing derivative when the embedded feature is not clearly and closely related to the host instrument and meets the definition of a derivative and does not qualify for the scope exception from derivative accounting. For conversion options embedded in a host instrument which are required to be bifurcated and qualify for the scope exception from derivative accounting are accounted for under other models as required by ASC 470-20, Debt with Conversion and Other Options. |
Revenue recognition | Revenue recognition 2,800,000 800,000 |
Fair value measurements | Fair value measurements Impairment of oil and natural gas properties - The fair value of asset retirement obligations is included in proved oil and natural gas properties with a corresponding liability. The fair value was determined based on a discounted cash flow model, which included assumptions of the estimated current abandonment costs, discount rate, inflation rate and timing associated with the incurrence of these costs. The inputs used to value oil and natural gas properties for impairments and asset retirement obligations require significant judgment and estimates made by management and represent Level 3 inputs. Embedded conversion feature Investment in related party – Financial instruments and other- |
Related Party Transactions | Related Party Transactions Related Party Disclosures |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
The aggregate capitalized costs of oil and natural gas properties as of June 30, 2021, are as follows: | The aggregate capitalized costs of oil and natural gas properties as of June 30, 2021, are as follows: Proved producing wells $ 18,632,940 Proved undeveloped 2,232,358 Lease, well and gathering equipment 4,913,874 Asset retirement obligation 18,696,199 Unproved leasehold costs 492,608 Gross capitalized costs 44,967,979 Less: accumulated depreciation, depletion and impairment (15,880,231 ) $ 29,087,748 |
Other property and equipment consists of operating lease asset (See Note 11), vehicles, office furniture and equipment. | Other property and equipment consists of operating lease asset (See Note 11), vehicles, office furniture and equipment. Other property and equipment, at cost $ 1,347,631 Less: accumulated depreciation (101,916 ) Oher property and equipment, net $ 1,245,715 |
ACQUISITION OF PARDUS OIL AND_2
ACQUISITION OF PARDUS OIL AND NATURAL GAS PROPERTIES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Extractive Industries [Abstract] | |
The following table sets forth the Company's purchase price allocation: | The following table sets forth the Company's purchase price allocation: Fair Value of Assets Acquired Accounts receivable $ 100,208 Inventory of oil in tanks 147,297 Deposits 378,000 Equipment and gathering lines 109,200 Oil and natural gas properties 10,397,821 Total Assets Acquired $ 11,132,526 Fair Value of Liabilities Assumed Accounts payable – trade $ 20,455 Note payable – current 378,000 Royalty suspense 1,185,587 Asset retirement obligations 9,508,484 Total liabilities assumed $ 11,092,526 Purchase Price $ 40,000 |
ACQUISITION OF XTO OIL AND NA_2
ACQUISITION OF XTO OIL AND NATURAL GAS PROPERTIES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Acquisition Of Xto Oil And Natural Gas Properties | |
The following table sets forth the Company's preliminary purchase price allocation: | The following table sets forth the Company's preliminary purchase price allocation: Preliminary Fair Value of Assets Acquired Inventory of oil in tanks 318,546 Vehicles 179,156 Asset retirement obligation 6,117,709 Oil and natural gas properties 17,662,402 Total Preliminary Assets Acquired $ 24,277,813 Preliminary Fair Value of Liabilities Assumed Royalty suspense 290,325 Asset retirement obligations 6,117,709 Total Preliminary Liabilities Assumed $ 6,408,034 Purchase Price $ 17,869,779 |
COMMODITY DERIVATIVE FINANCIA_2
COMMODITY DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Investments, All Other Investments [Abstract] | |
The following table summarizes the net realized and unrealized amounts reported in earnings related to the commodity derivative instruments for the three and six months ended June 30, 2021 and 2020: | The following table summarizes the net realized and unrealized amounts reported in earnings related to the commodity derivative instruments for the three and six months ended June 30, 2021 and 2020: Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020 Gain (loss) on derivatives: Oil derivatives $ (182,034 ) (402,374 ) $ (539,949 ) $ 2,106,671 Natural gas derivatives — — — — Total $ (182,034 ) (402,374 ) $ (539,949 ) $ 2,106,671 |
