Cover
Cover | 9 Months Ended |
Sep. 30, 2021shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Quarterly Report | true |
Document Transition Report | false |
Document Period End Date | Sep. 30, 2021 |
Document Fiscal Period Focus | Q3 |
Document Fiscal Year Focus | 2021 |
Current Fiscal Year End Date | --12-31 |
Entity File Number | 001-16653 |
Entity Registrant Name | EMPIRE PETROLEUM CORPORATION |
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 | 74,323,764 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Current Assets: | ||
Cash | $ 3,187,509 | $ 157,695 |
Accounts Receivable | 6,817,718 | 1,251,634 |
Unrealized Gain on Oil and Natural Gas Derivatives, Current | 41,558 | |
Oil Inventory | 1,531,063 | 531,309 |
Prepaids | 166,225 | 281,895 |
Total Current Assets | 11,744,073 | 2,222,533 |
Property and equipment: | ||
Oil and Natural Gas Properties, Successful Efforts | 45,340,347 | 22,711,445 |
Less: Accumulated Depreciation, Depletion and Impairment | (17,081,053) | (15,148,444) |
Oil and natural gas properties, successful efforts, net | 28,259,294 | 7,563,001 |
Other Property and Equipment, Net | 1,285,759 | 662,017 |
Total Property and Equipment, Net | 29,545,053 | 8,225,018 |
Unrealized Gain on Oil and Natural Gas Derivatives, Noncurrent | 66,636 | |
Sinking Fund (Note 5) | 4,330,000 | |
Other Assets | 956,542 | 802,050 |
Total Assets | 46,642,304 | 11,249,601 |
Current Liabilities: | ||
Accounts Payable | 4,264,495 | 1,937,743 |
Accrued Expenses | 4,233,800 | 2,697,831 |
Unrealized Loss on Oil and Natural Gas Derivatives | 5,749 | |
Contingent Payment | 40,000 | |
Current Portion of Lease Liability | 166,453 | 89,769 |
Current Portion of Long-term Notes Payable, Net of Discount | 1,253,038 | 1,301,618 |
Total Current Liabilities | 9,917,786 | 6,072,710 |
Long-Term Notes Payable | 6,515,455 | 7,719,703 |
Long Term Notes Payable to Related Party, Net of Discount | 2,964,930 | |
Embedded Conversion Option | 2,017,287 | |
Long Term Lease Liability | 680,784 | 534,009 |
Asset Retirement Obligations | 20,815,924 | 15,364,217 |
Total Liabilities | 42,912,166 | 29,690,639 |
Stockholders' Equity (Deficit): | ||
74,323,764 and 24,892,277 Shares Issued and Outstanding, Respectively | 74,323 | 24,892 |
Common Stock Subscribed | (97,388) | |
Additional Paid-in Capital | 54,366,951 | 22,152,451 |
Accumulated Deficit | (50,613,748) | (40,618,381) |
Total Stockholders' Equity (Deficit) | 3,730,138 | (18,441,038) |
Total Liabilities and Stockholders' Equity (Deficit) | $ 46,642,304 | $ 11,249,601 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares | Sep. 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 | 74,323,764 | 24,892,277 |
Common stock shares outstanding | 74,323,764 | 24,892,277 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenue: | ||||
Oil Sales | $ 7,761,584 | $ 1,470,345 | $ 13,882,077 | $ 3,644,634 |
Natural Gas Sales | 855,507 | 81,562 | 1,536,569 | 167,095 |
Natural Gas Liquids Sales | 1,439,799 | 1,913,191 | ||
Other Revenue | 71,043 | 93,496 | 154,018 | 142,603 |
Net Realized and Unrealized Gain (Loss) on Derivatives | (32,271) | (103,166) | (572,220) | 2,003,505 |
Total Revenue | 10,095,662 | 1,542,237 | 16,913,635 | 5,957,837 |
Costs and Expenses: | ||||
Operating | 3,597,124 | 1,286,598 | 7,328,066 | 3,476,088 |
Taxes - Production | 678,295 | 88,630 | 1,266,808 | 233,158 |
Depletion, Depreciation & Amortization | 1,279,534 | 254,114 | 2,025,407 | 1,008,699 |
Impairment of Oil and Natural Gas Properties | 800,452 | |||
Accretion of Asset Retirement Obligation | 327,018 | 275,713 | 881,638 | 631,710 |
General and Administrative | 1,914,326 | 1,278,667 | 6,040,475 | 3,722,057 |
Total Cost and Expenses | 7,796,297 | 3,183,722 | 17,542,394 | 9,872,164 |
Operating Income (Loss) | 2,299,365 | (1,641,485) | (628,759) | (3,914,327) |
Other Income and (Expense): | ||||
Convertible Debt Modification Inducement Expense (Note 9) | (2,276,813) | (2,276,813) | ||
Unrealized Gain on Embedded Conversion Option (Note 9) | 689,215 | 92,931 | ||
Gain on Sale of Assets | 125,000 | 1,268,760 | ||
Other Income | 29,687 | 190,387 | ||
Interest Expense | (4,467,679) | (124,887) | (7,373,113) | (380,975) |
Net Loss | $ (3,726,225) | $ (1,641,372) | $ (9,995,367) | $ (3,026,542) |
Net Loss per Common Share, Basic & Diluted | $ (0.06) | $ (0.07) | $ (0.19) | $ (0.14) |
Weighted Average Number of Common Shares Outstanding, | ||||
Basic & Diluted | 66,242,822 | 23,469,200 | 53,113,367 | 21,971,947 |
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, June 30, 2020 at Dec. 31, 2019 | $ 20,367 | $ 18,823,926 | $ (23,782,948) | $ (4,938,655) | |
Shares, Issued, Beginning Balance 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 | ||
Balances, September 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 | ||||
Conversion of Convertible Notes (in shares) | 1,025,000 | ||||
Balances, June 30, 2020 at Dec. 31, 2019 | $ 20,367 | 18,823,926 | (23,782,948) | (4,938,655) | |
Shares, Issued, Beginning Balance at Dec. 31, 2019 | 20,367,277 | ||||
Net Loss | (3,026,542) | ||||
Balances, September 30, 2020 at Sep. 30, 2020 | $ 24,892 | 19,853,151 | (26,809,490) | (6,931,447) | |
Shares, Issued, Ending Balance at Sep. 30, 2020 | 24,892,277 | ||||
Balances, June 30, 2020 at Mar. 31, 2020 | $ 21,392 | 18,925,401 | (22,194,933) | (3,248,140) | |
Shares, Issued, Beginning Balance at Mar. 31, 2020 | 21,392,277 | ||||
Net Loss | (2,973,185) | (2,973,185) | |||
Stock Compensation Expense | 406,250 | 406,250 | |||
Balances, September 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 | ||||
Net Loss | (1,641,372) | (1,641,372) | |||
Balances, September 30, 2020 at Sep. 30, 2020 | $ 24,892 | 19,853,151 | (26,809,490) | (6,931,447) | |
Shares, Issued, Ending Balance at Sep. 30, 2020 | 24,892,277 | ||||
Shares and Warrants Issued | $ 3,500 | 521,500 | 525,000 | ||
Shares and Warrants Issued (in Shares) | 3,500,000 | ||||
Balances, June 30, 2020 at Dec. 31, 2020 | $ 24,892 | 22,152,451 | (40,618,381) | (18,441,038) | |
Shares, Issued, Beginning Balance 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, September 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, June 30, 2020 at Dec. 31, 2020 | $ 24,892 | 22,152,451 | (40,618,381) | (18,441,038) | |
Shares, Issued, Beginning Balance at Dec. 31, 2020 | 24,892,277 | ||||
Net Loss | (9,995,367) | ||||
Balances, September 30, 2020 at Sep. 30, 2021 | $ 74,323 | (97,388) | 54,366,951 | (50,613,748) | 3,730,138 |
