Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 10-Q

_________________

(Mark One)

☑

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from: ____________to ____________

_____________________

EMPIRE PETROLEUM CORPORATION

(Exact name of registrant as specified in its charter)

_____________________

delaware

001-16653

73-1238709

(State or Other Jurisdiction of

Incorporation or Organization)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

2200 S. Utica Place, Suite 150, Tulsa, OK 74114
(Address of principal executive offices)(Zip Code)

(539) 444-8002

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

_________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock $.001 par value	EP	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☒		Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant's common stock, $0.001 par value, outstanding as of the latest practicable date of August 9, 2024 was 31,381,647.

EMPIRE PETROLEUM CORPORATION

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION	Page No.

Item 1.	Condensed Consolidated Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	2

	Condensed Consolidated Statements of Operations – For the Three and Six Months Ended June 30, 2024 and 2023	3

	Condensed Consolidated Statements of Changes in Stockholders' Equity – For the Three and Six Months Ended June 30, 2024 and 2023	4

	Condensed Consolidated Statements of Cash Flows – For the Six Months Ended June 30, 2024 and 2023	5

	Notes to Unaudited Condensed Consolidated Financial Statements	6-17

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18-23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24

Item 4.	Controls and Procedures	24

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	25

Item 1A.	Risk Factors	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25

Item 3.	Defaults Upon Senior Securities	25

Item 4.	Mine Safety Disclosures	25

Item 5.	Other Information	25

Item 6.	Exhibits	25

	Signatures	26

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

EMPIRE PETROLEUM CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	June 30,			December 31,
	2024			2023
ASSETS
Current Assets:
Cash	$	9,257,773		$	7,792,508
Accounts Receivable		8,783,051			8,354,636
Derivative Instruments		—			406,806
Inventory		1,451,195			1,433,454
Prepaids		788,073			757,500
Total Current Assets		20,280,092			18,744,904

Property and Equipment:
Oil and Natural Gas Properties, Successful Efforts		123,509,574			93,509,803
Less: Accumulated Depreciation, Depletion and Impairment		(27,040,862	)		(22,996,805	)
Total Oil and Gas Properties, Net		96,468,712			70,512,998
Other Property and Equipment, Net		1,625,870			1,883,211
Total Property and Equipment, Net		98,094,582			72,396,209

Other Noncurrent Assets		1,570,531			1,474,503

Total Assets	$	119,945,205		$	92,615,616

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable	$	13,641,835		$	16,437,219
Accrued Expenses		8,105,002			7,075,302
Derivative Instruments		189,468			—
Current Portion of Lease Liability		425,528			432,822
Current Portion of Note Payable - Related Party (Note 8)		1,060,004			1,060,004
Current Portion of Long-Term Debt		339,825			44,225
Total Current Liabilities		23,761,662			25,049,572

Long-Term Debt		8,523,756			4,596,775
Long Term Lease Liability		338,953			544,382
Asset Retirement Obligations		28,649,500			27,468,427
Total Liabilities		61,273,871			57,659,156

Commitments and Contingencies (Note 15)

Stockholders' Equity:
Series A Preferred Stock - $.001 Par Value, 10,000,000 Shares Authorized, 6 and 6 Shares Issued and Outstanding, Respectively		—			—
Common Stock - $.001 Par Value, 190,000,000 Shares Authorized, 31,375,375 and 25,503,530 Shares Issued and Outstanding, Respectively		90,897			85,025
Additional Paid-in Capital		131,564,222			99,490,253
Accumulated Deficit		(72,983,785	)		(64,618,818	)
Total Stockholders' Equity		58,671,334			34,956,460

Total Liabilities and Stockholders' Equity	$	119,945,205		$	92,615,616

See accompanying notes to condensed consolidated financial statements.

EMPIRE PETROLEUM CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Revenue:
Oil Sales	$	12,287,272		$	9,147,611		$	21,729,236		$	18,086,326
Gas Sales		(115,833	)		248,686			261,297			904,721
NGL Sales		617,029			362,181			1,033,240			867,135
Total Product Revenues		12,788,468			9,758,478			23,023,773			19,858,182
Other		11,227			18,361			21,313			37,725
Loss on Commodity Derivatives		(1,453	)		(66,657	)		(859,603	)		(133,480	)
Total Revenue		12,798,242			9,710,182			22,185,483			19,762,427