The following represents the Company’s net cash receipts from (payments on) derivatives for the three and six months ended June 30, 2021 and 2020: | The following represents the Company’s net cash receipts from (payments on) derivatives for the three and six months ended June 30, 2021 and 2020: Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020 Net cash received from payments on derivatives Oil derivatives $ (230,279 ) $ 510,609 $ (358,224 ) $ 1,043,894 Natural gas derivatives — — — — Total $ (230,279 ) $ 510,609 $ (358,224 ) $ 1,043,894 |
The Company has no outstanding natural gas derivatives. | The following table sets forth the Company’s outstanding derivative contracts at June 30, 2021. The Company has no outstanding natural gas derivatives. 3 rd 4 th 2021 Oil Swaps: Quarterly volume (MBbl) 5.20 — Price per Bbl $ 38.25 — |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
The following table represents the Company’s outstanding debt | The following table represents the Company’s outstanding debt June 30, 2021 December 31, 2020 Senior Revolver Loan Agreement $ 7,669,500 $ 8,124,000 2020 SBA Payroll Protection Plan loan — 160,700 2021 SBA Payroll Protection Plan loan 106,850 — Unsecured Promissory Note – Pardus — 378,000 PIE Joint Development Agreement loan, related party 462,959 315,273 Various Vehicle and Equipment notes 242,379 57,935 Secured Convertible Note, related party (see Note 11) 13,450,000 — Unsecured Convertible Notes (see Note 11) 1,743,000 — Total Debt 23,674,688 9,035,908 Unamortized Debt Issue Costs — (14,587 ) Unamortized Discount (8,090,088 ) — Total Debt net of Debt Issue Costs and Discount 15,584,600 9,021,321 Less current maturities 7,141,193 1,301,618 Total Long-Term Debt $ 8,443,407 $ 7,719,703 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Supplemental balance sheet information related to the right of use leases as of June 30, 2021: | Supplemental balance sheet information related to the right of use leases as of June 30, 2021: Operating lease asset (included in Other Property and Equipment $ 796,940 Current portion of lease liability $ 145,433 Long term lease liability 684,426 Total right of use lease liabilities $ 829,859 |
Maturities of lease liabilities as of June 30, 2021: | Maturities of lease liabilities as of June 30, 2021: 2021 $ 95,920 2022 212,175 2023 215,124 2024 215,837 2025 243,260 Total lease payments 982,316 Less imputed interest (153,748 ) Total lease obligation $ 828,568 |
SUPPLEMENTAL CASH FLOW INFORM_2
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Supplemental Cash Flow Information | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information 2021 2020 Cash Paid for Interest $ 469,638 $ 306,333 Non-cash Investing and Financing Activities: Non-cash Additions to Asset Retirement Obligations $ 6,117,709 $ 9,508,484 Unsecured Convertible Note conversion $ 1,500,000 $ — Purchases of oil and natural gas properties and deposits in accounts and notes payable, royalty suspense, and contingent payable to seller $ 290,325 $ 2,569,863 Note payable issued - PIE Agreement (see Note 8) $ 147,686 $ — Equipment purchased utilizing notes payable $ 199,226 $ — Forgiveness of PPP loan $ 160,700 $ — Shares and warrants issued for Secured Convertible Note $ 4,594,500 $ — |
BASIS OF PRESENTATION AND GOI_2
BASIS OF PRESENTATION AND GOING CONCERN (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items] | ||||||
Cash and Cash Equivalents, at Carrying Value | $ 1,016,877 | $ 285,813 | $ 1,016,877 | $ 285,813 | $ 157,695 | |
Working capital deficit | 13,177,298 | 13,177,298 | ||||
mpairment of oil and natural gas properties | 800,452 | $ 8,671,303 | ||||
Morrisett [Member] | ||||||
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items] | ||||||
Officers and employees compensation | 227,000 | 116,000 | ||||
Pritchard [Member] | ||||||
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items] | ||||||
Officers and employees compensation | 227,000 | $ 116,000 | ||||
Minimum [Member] | ||||||
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items] | ||||||
Officers and employees compensation | 33,000 | |||||
Maximum [Member] | ||||||
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items] | ||||||
Officers and employees compensation | $ 84,000 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Accounting Policies [Abstract] | |
Receivables from contracts | $ 2,800,000 |
Joint interest billings amount | $ 800,000 |
INVESTMENT IN RELATED PARTY (De
INVESTMENT IN RELATED PARTY (Details Narrative) - Energy Evolution Ltd [Member] | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Related Party Transaction [Line Items] | |
Investment in affiliate | $ 1,250,000 |
Terminated date | Aug. 19, 2021 |
The aggregate capitalized costs
The aggregate capitalized costs of oil and natural gas properties as of June 30, 2021, are as follows: (Details) - Oil And Natural Gas [Member] | Jun. 30, 2021USD ($) |
Guarantor Obligations [Line Items] | |