Shares, Issued, Ending Balance at Sep. 30, 2021 | 74,323,764 | ||||
Balances, June 30, 2020 at Mar. 31, 2021 | $ 57,515 | (13,000) | 28,617,530 | (41,615,561) | (12,953,516) |
Shares, Issued, Beginning Balance 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 | |||
Shares and Warrants Issued with Amended Secured 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, September 30, 2020 at Jun. 30, 2021 | $ 65,661 | 40,617,930 | (46,887,523) | (6,203,932) | |
Shares, Issued, Beginning Balance at May. 31, 2021 | 65,661,634 | ||||
Warrants Exercised (in shares) | 1,371,429 | ||||
Unsecured Convertible Note Convertible Notes (in shares) | 1,134,400 | ||||
Stock option exercise (in Shares) | 838,715 | ||||
Shares and Warrants Issued with Amended Secured Convertible Note (in shares) | 5,200,000 | ||||
Shares Issued for Convertible Note Interest (in Shares) | 117,586 | ||||
Balances, September 30, 2020 at Sep. 30, 2021 | $ 74,323 | (97,388) | 54,366,951 | (50,613,748) | 3,730,138 |
Shares, Issued, Ending Balance at Sep. 30, 2021 | 74,323,764 | ||||
Balances, June 30, 2020 at Jun. 30, 2021 | $ 65,661 | 40,617,930 | (46,887,523) | (6,203,932) | |
Net Loss | (3,726,225) | (3,726,225) | |||
Warrants Exercised | 1,371 | (50,000) | 584,343 | 535,714 | |
Shares and Warrants Issued with Amended Secured Convertible Notes | 5,200 | 11,412,940 | 11,418,140 | ||
Unsecured Convertible Note Conversion | 1,134 | 1,416,866 | 1,418,000 | ||
Stock Options Exercised | 839 | (47,388) | 93,936 | 47,387 | |
Shares Issued for Convertible Note Interest | 118 | 240,936 | 241,054 | ||
Balances, September 30, 2020 at Sep. 30, 2021 | $ 74,323 | $ (97,388) | $ 54,366,951 | $ (50,613,748) | $ 3,730,138 |
Shares, Issued, Ending Balance at Sep. 30, 2021 | 74,323,764 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Cash Flows From Operating Activities: | ||
Net Loss | $ (9,995,367) | $ (3,026,542) |
Adjustments to Reconcile Net Loss to Net Cash | ||
Gain on Sales of Assets | (1,268,760) | |
Stock Compensation Expense | 406,250 | 406,250 |
Stock Issued for Interest Expense Payment | 241,054 | |
Right to Buy Issuance Costs | 989,115 | |
Unrealized Gain on Embedded Conversion Option | (92,931) | |
Amortization of Discount on Convertible Notes | 6,670,129 | |
Convertible Debt Modification Inducement Expense | 2,276,813 | |
Amortization of Loan Issue Costs | 14,587 | 43,758 |
Changes in Right of Use Assets, net | 54,363 | |
Depreciation, Depletion and Amortization | 2,025,407 | 1,008,699 |
Impairment of Oil and Natural Gas Properties | 800,452 | |
Accretion of Asset Retirement Obligation | 881,638 | 631,710 |
Cash paid to Ovintiv | (850,000) | |
Loss relating to Ovintiv Purchase Deposit | 800,000 | |
Forgiveness of Paycheck Protection Program Loan | (160,700) | |
Change in Operating Assets and Liabilities: | ||
Accounts Receivable | (5,566,084) | (64,278) |
Unrealized Gain on Oil and Natural Gas Derivative Instruments | (113,943) | (680,079) |
Inventory | (681,208) | 34,954 |
Prepaids | 115,670 | (88,474) |
Other Assets | (6,807) | (181,600) |
Accounts Payable | 2,326,752 | 490,443 |
Accrued Expenses | 1,245,653 | (26,659) |
Net Cash Provided By (Used In) Operating Activities | 630,391 | (1,970,126) |
Cash Flows from Investing Activities: | ||
Acquisition of Oil and Natural Gas Properties | (17,869,779) | (506,000) |
Purchase of Other Fixed Assets | (508,571) | |
Sinking Fund Deposit | (4,330,000) | |
Proceeds From Sale of Oil and Natural Gas Properties | 1,309,800 | |
Net Cash Provided by (Used in) Investing Activities | (22,708,350) | 803,800 |
Cash Flows from Financing Activities: | ||
Proceeds from Debt Issued | 19,599,850 | 925,700 |
Principal Payments of Debt | (5,546,738) | (150,000) |
Proceeds from Stock and Warrant Issuance | 11,054,661 | 525,000 |
Net Cash Provided by Financing Activities | 25,107,773 | 1,300,700 |
Net Change in Cash | 3,029,814 | 134,374 |
Cash - Beginning of Period | 157,695 | |
Cash - End of Period | $ 3,187,509 | $ 134,374 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | 1. BASIS OF PRESENTATION 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. As of September 30, 2021, the Company had thirty-three employees. No independent Board members received compensation from the Company in the first nine months of 2020; in 2021 independent Board members were compensated $ 116,000 through September 30, 2021. Independent directors that remain seated at December 31, 2021 will receive 120,000 shares each of common stock, prorated for the portion of the year served. Beginning in calendar year 2022, Mssrs. Morrisett and Pritchard will each receive annual awards of 100,000 shares of common stock pursuant to their employment agreements |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 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. The separated derivative is initially recorded at fair value and subsequently revalued at each reporting date with changes in the fair value reported as other income or expense. When the convertible debt instrument contains embedded derivatives that are bifurcated and accounted for separately as a derivative liability, the total proceeds received are first allocated to the fair value of derivative liability. The remaining proceeds, if any, are then allocated to the debt, resulting in an initial discount on the debt. The debt discount is subsequently amortized under the interest method through periodic charges to interest expense. 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. 3,900,000 2,400,000 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 Financial instruments and other – Related Party Transactions. Related Party Disclosures Risk Factors. 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. The Company has a concentration of purchasers; however, should any of these relationships be extinguished, management believes that the Company could easily replace those purchasers with others in the areas in which the Company operates. |
INVESTMENT IN RELATED PARTY
INVESTMENT IN RELATED PARTY | 9 Months Ended |
Sep. 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 5 and 9), 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 | 9 Months Ended |