Costs and Expenses:
Lease Operating Expense		7,542,685			7,099,000			14,930,108			13,619,163
Production and Ad Valorem Taxes		1,065,718			721,275			1,899,165			1,479,389
Depletion, Depreciation & Amortization		2,676,981			711,042			4,167,111			1,333,531
Accretion of Asset Retirement Obligation		492,449			405,361			977,798			806,636
General and Administrative Expense:
General and Administrative Expense		2,354,080			1,894,204			5,233,117			4,917,483
Stock-Based Compensation		591,635			1,180,806			1,301,637			2,130,445
Total General and Administrative Expense		2,945,715			3,075,010			6,534,754			7,047,928

Total Costs and Expenses		14,723,548			12,011,688			28,508,936			24,286,647

Operating Income (Loss)		(1,925,306	)		(2,301,506	)		(6,323,453	)		(4,524,220	)

Other Income and (Expense):
Interest Expense		(735,220	)		(184,887	)		(1,050,269	)		(422,186	)
Other Income (Expense) (Note 8)		(1,729,245	)		21,484			(991,245	)		21,906
Income (Loss) Before Income Taxes		(4,389,771	)		(2,464,909	)		(8,364,967	)		(4,924,500	)

Income Tax (Provision) Benefit		—			—			—			—

Net Income (Loss)	$	(4,389,771	)	$	(2,464,909	)	$	(8,364,967	)	$	(4,924,500	)

Net Income (Loss) per Common Share:
Basic	$	(0.15	)	$	(0.11	)	$	(0.30	)	$	(0.22	)
Diluted	$	(0.15	)	$	(0.11	)	$	(0.30	)	$	(0.22	)
Weighted Average Number of Common Shares Outstanding:
Basic		29,839,853			22,105,704			27,752,816			22,101,264
Diluted		29,839,853			22,105,704			27,752,816			22,101,264

See accompanying notes to condensed consolidated financial statements.

EMPIRE PETROLEUM CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

For the Three and Six Months Ended June 30, 2024 and 2023

(Unaudited)

									Additional
	Common Stock				Preferred Stock				Paid-In		Accumulated
	Shares		Par Value		Shares		Par Value		Capital		Deficit			Total

Balances, December 31, 2023		25,503,530	$	85,025		6	$	—	$	99,490,253	$	(64,618,818	)	$	34,956,460

Net Loss		—		—		—		—		—		(3,975,196	)		(3,975,196	)

Stock-Based Compensation		120,144		120		—		—		709,882		—			710,002

Balances, March 31, 2024		25,623,674	$	85,145		6	$	—	$	100,200,135	$	(68,594,014	)	$	31,691,266

Net Loss		—		—		—		—		—		(4,389,771	)		(4,389,771	)

Rights Offering (Note 10)		4,132,232		4,132		—		—		20,507,397		—			20,511,529

Conversion of Related-Party Note (Note 8)		800,000		800		—		—		6,160,102		—			6,160,902

Partial Conversion of Option to Purchase (Note 3)		600,000		600		—		—		3,155,400		—			3,156,000

Warrants Exercised (Note 10)		128,800		129		—		—		949,642		—			949,771

Stock-Based Compensation		90,669		91		—		—		591,546		—			591,637

Balances, June 30, 2024		31,375,375		90,897		6		—	$	131,564,222		(72,983,785	)		58,671,334

									Additional
	Common Stock				Preferred Stock				Paid-In			Accumulated
	Shares		Par Value		Shares		Par Value		Capital			Deficit			Total

Balances, December 31, 2022		22,093,503	$	81,615		6	$	—	$	75,303,479		$	(52,149,213	)	$	23,235,881

Net Loss		—		—		—		—		—			(2,459,591	)		(2,459,591	)

Impact of Former CEO settlement		—		—		—		—		(2,126,131	)		—			(2,126,131	)

Stock-Based Compensation		11,089		11		—		—		949,628			—			949,639

Balances, March 31, 2023		22,104,592	$	81,626		6	$	—	$	74,126,976		$	(54,608,804	)	$	19,599,798

Net Loss		—		—		—		—		—			(2,464,909	)		(2,464,909	)

Stock-Based Compensation		20,000		20		—		—		1,180,786			—			1,180,806

Balances, June 30, 2023		22,124,592		81,646		6		—		75,307,762			(57,073,713	)		18,315,695

See accompanying notes to condensed consolidated financial statements.