Proved producing wells | $ 18,632,940 |
Proved undeveloped | 2,232,358 |
Lease, well and gathering equipment | 4,913,874 |
Asset retirement obligation | 18,696,199 |
Unproved leasehold costs | 492,608 |
Gross capitalized costs | 44,967,979 |
Less: accumulated depreciation, depletion and impairment | (15,880,231) |
$ 29,087,748 |
Other property and equipment co
Other property and equipment consists of operating lease asset (See Note 11), vehicles, office furniture and equipment. (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Abstract] | ||
Other property and equipment, at cost | $ 1,347,631 | |
Less: accumulated depreciation | (101,916) | |
Oher property and equipment, net | $ 1,245,715 | $ 662,017 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details Narrative) | Jan. 27, 2020USD ($)a | Feb. 29, 2020USD ($)a | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($) |
Related Party Transaction [Line Items] | |||||||
Impairment of Oil and Natural Gas Properties | $ 800,452 | $ 8,671,303 | |||||
Montana [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Purchased lease interests acres | a | 4,936 | ||||||
Payment for lease interests | $ 500,000 | ||||||
Consultant [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Purchased lease interests acres | a | 337 | ||||||
Sale of lease interest | $ 1,160,400 | ||||||
Proceeds from sale of lease interest | $ 1,143,760 |
OVINTIV OIL AND NATURAL GAS P_2
OVINTIV OIL AND NATURAL GAS PROPERTIES (Details Narrative) - USD ($) | Mar. 03, 2020 | Jun. 30, 2021 |
Related Party Transaction [Line Items] | ||
Deposits | $ 850,000 | |
Acquisition Deposit Receivable | 50,000 | |
Return of deposits | $ 725,000 | |
Ovintiv [Member] | Purchase and Sale Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Business acquisation purchase price | $ 8,500,000 | |
Business acquisation effective date | Jan. 1, 2020 | |
Business acquisation closing date | Apr. 30, 2020 |
The following table sets forth
The following table sets forth the Company's purchase price allocation: (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Accounts payable – trade | $ 2,363,312 | $ 1,937,743 |
Note payable – current | 8,443,407 | 7,719,703 |
Asset retirement obligations | 20,488,906 | $ 15,364,217 |
Fair Value of Assets Acquired [Member] | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Accounts receivable | 100,208 | |
Inventory of oil in tanks | 147,297 | |
Deposits | 378,000 | |
Equipment and gathering lines | 109,200 | |
Oil and natural gas properties | 10,397,821 | |
Total Assets Acquired | 11,132,526 | |
Fair Value of Liability Assumed [Member] | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Accounts payable – trade | 20,455 | |
Note payable – current | 378,000 | |
Royalty suspense | 1,185,587 | |
Asset retirement obligations | 9,508,484 | |
Total liabilities assumed | 11,092,526 | |
Purchase Price | $ 40,000 |
ACQUISITION OF PARDUS OIL AND_3
ACQUISITION OF PARDUS OIL AND NATURAL GAS PROPERTIES (Details Narrative) - USD ($) | Apr. 06, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Asset retirement obligations | $ 20,488,906 | $ 15,364,217 | ||
Total purchase price for oil and natural gas propertie | $ 17,869,779 | $ 506,000 | ||
Pardus Agreement [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Description of asset acquired | purchase certain oil and natural gas properties in Texas comprising 139 gross wells and approximately 30,000 net acres, 77.3 miles of gathering lines and pipelines and related facilities and equipment, and all general and limited partner interest in Pardus Oil & Gas Operating, LP. | |||
Asset retirement obligations | $ 1,584,042 | |||
Amount paid for oil and natural gas properties | 40,000 | |||
Total purchase price for oil and natural gas propertie | $ 1,624,042 | |||
Business acquisation closing date | Apr. 7, 2020 |
The following table sets fort_2
The following table sets forth the Company's preliminary purchase price allocation: (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Asset retirement obligations | $ 20,488,906 | $ 15,364,217 |
Preliminary Fair value of Assets Acquired [Member] | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Inventory of oil in tanks | 318,546 | |
Vehicles | 179,156 | |
Asset retirement obligation | 6,117,709 | |
Oil and natural gas properties | 17,662,402 | |
Total Assets Acquired | 24,277,813 | |
Preliminary Fair Value of Liabilities Acquired [Member] | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Royalty suspense | 290,325 | |
Asset retirement obligations | 6,117,709 | |
Total liabilities assumed | 6,408,034 | |
Purchase Price | $ 17,869,779 |
ACQUISITION OF XTO OIL AND NA_3
ACQUISITION OF XTO OIL AND NATURAL GAS PROPERTIES (Details Narrative) - USD ($) | Mar. 12, 2021 | Jun. 30, 2021 | Jun. 30, 2020 |
Related Party Transaction [Line Items] | |||