Sep. 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. In May 2021 the Company purchased oil and natural gas properties in New Mexico (See Note 5). 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 September 30, 2021, are as follows: Proved producing wells $ 18,865,150 Proved undeveloped 2,232,358 Lease, well and gathering equipment 5,054,033 Asset retirement obligation 18,696,199 Unproved leasehold costs 492,607 Gross capitalized costs 45,340,347 Less: accumulated depreciation, depletion and impairment (17,081,053 ) $ 28,259,294 Other property and equipment consists of operating lease assets (See Note 10), vehicles, office furniture and equipment. Other property and equipment, at cost $ 1,514,322 Less: accumulated depreciation (228,563 ) Oher property and equipment, net $ 1,285,759 |
ACQUISITION OF XTO OIL AND NATU
ACQUISITION OF XTO OIL AND NATURAL GAS PROPERTIES | 9 Months Ended |
Sep. 30, 2021 | |
Acquisition Of Xto Oil And Natural Gas Properties | |
ACQUISITION OF XTO OIL AND NATURAL GAS PROPERTIES | 5. 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 The XTO acquisition has been assessed under the screen test for business combinations under FASB ASC 805, Business Combinations (“ASC 805”). The XTO acquisition met the screen test and has been accounted for as an asset acquisition using the acquisition method of accounting. 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. 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 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 their relative fair values as described above. 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 | 9 Months Ended |
Sep. 30, 2021 | |
Joint Development Agreement | |
JOINT DEVELOPMENT AGREEMENT | 6. 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 12), 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 464,000 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 | 9 Months Ended |
Sep. 30, 2021 | |
Investments, All Other Investments [Abstract] | |
COMMODITY DERIVATIVE FINANCIAL INSTRUMENTS | 7. 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 put options. 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 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 nine months ended September 30, 2021 and 2020: Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Gain (loss) on derivatives: Oil derivatives $ 112,183 $ (103,166 ) $ (427,766 ) $ 2,003,505 Natural gas derivatives (144,454 ) — (144,454 ) — Total $ (32,271 ) $ (103,166 ) $ (572,220 ) $ 2,003,505 The following represents the Company’s net cash receipts from (payments on) derivatives for the three and nine months ended September 30, 2021 and 2020: Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Net cash received (payments made) on derivatives Oil derivatives $ (177,736 ) $ 279,533 $ (541,709 ) $ 1,323,426 Natural gas derivatives (144,454 ) — (144,454 ) — Total $ (322,190 ) $ 279,533 $ (686,163 ) $ 1,323,426 The following table sets forth the Company’s outstanding derivative contracts at September 30, 2021. 4 th 2021 WTI Index Put Options: Quarterly volume (MBbl) 20.68 Floor Price (Bbl) $ 40.00 1st Quarter 2 nd 3 rd 4 th 2022 WTI Index Put Options: Quarterly volume (MBbl) 20.56 20.43 20.32 15.72 Floor Price (Bbl) $ 40.00 $ 40.00 $ 40.00 $ 40.00 1 st 2 nd 2023 WTI Index Put Options: Quarterly volume (MBbl) 13.40 4.45 Floor Price (Bbl) $ 40.00 $ 40.00 |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
DEBT | 8. DEBT The following table represents the Company’s outstanding debt. September 30, 2021 December 31, 2020 Senior Revolver Loan Agreement $ 7,369,500 $ 8,124,000 2020 SBA Paycheck Protection Program Loan — 160,700 2021 SBA Paycheck Protection Program Loan 106,850 — Unsecured Promissory Note – Pardus — 378,000 PIE Joint Development Agreement Loan, Related Party 463,569 315,273 Various Vehicle and Equipment Loans 295,567 57,935 Secured Convertible Note, Related Party (See Note 9) 5,700,000 — Total Debt 13,935,486 9,035,908 Unamortized Debt Issue Costs — (14,587 ) Unamortized Discount (3,202,063 ) — Total Debt, Net of Debt Issue Costs and Unamortized Discount 10,733,423 9,021,321 Less current maturities 1,253,038 1,301,618 Total Long-Term Debt $ 9,480,385 $ 7,719,703 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 maximum amount that can be advanced under the Agreement is $20,000,000 and the existing commitment amount is $ 7,980,000 which is reduced by $ 300,000 per calendar quarter beginning September 30, 2021 and includes interest at Wall Street Journal Prime plus 150 basis points ( 4.75 % as of September 30, 2021). The Amended Agreement matures on March 27, 2024 . Collateral for the loan is a lien on all of the assets of Empire Louisiana and Empire North Dakota, wholly owned subsidiaries of the Company, Empire Louisiana and Empire North Dakota, and a first priority mortgage lien, pledge of and security interest in not less than 80 % of Empire Louisiana’s and Empire North Dakota’s producing oil, gas and other leasehold and mineral interests. The Amended Agreement requires the Company maintain commodity derivatives at certain thresholds based on projected production and, beginning March 31, 2021, to maintain certain covenants including an 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. As of September 30, 2021, the Company has an outstanding loan balance of $ 7,369,500 under the Amended Agreement. The current maturities of the Amended Agreement is $1,200,000. The Company was in compliance with the loan covenants at September 30, 2021. On April 1, 2020, in conjunction with the purchase of assets from Pardus Oil & Gas, LLC, the Company entered into an 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 bore interest at the one-year LIBOR rate. The note was paid on April 1, 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 |
CONVERTIBLE NOTES PAYABLE