EMPIRE PETROLEUM CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	For the Six Months Ended June 30,
	2024			2023
Cash Flows From Operating Activities:
Net Income (Loss)	$	(8,364,967	)	$	(4,924,500	)

Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided By Operating Activities:
Stock-Based Compensation		1,301,637			2,130,445
Amortization of Right of Use Assets		271,467			163,785
Depreciation, Depletion and Amortization		4,167,111			1,333,531
Accretion of Asset Retirement Obligation		977,798			806,636
Loss on Commodity Derivatives		859,603			133,480
Settlement on or Purchases of Commodity Derivative Instruments		(263,330	)		(41,187	)
Loss on Financial Derivatives (Note 8)		998,000			—
Amortization of Debt Discount on Convertible Notes		500,382			—
Gain on extinguishment of debt		(16,611	)		—
Change in Operating Assets and Liabilities:
Accounts Receivable		(630,061	)		(2,039,189	)
Inventory, Oil in Tanks		(17,741	)		(265,802	)
Prepaids, Current		460,201			708,549
Accounts Payable		1,854,786			(1,697,939	)
Accrued Expenses		1,029,700			(3,642,305	)
Other Long-Term Assets and Liabilities		(1,021,396	)		(650,134	)
Net Cash Provided By (Used In) Operating Activities		2,106,579			(7,984,630	)

Cash Flows From Investing Activities:
Deposit for Acquistion of Oil and Natural Gas Properties		—			(670,000	)
Additions to Oil and Natural Gas Properties (a)		(30,143,188	)		(3,127,847	)
Purchase of Other Fixed Assets		(119,891	)		(153,036	)
Cash Paid for Right of Use Assets		(250,475	)		(204,105	)
Sinking Fund Deposit		—			2,779,000
Net Cash Provided By (Used In) Investing Activities		(30,513,554	)		(1,375,988	)

Cash Flows From Financing Activities:
Borrowings on Credit Facility		3,950,000			—
Proceeds from Promissory Note - Related Party (Note 8)		5,000,000			—
Proceeds from Rights Offering (Net of Transaction Costs) (Note 10)		20,511,529			—
Principal Payments of Debt		(218,192	)		(1,288,974	)
Net Proceeds from Warrant Exercise (Note 10)		628,903			—
Net Cash Provided By (Used In) Financing Activities		29,872,240			(1,288,974	)

Net Change in Cash		1,465,265			(10,649,592	)

Cash - Beginning of Period		7,792,508			11,944,442

Cash - End of Period	$	9,257,773		$	1,294,850

Supplemental Cash Flow Information:
Cash Paid for Interest	$	436,616		$	272,471

________

(a)

Incurred capital expenditures were $25,493,019 and $3,696,486 for the respective periods. The differences between incurred and cash capital expenditures is primarily due to changes in related accounts payable.

See accompanying notes to condensed consolidated financial statements.

EMPIRE PETROLEUM CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Organization and Basis of Presentation

Empire Petroleum Corporation (the “Company”, collectively with its subsidiaries) is an independent energy company operator engaged in optimizing developed production by employing field management methods to maximize reserve recovery while minimizing costs. Empire operates the following wholly-owned subsidiaries in its areas of operations:

●	Empire New Mexico, LLC (“Empire New Mexico”)
		o	Empire New Mexico LLC d/b/a Green Tree New Mexico
		o	Empire EMSU LLC
		o	Empire EMSU-B LLC
		o	Empire AGU LLC
		o	Empire NM Assets LLC
●	Empire Rockies Region
		o	Empire North Dakota LLC (“Empire North Dakota”)
		o	Empire North Dakota Acquisition LLC (“Empire NDA”)
●	Empire Texas (“Empire Texas”), consisting of the following entities:
		o	Empire Texas LLC
		o	Empire Texas Operating LLC
		o	Empire Texas GP LLC
		o	Pardus Oil & Gas Operating, LP (owned 1% by Empire Texas GP LLC and 99% by Empire Texas LLC)
●	Empire Louisiana LLC (“Empire Louisiana”)

Empire was incorporated in the State of Delaware in 1985. The consolidated financial statements of Empire Petroleum Corporation and subsidiaries include the accounts of the Company and its wholly-owned subsidiaries.

The accompanying unaudited condensed consolidated financial statements of 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. Certain amounts in prior periods have been reclassified to conform to current presentation. Operating results for the interim period are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

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, 2023 which are contained in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 28, 2024.