Total purchase price for oil and natural gas propertie | $ 17,869,779 | $ 506,000 | |
Purchase of performance bond | 5,000,000 | ||
Letter of credit | 3,750,000 | ||
Deposit per month | 1,250,000 | ||
Promissory Note Agreement [Member] | |||
Related Party Transaction [Line Items] | |||
Letter of credit | $ 3,750,000 | ||
Rate of interest | 4.00% | ||
Deposit per month | $ 100,000 | ||
XTO Holdings LLC [Member] | |||
Related Party Transaction [Line Items] | |||
Total purchase price for oil and natural gas propertie | $ 17,800,000 | ||
Wired deposit | $ 1,780,000 | ||
Business acquisation closing date | May 14, 2021 | ||
Business acquisation effective date | Jan. 1, 2021 |
JOINT DEVELOPMENT AGREEMENT (De
JOINT DEVELOPMENT AGREEMENT (Details Narrative) - USD ($) | Mar. 11, 2021 | Jun. 30, 2021 |
Joint Development Agreement [Member] | Petroleum & Independent Exploration, LLC [Member] | August 6, 2020 [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Loan from related party | $ 2,000,000 | |
Rate of interest | 6.00% | |
Maturity date | Aug. 7, 2024 | |
Proceeds from loan | $ 446,000 | |
Description of working and revenue interest | As part of the JDA, Empire Texas will assign to PIE a combined 85% working and revenue interest in the Workover Wells; an assignment was completed in October 2020 for the initial three Workover Wells. Of the assigned interest, 70% working and revenue interest will be used to repay the obligations under the term loan agreement. Once the term loan is repaid, PIE will reassign a 35% working and revenue interest to Empire Texas in each of the Workover Wells and retain a 50% working and revenue interest | |
Security Purchase Agreement [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Description of security purchase agreement | PIE purchased for $525,000 (a) 3,500,000 shares of Empire common stock, (b) warrants to purchase 2,625,000 shares of Empire common stock at an exercise price of $0.20 per share, (c) warrants to purchase 1,800,000 shares of Empire common stock at an exercise price of $0.25 per share, (d) warrants to purchase 8,136,518 shares of Empire common stock at an exercise price of $0.10 per share, and (e) warrants to purchase up to 11,066,667 shares of Empire common stock at an exercise price of $0.141 per share, pursuant to various vesting provisions as detailed in the Securities Agreement. | |
Aggregate exercise price | $ 3,349,052 | $ 3,349,052 |
The following table summarizes
The following table summarizes the net realized and unrealized amounts reported in earnings related to the commodity derivative instruments for the three and six months ended June 30, 2021 and 2020: (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Credit Derivatives [Line Items] | ||||
Gain (loss) on derivatives | $ (182,034) | $ (402,374) | $ (539,949) | $ 2,106,671 |
Oil derivatives [Member] | ||||
Credit Derivatives [Line Items] | ||||
Gain (loss) on derivatives | (182,034) | (402,374) | (539,949) | 2,106,671 |
Natural Gas Derivatives [Member] | ||||
Credit Derivatives [Line Items] | ||||
Gain (loss) on derivatives |
The following represents the Co
The following represents the Company’s net cash receipts from (payments on) derivatives for the three and six months ended June 30, 2021 and 2020: (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Credit Derivatives [Line Items] | ||||
Net cash receipts from (payments on) derivatives: | $ (230,279) | $ 510,609 | $ (358,224) | $ 1,043,894 |
Oil derivatives [Member] | ||||
Credit Derivatives [Line Items] | ||||
Net cash receipts from (payments on) derivatives: | (230,279) | 510,609 | (358,224) | 1,043,894 |
Natural Gas Derivatives [Member] | ||||
Credit Derivatives [Line Items] | ||||
Net cash receipts from (payments on) derivatives: |
The Company has no outstanding
The Company has no outstanding natural gas derivatives. (Details) - Oil Swaps [Member] - 2021 [Member] | Jun. 30, 2021$ / shares |
Third quarter [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Quarterly volume (MBbl) | 5.20 |
Price per Bbl | $ 38.25 |
Fourth quarter [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Quarterly volume (MBbl) | |
Price per Bbl |
The following table represents
The following table represents the Company’s outstanding debt (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total Debt | $ 23,674,688 | $ 9,035,908 |
Unamortized Debt Issue Costs | (14,587) | |
Unamortized Discount | (8,090,088) | |
Total Debt net of Debt Issue Costs and Discount | 15,584,600 | 9,021,321 |
Less current maturities | 7,141,193 | 1,301,618 |
Total Long-Term Debt | 8,443,407 | 7,719,703 |
Senior Revolver Loan Agreement [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total Debt | 7,669,500 | 8,124,000 |
SBA Payroll Protection Plan Note [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total Debt | 160,700 | |