CONVERTIBLE NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES PAYABLE | 9. CONVERTIBLE NOTES PAYABLE On May 14, 2021, the Company’s wholly owned subsidiary, 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) 5,530,677 5,437,746 689,215 92,931 As partial consideration for the issuance of the Secured Note, Energy Evolution received a closing fee of 1,500,000 three million 1.00 May 14, 2022 10,125,177 5,530,677 1,500 2,773,500 1,819,500 3,000,000 3,832,440 On September 29, 2021 the parties entered into a Loan Modification Agreement (the “Amended Secured Note”) pursuant to which Energy Evolution exchanged $ 6,500,000 2,000,000 1.25 5,700,000 Pursuant to the Amended Secured Note, the Company’s obligations with respect to a registration statement under the Secured Note were extended, the Company executed and delivered a Pledge and Security Agreement granting Energy Evolution a first priority perfected security interest in the Company’s membership interest in Empire New Mexico, d/b/a Green Tree New Mexico, the Company and Green Tree New Mexico agreed to use commercial reasonable best efforts to separate Green Tree New Mexico from the Company as an independent business on or before December 31, 2022 in a spin-off to stockholders of the Company. In accordance with ASC 470-20, the Company accounted for this exchange as an induced conversion based on the short period time of the offer was open and the substantive conversion feature offer. The Company accounted for the conversion of the debt instruments as an inducement by expensing the fair value of the instruments that were issued in excess of the original terms of the Secured Notes. The Company reduced the outstanding debt by $9,141,327, representing the face amount of the Secured Notes converted of $6,500,000, net of unamortized discount costs of $2,796,419, and the embedded conversion liability of $5,437,746. The Company recorded induced conversion expense of $2,276,813 representing the difference in fair value of the instruments exchanged, including the fair value of the warrants to purchase 2,000,000 shares of common stock at $1.25 per share. The embedded conversion option of the principal balance outstanding after the conversion and amendment, has been bifurcated and accounted for separately as a derivative financial instrument. The separated derivative was initially recorded at fair value of $2,017,287, with the amount recorded as a discount against the surviving Amended Secured Note balance and the derivative liability will be revalued on a quarterly basis. On September 30, 2021, 95,208 shares of common stock were issued as payment for the outstanding accrued interest on the Secured Note. In May 2021 the Empire New Mexico entered into $ 3,243,000 May 9, 2022 5 The Unsecured Note holders had the ability to 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). 2,918,000 2,334,400 The Company determined the embedded conversion features of the Unsecured Notes were equity-classified financing instruments. The fair value of the conversion feature was determined using a beneficial conversion model based on 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 $ 544,824 544,824 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 0.75 600,000 643,600 0.25 989,155 At September 30, 2021, there was a subscription receivable balance for stock purchased on September 29, 2021 by the Company’s Chief Executive Officer for which payment was not received until October 2021. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
LEASES | 10. 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 $ 135,061 123,973 Supplemental balance sheet information related to the right of use leases as of September 30, 2021: Operating lease asset (included in Other Property and Equipment) $ 820,755 Current portion of lease liability $ 166,453 Long term lease liability 680,784 Total right of use lease liabilities $ 847,237 The weighted average remaining term for the Company’s right of use leases is 3.8 Maturities of lease liabilities as of September 30, 2021: 2021 $ 53,912 2022 235,983 2023 238,931 2024 239,644 2025 193,660 Thereafter 49,600 Total lease payments 1,011,730 Less imputed interest (164,493 ) Total lease obligation $ 847,237 |
EQUITY
EQUITY | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
EQUITY | 11. 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 September 30, 2021 and 2020, the Company had 9,012,800 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 ten million. Further, on April 3, 2019 the Company granted Mr. Pritchard and Mr. Morrissett each, options to purchase 2,500,000 0.33 1,250,000 625,000 April, 2029 213 2.32 5.375 812,500 406,250 On August 27, 2021, the Board of Directors of the Company adopted the Empire Petroleum Corporation 2021 Incentive Plan (the “Incentive Plan”). The total number of shares of common stock that may be issued pursuant to the Incentive Plan is three million. As of September 30, 2021 no grants have been made. 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 4 450,848 3,349,052 During February and March 2021, the Company issued to a group of accredited investors 8,993,858 8,993,858 .50 December 31, 2022 3,147,850 180 2,350,407 2,518,743 In connection with the purchase of XTO assets (See Note 5) 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 three million 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 5), the Company entered into $ 3,243,000 May 9, 2022 5 1.25 2,918,000 2,334,400 544,824 On August 27, 2021 the Company’s Board of Directors recommended a one for four reverse stock split such that every holder of the Company’s common stock shall receive one share of Common Stock for every four shares owned. In addition, the Board recommended the Company to issue ten million shares of no-par value Preferred Stock. The majority of the stockholders, and the majority of the minority stockholders approved the recommendations. As of September 30, 2021 the Company has not made the reverse stock split effective, nor has it issued any Preferred Stock. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 12. RELATED PARTY TRANSACTIONS The Energy Evolution Master Fund, Ltd. (“Energy Evolution”) is a related party of the Company as it beneficially owns approximately 23 18 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 9). The Company has a joint development agreement with PIE to perform recompletion or workover on specified mutually agreed upon wells (See Note 6). As of September 30, 2021, the Company has incurred obligations of $ 463,569 The Company is a borrower from Energy Evolution under the secured and unsecured notes that were amended in the third quarter of 2021. These notes and the associated amendment resulted in the issuance of warrants and common stock to Energy Evolution (See Note 9). |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 9 Months Ended |
Sep. 30, 2021 | |
Supplemental Cash Flow Information | |