Liquidity and Going Concern

The Company determined that it was not in compliance with the current ratio covenant contained in its revolving line of credit agreement as of June 30, 2024 (see Note 8). Upon discovering this issue, the Company notified the lender to request a waiver. The noncompliance is due to a higher level of payables related to the capital spending program in North Dakota. On August 12, 2024, the Company obtained a compliance waiver from the lender for June 30, 2024. The Company will require funds to be in compliance with debt covenants and satisfy the payables discussed above which are greater than estimated cash flows from operations over the next 12 months.

The Company has initiated a plan to raise additional funds for the payables discussed above as well as the additional capital spending in 2024 in an anticipated form of either a subscription rights equity offering, related party warrants, or a related party note payable that may or may not have conversion rights into shares of common stock of the Company. These fundraising forms are supported through committed financial support from Phil Mulacek and Energy Evolution Master Fund, Ltd ("Energy Evolution"), both related parties of the Company (see Note 14) and our largest stockholders collectively holding 51% of the common shares outstanding. Mr. Mulacek and Energy Evolution have indicated and are willing and able to provide these additional funds, if required, for the Company to continue to meet its obligations over the next 12 months.

Management has considered these plans, including if they are within the control of the Company, in evaluating ASC 205-40, Presentation of Financial Statements-Going Concern. Management believes the above actions are sufficient to allow the Company to meet its obligations as they become due for a period of at least 12 months from the issuance of these financial statements. Management believes that its plans, and support from the existing related-party stockholders discussed above, is probable and has alleviated the substantial doubt regarding the Company's ability to continue as a going concern.

Note 2 – Summary of Significant Accounting Policies

Significant Accounting Policies

During the six months ended June 30, 2024, the Company added one significant accounting policy and estimate relating to convertible debt and derivative liability. Besides this, there have been no material changes to significant accounting policies and estimates from the information provided in the Form 10-K for the year ended December 31, 2023.

Convertible Debt and Derivative Liability

In connection with the Company’s issuance of a Promissory Note in the first quarter of 2024, the Company bifurcated the embedded conversion option, and recorded the embedded conversion option as a long-term derivative liability in the Company’s Condensed Consolidated Balance Sheet in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging. The convertible debt and the derivative liability associated with the Promissory Note were presented on the Condensed Consolidated Balance Sheet as the Long-Term Note Payable – Related Party and long-term Derivative Instruments. The convertible debt was carried at amortized cost. The derivative liability was remeasured at each reporting period using a binomial lattice model with changes in fair value recorded in the Condensed Consolidated Statements of Operations in Other Income (Expense). The conversion option related to the Promissory Note was exercised in the second quarter of 2024. See Note 8 for further details.

Fair Value Measurements

FASB ASC Topic 820, Fair Value Measurement (ASC Topic 820), defines fair value, establishes a consistent framework for measuring fair value and establishes a fair value hierarchy based on the observability of inputs used to measure fair value.

The three-level fair value hierarchy for disclosure of fair value measurements defined by ASC Topic 820 is as follows:

Level 1 – Unadjusted, quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. An active market is defined as a market where transactions for the financial instrument occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 – Inputs, other than quoted prices within Level 1, that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level 3 – Prices or valuations that require unobservable inputs that are both significant to the fair value measurement and unobservable. Valuation under Level 3 generally involves a significant degree of judgment from management.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve a degree of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instrument’s complexity. The Company reflects transfers between the three levels at the beginning of the reporting period in which the availability of observable inputs no longer justifies classification in the original level. There were no transfers between fair value hierarchy levels for the period ended June 30, 2024.

Financial instruments and other – The fair values determined for accounts receivable, accrued expenses and other current liabilities were equivalent to the carrying value due to their short-term nature.

Derivatives – Derivative financial instruments are carried at fair value and measured on a recurring basis. The Company’s commodity price hedges are valued based on discounted future cash flow models that are primarily based on published forward commodity price curves; thus, these inputs are designated as Level 2 within the valuation hierarchy.

The fair values of derivative instruments in asset positions include measures of counterparty nonperformance risk, and the fair values of derivative instruments in liability positions include measures of the Company’s nonperformance risk. These measurements were not material to the Condensed Consolidated Financial Statements.

Assets and Liabilities Measured at Fair Value on a Recurring Basis - The Company uses a binomial lattice valuation model to value Level 3 derivative liabilities at inception and on subsequent valuation dates. This model incorporates transaction details such as the Company’s stock price, contractual terms of the Promissory Note, and unobservable inputs classified as Level 3 including risk-free rate and expected volatility. As of the conversion option exercise date of May 24, 2024, these unobservable inputs were 5.0% and 46.9%, respectively.