SBA Payroll Protection Plan Note 2021 [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total Debt | 106,850 | |
Unsecured Note Pardus Acquisition [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total Debt | 378,000 | |
Term Loan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total Debt | 462,959 | 315,273 |
Equipment Note [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total Debt | 242,379 | 57,935 |
Secured Convertible Note Related Party [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total Debt | 13,450,000 | |
Unsecured Convertible Notes [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total Debt | $ 1,743,000 |
DEBT (Details Narrative)
DEBT (Details Narrative) - USD ($) | Mar. 10, 2021 | May 05, 2020 | Apr. 30, 2021 | Jun. 30, 2020 | Jan. 31, 2020 | Mar. 31, 2020 | Jun. 30, 2021 | Dec. 31, 2019 | Dec. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||||||||||
Debt conversion converted amount | $ 102,500 | |||||||||
Letter of credit oustanding | $ 3,750,000 | |||||||||
Pardus Oil & Gas, LLC [Member] | April 1, 2020 [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Promissory note | $ 378,000 | |||||||||
Description of notes payable | The note was payable in one installment on April 1, 2021 and bears interest at the one-year LIBOR rate (1% as of June 30, 2021). | |||||||||
Senior Unsecured Promissory Notes [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt conversion converted instrument shares issued | 260,000 | 260,000 | ||||||||
Debt instrument convertible terms | All of the Senior Unsecured Promissory Notes have been converted to common stock of the Company as of June 30, 2020. | |||||||||
Three Senior Unsecured Promissory Notes [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt conversion converted instrument shares issued | 1,025,000 | 1,575,000 | ||||||||
Debt conversion converted amount | $ 102,500 | $ 157,500 | ||||||||
Empire Louisiana and Empire North Dakota [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate terms | EBITDAX to interest expense of at least 3:1 and funded debt to EBITDAX of 6:1 on a trailing twelve-month basis and reducing quarterly to 4:1 as of March 31, 2022 and thereafter. | |||||||||
Empire Louisiana and Empire North Dakota [Member] | Maximum [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate | 80.00% | |||||||||
Bank of Oklahoma [Member] | Promissory Note Agreement [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Letter of credit oustanding | $ 3,750,000 | |||||||||
Line of credit interest rate | 4.00% | |||||||||
Revolver Loan Agreement [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maturity date | Mar. 27, 2024 | |||||||||
Outstanding loan | $ 7,669,500 | |||||||||
Revolver Loan Agreement [Member] | Cross First Bank [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Revolver commitment amount | $ 8,520,000 | |||||||||
Reduction in commitment amount per quarter | $ 180,000 | |||||||||
Debt instrument maturity start date | Jun. 30, 2021 | |||||||||
Interest rate terms | Prime plus 150 basis points | |||||||||
Interest rate | 4.75% | |||||||||
Maturity date | Mar. 27, 2022 | |||||||||
Revolver Loan Agreement [Member] | Cross First Bank [Member] | Maximum [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Revolver commitment amount | $ 20,000,000 | |||||||||
SBA Payroll Protection Plan Note [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate | 1.00% | |||||||||
Promissory note | $ 160,700 | |||||||||
Debt Instrument, Maturity Date | May 5, 2022 | |||||||||
Description of forgiven of loans | In June, 2021 the Company was informed that the SBA had forgiven the entire loan balance. | |||||||||
Joint Development Agreement [Member] | August 6, 2020 [Member] | Petroleum & Independent Exploration, LLC [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate | 6.00% | |||||||||
Debt Instrument, Maturity Date | Aug. 7, 2024 | |||||||||
Loan from related party | $ 2,000,000 | |||||||||
Description of working and revenue interest | In addition, the Company assigned a 70% working and revenue interest to PIE in the designated wells which will be applied to repayment of the loan. | |||||||||
Second Draw SBA Payroll Protection Plan Note [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate | 100.00% | |||||||||
Promissory note | $ 106,850 | |||||||||
Debt Instrument, Maturity Date | Apr. 30, 2026 |
CONVERTIBLE NOTES PAYABLE (Deta
CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($) | May 14, 2021 | May 31, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2021 | Jun. 30, 2020 |
Short-term Debt [Line Items] | ||||||
Derivative fair value | $ 5,530,677 | $ 5,530,677 | ||||
Derivative revalued | 6,126,961 | $ 6,126,961 | ||||
Change in fair value of derivative | 596,284 | |||||