SUPPLEMENTAL CASH FLOW INFORMATION | 13. SUPPLEMENTAL CASH FLOW INFORMATION Supplemental Cash Flow Information for the nine months ended September 30, 2021 and 2020: 2021 2020 Cash Paid for Interest $ 975,944 $ 442,299 Non-cash Investing and Financing Activities: Non-cash Additions to Asset Retirement Obligations $ 6,117,709 $ 9,508,483 Unsecured Convertible Note conversion $ 2,918,000 $ 102,500 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) $ 148,296 $ 69,962 Equipment purchased utilizing notes payable $ 259,945 $ — Forgiveness of PPP loan $ 160,700 $ — Shares and warrants issued for Secured Convertible Note $ 16,131,650 $ — |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 14. 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 September 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 closing date. Prior to filing the assignment and the transfer of operatorship of the wells, Empire received notice of a temporary restraining order issued by the District Court in Rockwall County, Texas enjoining 31 Group from transferring any assets to Empire. The Company and 31 Group, LLC negotiated a termination agreement that was signed July 22, 2021 which returned both parties to their pre-Agreement position. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 15. SUBSEQUENT EVENTS In October 2021 the Company was informed that the SBA had forgiven the entire loan balance of its $ 106,850 On October 29, 2021, the Company, through its newly formed wholly owned subsidiary Empire Northwest Shelf LLC entered into a Purchase and Sale Agreement dated October 22, 2021 with Rover Operating LLC and Rover Petroleum Properties, LLC (collectively, “Rover”) to purchase certain oil and gas leasehold and other property interests in the state of New Mexico for a n initial purchase price of $ 1.1 million . The Company paid $ 110,000 in escrow fees on October 29, 2021. Closing is scheduled for December 8, 2021 . Effective October 8, 2021, the Board of Directors of the Company appointed Angela Baker as Chief Accounting Officer of the Company. As a condition of employment, Ms. Baker was issued 60,000 shares of common stock of the Company under the Company’s 2021 Stock and Incentive Compensation Plan which will vest over a period of three years in one-third increments on each anniversary of October 18, 2021. On October 28, 2021, the Company filed a Form S-3 Registration Statement with the SEC utilizing a “shelf” registration process, which registration statement was declared effective by the SEC on November 5, 2021. This registration statement provides the Company the ability to offer and sell from time to time up to $350.0 million of various equity securities of the Company, subject to market conditions and the Company’s capital needs. This registration statement also registered the offer and resale from time to time by certain selling stockholders of the Company of up to 21,360,165 shares of common stock of the Company. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 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. |
Schedule of Compensating Balances [Table Text Block] | 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. The separated derivative is initially recorded at fair value and subsequently revalued at each reporting date with changes in the fair value reported as other income or expense. When the convertible debt instrument contains embedded derivatives that are bifurcated and accounted for separately as a derivative liability, the total proceeds received are first allocated to the fair value of derivative liability. The remaining proceeds, if any, are then allocated to the debt, resulting in an initial discount on the debt. The debt discount is subsequently amortized under the interest method through periodic charges to interest expense. 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. 3,900,000 2,400,000 |
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 Financial instruments and other – |
Related Party Transactions. | Related Party Transactions. Related Party Disclosures Risk Factors. 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. The Company has a concentration of purchasers; however, should any of these relationships be extinguished, management believes that the Company could easily replace those purchasers with others in the areas in which the Company operates. |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
The aggregate capitalized costs of oil and natural gas properties as of September 30, 2021, are as follows: | The aggregate capitalized costs of oil and natural gas properties as of September 30, 2021, are as follows: Proved producing wells $ 18,865,150 Proved undeveloped 2,232,358 Lease, well and gathering equipment 5,054,033 Asset retirement obligation 18,696,199 Unproved leasehold costs 492,607 Gross capitalized costs 45,340,347 Less: accumulated depreciation, depletion and impairment (17,081,053 ) $ 28,259,294 |
Other property and equipment consists of operating lease assets (See Note 10), vehicles, office furniture and equipment. | Other property and equipment consists of operating lease assets (See Note 10), vehicles, office furniture and equipment. Other property and equipment, at cost $ 1,514,322 Less: accumulated depreciation (228,563 ) Oher property and equipment, net $ 1,285,759 |
ACQUISITION OF XTO OIL AND NA_2
ACQUISITION OF XTO OIL AND NATURAL GAS PROPERTIES (Tables) | 9 Months Ended |
Sep. 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) | 9 Months Ended |
Sep. 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 nine months ended September 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 nine months ended September 30, 2021 and 2020: Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Gain (loss) on derivatives: Oil derivatives $ 112,183 $ (103,166 ) $ (427,766 ) $ 2,003,505 Natural gas derivatives (144,454 ) — (144,454 ) — Total $ (32,271 ) $ (103,166 ) $ (572,220 ) $ 2,003,505 |
The following represents the Company’s net cash receipts from (payments on) derivatives for the three and nine months ended September 30, 2021 and 2020: | The following represents the Company’s net cash receipts from (payments on) derivatives for the three and nine months ended September 30, 2021 and 2020: Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Net cash received (payments made) on derivatives Oil derivatives $ (177,736 ) $ 279,533 $ (541,709 ) $ 1,323,426 Natural gas derivatives (144,454 ) — (144,454 ) — Total $ (322,190 ) $ 279,533 $ (686,163 ) $ 1,323,426 |