Shares issued for closing fee | 1,500,000 | |||||
Amortization of debt discount | 289,949 | |||||
Proceeds from issuance of debt | $ 19,599,850 | $ 925,700 | ||||
Secured Note [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Issuance discount | 10,125,177 | |||||
Embedded derivative liability | 5,530,677 | 5,530,677 | ||||
Amortization of debt discount | 2,289,966 | |||||
Unsecured Convertible Note [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Maturity date | May 9, 2022 | |||||
Interest rate | 5.00% | |||||
Debt instrument conversion terms | The Unsecured Note holders may convert their notes to common stock of the Company at the lesser of $1.25 per share or the price per share offered by the Company if the Company has a future capital raise for an aggregate 2,594,400 shares of common stock (without giving effect to any interest that may be converted). | |||||
Unsecured Convertible Note [Member] | Energy Evolution Ltd [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Stock Issued During Period, Shares, New Issues | 600,000 | |||||
Face amount | $ 1,500,000 | 1,500,000 | ||||
Unsecured Convertible Note [Member] | Empire New Mexico [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Debt instrument conversion terms | (a) the 20-day weighted average price of the Common Stock trades above $3.50 per share on the OTCQB or any exchange and (b) the Registration Statement has become effective. The Unsecured Notes may be prepaid without penalty, but Empire New Mexico must provide at least 30 days’ prior written notice so the holders thereof may exercise their conversion rights. | |||||
Face amount | $ 3,243,000 | |||||
Unsecured Convertible Note [Member] | Empire New Mexico [Member] | Energy Evolution Ltd [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Debt instrument oustanding amount | $ 1,500,000 | |||||
Unsecured Convertible Note [Member] | Energy Evoluation [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Conversion of converted stock amount | $ 1,500,000 | |||||
Warrant [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Stock Issued During Period, Shares, New Issues | 3,000,000 | |||||
Issued price per shares | $ 1 | $ 1 | ||||
Maturity date | May 14, 2022 | May 14, 2022 | ||||
Proceeds from warrant exercises | $ 3,000,000 | |||||
Common Stock [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Stock Issued During Period, Shares, New Issues | 8,995,458 | |||||
Issuance discount | $ 1,500 | |||||
Common Stock [Member] | Unsecured Convertible Note [Member] | Energy Evoluation [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Conversion of stock | 1,200,000 | |||||
Shares exercised | 600,000 | 600,000 | ||||
Additional Paid-in Capital [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Issuance discount | $ 2,773,500 | |||||
issuance of warrant to purchase common stock | 1,819,500 | |||||
Proceeds from issuance of debt | $ 544,824 | |||||
Chief Executive Officer and President [Member] | Unsecured Convertible Note [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Percentage principal balance right to buy | 40.00% | |||||
Principal balance right to buy per shares | $ 0.75 | |||||
Chief Executive Officer and President [Member] | Warrant [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Shares exercised | 300,000 | 300,000 | ||||
Exercise price | $ 0.25 | $ 0.25 | ||||
Issued expense | $ 989,155 | $ 989,155 | ||||
Senior Secured Convertible Note Agreement [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Maturity date | Dec. 31, 2021 | |||||
Conversion of debt to common stock | 0 | |||||
Prepayment of debt | $ 2,800,000 | |||||
Face amount | $ 16,250,000 | 16,250,000 | ||||
Senior Secured Convertible Note Agreement [Member] | Enerry Evolution Master Fund Ltd [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Convertible notes payable | $ 16,250,000 | |||||
Maturity date | Dec. 31, 2021 | |||||
Interest rate | 3.80% | |||||
Debt instrument conversion terms | The Secured Note provides that up to 40% of the balance, together with accrued interest, can be converted into the Company’s common stock at the lesser of $1.25 per share or the offering price if the Company has a subsequent capital raise or an aggregate of 5,200,000 shares of common stock (without giving effect to any interest that may be converted). | |||||
Debt instrument conversion price decrease | $ 0.25 | |||||
Debt instrument conversion features | if any amount is due on the Secured Note as of October 1, 2021 or the Company has not filed a registration statement with the United States Securities and Exchange Commission within 120 days of the Secured Note. If the registration statement described above is not filed within 120 days of the date of the Secured Note, Energy Evolution has the option to convert 50% of the Secured Note amount into common stock of the Company at a rate of $1.00 per share. | |||||
Maximum number of conversion shares increase | 8,125,000 | |||||
Description of conversion price terms | In addition, if any principal amount of the Secured Note remains outstanding on October 1, 2021, the conversion price shall be reduced by $0.25, provided the conversion price cannot be reduced by more than $0.25. | |||||
Conversion of converted stock amount | $ 10,125,177 |
Supplemental balance sheet info
Supplemental balance sheet information related to the right of use leases as of June 30, 2021: (Details) | Jun. 30, 2021USD ($) |
Leases [Abstract] | |
Operating lease asset (included in Other Property and Equipment | $ 796,940 |
Current portion of lease liability | 145,433 |
Long term lease liability | 684,426 |
Total right of use lease liabilities | $ 829,859 |
Maturities of lease liabilities
Maturities of lease liabilities as of June 30, 2021: (Details) | Jun. 30, 2021USD ($) |
Leases [Abstract] | |
2021 | $ 95,920 |
2022 | 212,175 |
2023 | 215,124 |
2024 | 215,837 |
2025 | 243,260 |
Total lease payments | 982,316 |
Less imputed interest | (153,748) |
Total lease obligation | $ 828,568 |
LEASES (Details Narrative)
LEASES (Details Narrative) | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Leases [Abstract] | |
Right of use lease expense | $ 78,712 |
Cash paid for right of use lease | $ 72,045 |
Weighted average remaining term for right of use leases | 4 years 8 months 12 days |
EQUITY (Details Narrative)
EQUITY (Details Narrative) - USD ($) | May 14, 2021 | Jun. 30, 2021 | Jun. 30, 2020 |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Options outstanding excluded from calculation of earnings per share | 10,000,000 | 5,004,167 | |
Senior Secured Convertible Note Agreement [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Maturity date | Dec. 31, 2021 | ||
Principal amount | $ 16,250,000 | ||
Common Stock [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Share-based Payment Arrangement, Option, Exercise Price Range, Shares Outstanding | 1,547,314 | ||
Warrant [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Issued price per share | $ 1 | ||
Maturity date | May 14, 2022 | ||
Enerry Evolution Master Fund Ltd [Member] | Senior Secured Convertible Note Agreement [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Maturity date | Dec. 31, 2021 | ||
Description of partial consideration | Empire issued to Energy Evolution Ltd (i) 1,500,000 shares of common stock along with (ii) a warrant certificate to purchase up to 3,000,000 shares of common stock at an exercise price of $1.00 per Warrant Share until May 14, 2022. Under the warrant certificate, the exercise price is subject to customary downward adjustments. | ||
Conversion feature alloted | $ 10,125,177 | ||
Interest rate | 3.80% | ||
April 30, 2021 [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Stock options vested | 625,000 | ||
April 30, 2021 [Member] | Warrants [Member] | Mr. Morrissett [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Warrants issued to purchase common shares | 2,500,000 | ||
February and March 2021 [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Warrants issued to purchase common shares | 8,993,858 | ||
Risk free interest rate | 18000.00% | ||
Stock Issued During Period, Shares, Conversion of Units | 8,993,858 | ||
Issued price per share | $ 0.50 | ||
Maturity date | Dec. 31, 2022 | ||
Stock Issued During Period, Value, Conversion of Units | $ 3,147,850 | ||
Proceeds from Contributed Capital | $ 2,350,407 | ||
Stock Option Plan [Member] | April 3, 2019 [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Shares issuable | 10,000,000 | ||
Stock options vested | 1,250,000 | ||
Options expiry date | April, 2029 | ||
Expected volatility rate | 213.00% | ||
Risk free interest rate | 232.00% | ||
Expected useful life | 5 years 4 months 15 days | ||
Additional paid in capital | $ 812,500 | ||
Fair of the remaining unvested options | $ 406,250 | ||
Stock Option Plan [Member] | April 3, 2019 [Member] | Pritchard [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Warrants exercise price | $ 0.33 | ||
Joint Development Agreement [Member] | August 7, 2020 [Member] | Petroleum & Independent Exploration, LLC [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Expected volatility rate | 147.00% | ||
Risk free interest rate | 19.00% | ||
Expected useful life | 4 years | ||
Additional paid in capital | $ 450,848 | ||
Description of security purchase agreement | PIE purchased for $525,000 (a) 3,500,000 shares of Empire common stock, (b) warrants to purchase 2,625,000 shares of Empire common stock at an exercise price of $0.20 per share, (c) warrants to purchase 1,800,000 shares of Empire common stock at an exercise price of $0.25 per share, (d) warrants to purchase 8,136,518 shares of Empire common stock at an exercise price of $0.10 per share, and (e) warrants to purchase up to 11,066,667 shares of Empire common stock at an exercise price of $0.141 per share | ||