The following table sets forth the Company’s outstanding derivative contracts at September 30, 2021. | The following table sets forth the Company’s outstanding derivative contracts at September 30, 2021. 4 th 2021 WTI Index Put Options: Quarterly volume (MBbl) 20.68 Floor Price (Bbl) $ 40.00 1st Quarter 2 nd 3 rd 4 th 2022 WTI Index Put Options: Quarterly volume (MBbl) 20.56 20.43 20.32 15.72 Floor Price (Bbl) $ 40.00 $ 40.00 $ 40.00 $ 40.00 1 st 2 nd 2023 WTI Index Put Options: Quarterly volume (MBbl) 13.40 4.45 Floor Price (Bbl) $ 40.00 $ 40.00 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
The following table represents the Company’s outstanding debt. | The following table represents the Company’s outstanding debt. September 30, 2021 December 31, 2020 Senior Revolver Loan Agreement $ 7,369,500 $ 8,124,000 2020 SBA Paycheck Protection Program Loan — 160,700 2021 SBA Paycheck Protection Program Loan 106,850 — Unsecured Promissory Note – Pardus — 378,000 PIE Joint Development Agreement Loan, Related Party 463,569 315,273 Various Vehicle and Equipment Loans 295,567 57,935 Secured Convertible Note, Related Party (See Note 9) 5,700,000 — Total Debt 13,935,486 9,035,908 Unamortized Debt Issue Costs — (14,587 ) Unamortized Discount (3,202,063 ) — Total Debt, Net of Debt Issue Costs and Unamortized Discount 10,733,423 9,021,321 Less current maturities 1,253,038 1,301,618 Total Long-Term Debt $ 9,480,385 $ 7,719,703 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
Supplemental balance sheet information related to the right of use leases as of September 30, 2021: | Supplemental balance sheet information related to the right of use leases as of September 30, 2021: Operating lease asset (included in Other Property and Equipment) $ 820,755 Current portion of lease liability $ 166,453 Long term lease liability 680,784 Total right of use lease liabilities $ 847,237 |
Maturities of lease liabilities as of September 30, 2021: | Maturities of lease liabilities as of September 30, 2021: 2021 $ 53,912 2022 235,983 2023 238,931 2024 239,644 2025 193,660 Thereafter 49,600 Total lease payments 1,011,730 Less imputed interest (164,493 ) Total lease obligation $ 847,237 |
SUPPLEMENTAL CASH FLOW INFORM_2
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Supplemental Cash Flow Information | |
Supplemental Cash Flow Information for the nine months ended September 30, 2021 and 2020: | Supplemental Cash Flow Information for the nine months ended September 30, 2021 and 2020: 2021 2020 Cash Paid for Interest $ 975,944 $ 442,299 Non-cash Investing and Financing Activities: Non-cash Additions to Asset Retirement Obligations $ 6,117,709 $ 9,508,483 Unsecured Convertible Note conversion $ 2,918,000 $ 102,500 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) $ 148,296 $ 69,962 Equipment purchased utilizing notes payable $ 259,945 $ — Forgiveness of PPP loan $ 160,700 $ — Shares and warrants issued for Secured Convertible Note $ 16,131,650 $ — |
BASIS OF PRESENTATION (Details
BASIS OF PRESENTATION (Details Narrative) | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Minimum [Member] | |
Salary and Wage, Officer, Excluding Cost of Good and Service Sold | $ 116,000 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Accounting Policies [Abstract] | |
Receivables from contracts | $ 3,900,000 |
Joint interest billings amount | $ 2,400,000 |
INVESTMENT IN RELATED PARTY (De
INVESTMENT IN RELATED PARTY (Details Narrative) | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Investment In Related Party | |
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 September 30, 2021, are as follows: (Details) | Sep. 30, 2021USD ($) |
Property, Plant and Equipment [Abstract] | |
Proved producing wells | $ 18,865,150 |
Proved undeveloped | 2,232,358 |
Lease, well and gathering equipment | 5,054,033 |
Asset retirement obligation | 18,696,199 |
Unproved leasehold costs | 492,607 |
Gross capitalized costs | 45,340,347 |
Less: accumulated depreciation, depletion and impairment | (17,081,053) |
Capitalized Costs, Oil and Gas Producing Activities, Net | $ 28,259,294 |
Other property and equipment co
Other property and equipment consists of operating lease assets (See Note 10), vehicles, office furniture and equipment. (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Abstract] | ||
Other property and equipment, at cost | $ 1,514,322 | |
Less: accumulated depreciation | (228,563) | |
Oher property and equipment, net | $ 1,285,759 | $ 662,017 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details Narrative) | Feb. 29, 2020USD ($)a | Jan. 27, 2020USD ($)a | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) |
Defined Benefit Plan Disclosure [Line Items] | ||||||
Impairment of Oil and Natural Gas Properties | $ 800,452 | |||||
Montana [Member] | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Purchased lease interests acres | a | a | 4,936 | |||||
Payment for lease interests | $ 500,000 | |||||
Consultant [Member] | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Purchased lease interests acres | a | a | 337 | |||||
Sale of lease interest | $ 1,160,400 | |||||
Proceeds from sale of lease interest | $ 1,143,760 |
The following table sets forth
The following table sets forth the Company’s preliminary purchase price allocation: (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Impairment Effects on Earnings Per Share [Line Items] | ||
Asset retirement obligations | $ 20,815,924 | $ 15,364,217 |
Preliminary Fair Value Of Assets Acquired [Member] | ||
Impairment Effects on Earnings Per Share [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] | ||
Impairment Effects on Earnings Per Share [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 | Sep. 30, 2021 | Sep. 30, 2020 | Oct. 30, 2021 |
Defined Benefit Plan Disclosure [Line Items] | ||||
Total purchase price for oil and natural gas properties | $ 17,869,779 | $ 506,000 | ||
Purchase of performance bond | 5,000,000 | |||
Letter of credit | $ 3,750,000 | |||
Deposit per month | $ 1,250,000 | |||
X T O Holdings L L C [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total purchase price for oil and natural gas properties | $ 1,780,000 |
JOINT DEVELOPMENT AGREEMENT (De
JOINT DEVELOPMENT AGREEMENT (Details Narrative) - USD ($) | Mar. 11, 2021 | Sep. 30, 2021 |
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 | $ 464,000 | |
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 |
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 nine months ended September 30, 2021 and 2020: (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Credit Derivatives [Line Items] | ||||
Gain (loss) on derivatives | $ (32,271) | $ (103,166) | $ (572,220) | $ 2,003,505 |