Share Price | $ 0.141 | ||
Aggregate exercise price | $ 3,349,052 | ||
Unsecured Convertible Notes [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Conversion feature alloted | $ 1,500,000 | ||
Conversion of Stock, Shares Issued | 1,200,000 | ||
Unsecured Convertible Notes [Member] | Accredited Investors [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Maturity date | May 9, 2022 | ||
Principal amount | $ 3,243,000 | ||
Interest rate | 5.00% | ||
Conversion price per share | $ 1.25 | ||
Unsecured Convertible Notes [Member] | Warrant [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Conversion feature alloted | $ 544,824 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | ||
May 31, 2021 | Jun. 30, 2021 | May 14, 2021 | Dec. 31, 2020 | |
Related Party Transaction [Line Items] | ||||
Total Debt | $ 23,674,688 | $ 9,035,908 | ||
Senior Secured Convertible Note Agreement [Member] | ||||
Related Party Transaction [Line Items] | ||||
Principal amount | $ 16,250,000 | |||
Senior Secured Convertible Note Agreement [Member] | Enerry Evolution Master Fund Ltd [Member] | ||||
Related Party Transaction [Line Items] | ||||
Notes Payable | $ 16,250,000 | |||
Description of partial consideration | Empire issued to Energy Evolution Ltd (i) 1,500,000 shares of common stock along with (ii) a warrant certificate to purchase up to 3,000,000 shares of common stock at an exercise price of $1.00 per warrant share until May 14, 2022. | |||
Repayments of Convertible Debt | $ 2,800,000 | |||
Repayment of interest | 56,472 | |||
Term Loan [Member] | ||||
Related Party Transaction [Line Items] | ||||
Total Debt | $ 462,959 | $ 315,273 | ||
Energy Evolution Master Fund Ltd [Member] | ||||
Related Party Transaction [Line Items] | ||||
Percentage of ownership | 21.40% | |||
Energy Evolution Ltd [Member] | ||||
Related Party Transaction [Line Items] | ||||
Percentage of ownership | 23.58% | |||
Related Party Transaction, Due from (to) Related Party | $ 1,250,000 | |||
Maturity date | Aug. 19, 2021 | |||
Energy Evolution Ltd [Member] | Unsecured Convertible Note [Member] | ||||
Related Party Transaction [Line Items] | ||||
Principal amount | $ 1,500,000 | |||
Conversion of Stock, Shares Issued | 1,200,000 | |||
Number of shares issued | 600,000 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Supplemental Cash Flow Information | ||
Cash Paid for Interest | $ 469,638 | $ 306,333 |
Non-cash Investing and Financing Activities: | ||
Non-cash Additions to Asset Retirement Obligations | 6,117,709 | 9,508,484 |
Unsecured Convertible Note conversion | 1,500,000 | |
Purchases of oil and natural gas properties and deposits in accounts and notes payable, royalty suspense, and contingent payable to seller | 290,325 | 2,569,863 |
Note payable issued - PIE Agreement (see Note 8) | 147,686 | |
Equipment purchased utilizing notes payable | 199,226 | |
Forgiveness of PPP loan | 160,700 | |
Shares and warrants issued for Secured Convertible Note | $ 4,594,500 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) | Mar. 22, 2021USD ($) |
31 Group, LLC [Member] | |
Related Party Transaction [Line Items] | |
Purchase price | $ 900,000 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | Sep. 30, 2021 | Aug. 18, 2021 | Jul. 07, 2021 | Aug. 23, 2021 | Aug. 19, 2021 | Jun. 30, 2021 |
Energy Evolution Ltd [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Related Party Transaction, Due from (to) Related Party | $ 1,250,000 | |||||
Subsequent Event [Member] | Non Employee Director [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Board fee | $ 80,000 | |||||
Shares issued for board fee | 120,000 | |||||
Vested date | Dec. 31, 2021 | |||||
Subsequent Event [Member] | Common Stock [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Number of warrants purchase | 571,429 | |||||
Proceeds from warrant exercises | $ 285,714 | |||||
Number of shares option to purchase | 700,000 | |||||
Subsequent Event [Member] | Energy Evolution Ltd [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Related Party Transaction, Due from (to) Related Party | $ 1,250,000 | |||||
Subsequent Event [Member] | Amended Agreement Revolver [Member] | Cross First Bank [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Maturity date | Mar. 27, 2024 | |||||
Commitment amount | $ 7,980,000 | |||||
Description of reduction terms | reduced by $300,000 each calendar quarter beginning September 30, 2021. | |||||
Interest expense description | EBITDAX to interest expense of at least 3:1 and funded debt to EBITDAX of 5:1 on a trailing twelve-month basis. |