Oil Derivatives [Member] | ||||
Credit Derivatives [Line Items] | ||||
Gain (loss) on derivatives | 112,183 | (103,166) | (427,766) | 2,003,505 |
Natural Gas Derivatives [Member] | ||||
Credit Derivatives [Line Items] | ||||
Gain (loss) on derivatives | $ (144,454) | $ (144,454) |
The following represents the Co
The following represents the Company’s net cash receipts from (payments on) derivatives for the three and nine months ended September 30, 2021 and 2020: (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Credit Derivatives [Line Items] | ||||
Net cash receipts from (payments on) derivatives | $ (322,190) | $ 279,533 | $ (686,163) | $ 1,323,426 |
Oil Derivatives [Member] | ||||
Credit Derivatives [Line Items] | ||||
Net cash receipts from (payments on) derivatives | (177,736) | 279,533 | (541,709) | 1,323,426 |
Natural Gas Derivatives [Member] | ||||
Credit Derivatives [Line Items] | ||||
Net cash receipts from (payments on) derivatives | $ (144,454) | $ (144,454) |
The following table sets fort_2
The following table sets forth the Company’s outstanding derivative contracts at September 30, 2021. (Details) - Oil Swaps [Member] | Sep. 30, 2021$ / shares |
Fourth quarter [Member] | 2021 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
[custom:QuarterlyVolumeMbbl-0] | 20.68 |
[custom:PricePerBbl-0] | $ 40 |
Fourth quarter [Member] | Two Zero Two Two [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
[custom:PricePerBbl-0] | $ 40 |
First Quarter [Member] | Two Zero Two Two [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
[custom:QuarterlyVolumeMbbl-0] | 20.56 |
[custom:PricePerBbl-0] | $ 40 |
First Quarter [Member] | Two Zero Two Three [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
[custom:QuarterlyVolumeMbbl-0] | 13.40 |
[custom:PricePerBbl-0] | $ 40 |
Second Quarter [Member] | Two Zero Two Two [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
[custom:QuarterlyVolumeMbbl-0] | 20.43 |
[custom:PricePerBbl-0] | $ 40 |
Second Quarter [Member] | Two Zero Two Three [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
[custom:QuarterlyVolumeMbbl-0] | 4.45 |
[custom:PricePerBbl-0] | $ 40 |
Third Quarter [Member] | Two Zero Two Two [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
[custom:QuarterlyVolumeMbbl-0] | 20.32 |
[custom:PricePerBbl-0] | $ 40 |
Forth Quarter [Member] | Two Zero Two Two [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
[custom:QuarterlyVolumeMbbl-0] | 15.72 |
The following table represents
The following table represents the Company’s outstanding debt. (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total Debt | $ 13,935,486 | $ 9,035,908 |
Unamortized Debt Issue Costs | (14,587) | |
Unamortized Discount | (3,202,063) | |
Total Debt net of Debt Issue Costs and Discount | 10,733,423 | 9,021,321 |
Less current maturities | 1,253,038 | 1,301,618 |
Total Long-Term Debt | 9,480,385 | 7,719,703 |
Senior Revolver Loan Agreement [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total Debt | 7,369,500 | 8,124,000 |
S B A Paycheck Protection Program Loan 2020 [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total Debt | 160,700 | |
S B A Paycheck Protection Program Loan 2021 [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total Debt | 106,850 | |
Unsecured Promissory Note Pardus [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total Debt | 378,000 | |
P I E Joint Development Agreement Loan Related Party [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total Debt | 463,569 | 315,273 |
Various Vehicleand Equipment Loans [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total Debt | 295,567 | 57,935 |
Secured Convertible Note Related Party [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total Debt | $ 5,700,000 |
DEBT (Details Narrative)
DEBT (Details Narrative) - USD ($) | Jul. 07, 2021 | May 05, 2020 | Apr. 30, 2021 | Sep. 30, 2021 | May 05, 2021 |
Debt Instrument [Line Items] | |||||
Debt Instrument, Maturity Date | Aug. 7, 2024 | ||||
Loan from related party | $ 2,000,000 | ||||
Pardus Oil And Gas L L C [Member] | April First Two Zero Two Zero [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 bore interest at the one-year LIBOR rate. The note was paid on April 1, 2021 | ||||
Empire Louisiana And Empire North Dakota [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt Instrument, 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% | ||||
Revolver Loan Agreement [Member] | |||||
Debt Instrument [Line Items] | |||||
Short-term Debt, Average Outstanding Amount | $ 7,369,500 | ||||
Revolver Loan Agreement [Member] | Cross First Bank [Member] | |||||
Debt Instrument [Line Items] | |||||
[custom:RevolverCommitmentAmount] | $ 7,980,000 | ||||
[custom:ReductionInCommitmentAmountPerQuarter] | $ 300,000 | ||||
Debt Instrument, Interest Rate Terms | Prime plus 150 basis points | ||||
Long-term Debt, Maturity Date | Mar. 27, 2024 | ||||
Revolver Loan Agreement [Member] | Cross First Bank Loan [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt Instrument, Maturity Date Range, Start | Sep. 30, 2021 | ||||
Revolver Loan Agreement [Member] | Corss First Bank [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest Rate | 4.75% | ||||
S B A 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 Six Two Thousand Twenty [Member] | Petroleum And Independent Exploration L L C [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 S B A Payroll Protection Plan Note [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest Rate | 1.00% | ||||
Promissory note | $ 106,850 | ||||
Debt Instrument, Maturity Date | Apr. 30, 2026 |
CONVERTIBLE NOTES PAYABLE (Deta
CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($) | Sep. 29, 2021 | May 14, 2021 | May 31, 2021 | Sep. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2021 | Sep. 30, 2020 |
Short-term Debt [Line Items] | |||||||
Maturity date | Aug. 7, 2024 | ||||||
Derivative fair value | $ 5,530,677 | $ 5,530,677 | |||||
Derivative revalued | 5,437,746 | 5,437,746 | |||||
Change in fair value of derivative | 689,215 | $ 92,931 | |||||
Shares issued for closing fee | 1,500,000 | ||||||
Issuance of warrant to purchase common stock | $ 544,824 | ||||||
Amortization of debt discount | 544,824 | ||||||
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 | $ 3,832,440 | ||||||
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 had the ability to 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] | Empire New Mexico [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Face amount | $ 3,243,000 | ||||||
Unsecured Convertible Note [Member] | Energy Evoluation [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Conversion of Stock, Amount Converted | $ 2,918,000 | ||||||
Warrant [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Warrants to purchase | 2,000,000 | 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] | |||||||
Warrants to purchase | 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, Shares Converted | 2,334,400 | ||||||
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 | ||||||
Warrant 1 [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Issued price per shares | $ 1.25 | $ 1.25 | |||||
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 | 643,600 | 643,600 | |||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 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 | ||||||
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) | ||||||
Conversion of Stock, Amount Converted | $ 10,125,177 | ||||||
Loan Modification Agreement [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Convertible notes payable | $ 5,700,000 | ||||||
Loan Modification Agreement [Member] | Enerry Evolution Master Fund Ltd [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Convertible notes payable | $ 6,500,000 |
Supplemental balance sheet info
Supplemental balance sheet information related to the right of use leases as of September 30, 2021: (Details) | Sep. 30, 2021USD ($) |
Leases [Abstract] | |
Operating lease asset (included in Other Property and Equipment) | $ 820,755 |
Current portion of lease liability | 166,453 |
Long term lease liability | 680,784 |
Total right of use lease liabilities | $ 847,237 |
Maturities of lease liabilities
Maturities of lease liabilities as of September 30, 2021: (Details) | Sep. 30, 2021USD ($) |
Leases [Abstract] | |
2021 | $ 53,912 |
2022 | 235,983 |
2023 | 238,931 |
2024 | 239,644 |
2025 | 193,660 |
Thereafter | 49,600 |
Total lease payments | 1,011,730 |
Less imputed interest | (164,493) |
Total lease obligation | $ 847,237 |
LEASES (Details Narrative)
LEASES (Details Narrative) | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Leases [Abstract] | |
Right of use lease expense | $ 135,061 |
Cash paid for right of use lease | $ 123,973 |
Weighted average remaining term for right of use leases | 3 years 9 months 18 days |
EQUITY (Details Narrative)
EQUITY (Details Narrative) - USD ($) | May 14, 2021 | Jun. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 9,012,800 | 5,004,167 | ||
Maturity date | Aug. 7, 2024 | |||
Issuance of warrant to purchase common stock | $ 544,824 | |||
Senior Secured Convertible Note Agreement [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Maturity date | Dec. 31, 2021 | |||
DebtInstrumentFaceAmount | $ 16,250,000 | |||
Common Stock [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Share-based Payment Arrangement, Option, Exercise Price Range, Shares Outstanding | 2,518,743 | |||
Unsecured Convertible Notes [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Conversion feature alloted | $ 2,918,000 | |||
Conversion of Stock, Shares Issued | 2,334,400 | |||
Unsecured Convertible Notes [Member] | Accredited Investors [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Maturity date | May 9, 2022 | |||
DebtInstrumentFaceAmount | $ 3,243,000 | |||
Interest rate | 5.00% | |||
Conversion price per share | $ 1.25 | |||
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 three million 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 Thirty Two Thousand Twenty One [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Stock options vested | 625,000 | |||
April Thirty Two Thousand Twenty One [Member] | Warrants [Member] | Mr Morrissett [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Warrants issued to purchase common shares | 2,500,000 | |||
April 32019 [Member] | Stock Option Plan [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
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 45 months | |||
Additional paid in capital | $ 812,500 | |||
Fair of the remaining unvested options | $ 406,250 | |||
April 32019 [Member] | Pritchard [Member] | Stock Option Plan [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Warrants exercise price | $ 0.33 | |||
August Seven Two Thousand Twenty [Member] | Joint Development Agreement [Member] | Petroleum And Independent Exploration L L C [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 | |||
February And March Two Thousand Twenty One [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Warrants issued to purchase common shares | 8,993,858 | |||
Risk free interest rate | 180.00% | |||
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 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Related Party Transaction [Line Items] | ||
Total Debt | $ 13,935,486 | $ 9,035,908 |
Term Loan [Member] | ||
Related Party Transaction [Line Items] | ||
Total Debt | $ 463,569 | |
Energy Evolution Master Fund Ltd [Member] | ||
Related Party Transaction [Line Items] | ||
Percentage of ownership | 23.00% | |
Energy Evolution Ltd [Member] | ||
Related Party Transaction [Line Items] | ||
Percentage of ownership | 18.00% |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information for the nine months ended September 30, 2021 and 2020: (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Supplemental Cash Flow Information | ||
Cash Paid for Interest | $ 975,944 | $ 442,299 |
Non-cash Investing and Financing Activities: | ||
Non-cash Additions to Asset Retirement Obligations | 6,117,709 | 9,508,483 |
Unsecured Convertible Note conversion | 2,918,000 | 102,500 |
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) | 148,296 | 69,962 |
Equipment purchased utilizing notes payable | 259,945 | |
Forgiveness of PPP loan | 160,700 | |
Shares and warrants issued for Secured Convertible Note | $ 16,131,650 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) | Mar. 22, 2021USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Purchase Price | $ 900,000 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - USD ($) | Oct. 29, 2021 | Oct. 31, 2021 |
Subsequent Event [Line Items] | ||
Other Noncontrolling Interests | $ 1,100,000 | |
Escrow Deposit | $ 110,000 | |
[custom:ClosingDate] | Dec. 8, 2021 | |
Paycheck Protection Program Loan [Member] | ||
Subsequent Event [Line Items] | ||
Forgiven loan | $ 106,850 |