Fair Value on a Nonrecurring Basis

The Company applies the provisions of fair value measurement on a non-recurring basis to its non-financial assets and liabilities, including oil and gas properties and asset retirement obligations. These assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments if events or changes in certain circumstances indicate that adjustments may be necessary. No triggering events that require assessment of such items were observed during the six months ended June 30, 2024.

Related Party Transactions

Transactions between related parties are considered to be related party transactions even though they may not be given accounting recognition. FASB ASC 850, Related Party Disclosures requires that transactions with related parties that would have influence in decision making shall be disclosed so that users of the financial statements can evaluate their significance. Related party transactions typically occur within the context of the following relationships: affiliates of the entity; entities for which investments in their equity securities is typically accounted for under the equity method by the investing entity; trusts for the benefit of employees; principal owners of the entity and members of their immediate families; management of the entity and members of their immediate families; and other parties that can significantly influence the management or operating policies of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

Concentrations of Credit Risk

The Company’s accounts receivable are primarily receivables from oil and natural gas purchasers and joint interest owners. The purchasers of the Company’s oil and natural gas production consist primarily of independent marketers, major oil and natural gas companies and gas pipeline companies. Historically, the Company has not experienced any significant losses from uncollectible accounts from its oil and natural gas purchasers. The Company operates a substantial portion of its oil and natural gas properties. As the operator of a property, the Company makes full payments for costs associated with the property and seeks reimbursement from the other working interest owners in the property for their share of those costs. Joint operating agreements govern the operations of an oil or natural gas well and, in most instances, provide for offsetting of amounts payable or receivable between the Company and its joint interest owners. The Company’s joint interest partners consist primarily of independent oil and natural gas producers. If the oil and natural gas exploration and production industry in general was adversely affected, the ability of the Company’s joint interest partners to reimburse the Company could be adversely affected.

Recently Adopted Accounting Standards

The FASB periodically issues new accounting standards in a continuing effort to improve standards of financial accounting and reporting. The Company has reviewed the recently issued pronouncements and concluded that the following new accounting standards are applicable:

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendments in this ASU affect entities that issue convertible instruments and/or contracts in an entity’s own equity. The amendments in this ASU primarily affect convertible instruments issued with beneficial conversion features or cash conversion features because the accounting models for those specific features are removed. However, all entities that issue convertible instruments are affected by the amendments to the disclosure requirements of this ASU. For contracts in an entity’s own equity, the contracts primarily affected are freestanding instruments and embedded features that are accounted for as derivatives under the current guidance because of failure to meet the settlement conditions of the derivatives scope exception related to certain requirements of the settlement assessment. Also affected is the assessment of whether an embedded conversion feature in a convertible instrument qualifies for the derivatives scope exception. Additionally, the amendments in this ASU affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments. The amendments in this ASU are effective for public business entities, excluding entities eligible to be smaller reporting companies, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Board decided to allow entities to adopt the guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The Company has adopted this standard for the current year and does not expect it to have a material impact on our consolidated financial statements.

Note 3 – Property

The Company follows the successful efforts method of accounting for its oil and natural gas activities. Under this method, costs to acquire oil and natural gas properties and costs incurred to drill and equip development and exploratory wells are deferred until exploration and completion results are evaluated. Exploration drilling costs are expensed if recoverable reserves are not found. Upon sale or retirement of oil and natural gas properties, the costs and related accumulated depreciation, depletion and amortization are eliminated from the accounts and the resulting gain or loss is recognized.

Costs incurred to maintain wells and related equipment and lease and well operating costs are charged to expense as incurred.

Depletion is calculated on a units-of-production basis at the field level based on total proved developed reserves.

Proved oil and natural gas properties are reviewed for impairment at least annually, or as indicators of impairment arise. There have been no indicators of impairment during the six months ended June 30, 2024.

Aggregate capitalized costs of oil and natural gas properties are as follows:

	June 30, 2024			December 31, 2023
Proved properties	$	119,421,112		$	75,346,623
Unproved properties		3,820,480			3,245,431
Work in process		267,982			14,917,749
Gross capitalized costs		123,509,574			93,509,803

Depreciation, depletion, amortization and impairment		(27,040,862	)		(22,996,805	)
Total oil and gas properties, net	$	96,468,712		$	70,512,998

Depletion and amortization expense related to oil and gas properties for the three months ended June 30, 2024 and 2023 was approximately $2,613,000 and $657,000, respectively. Depletion and amortization expense related to oil and gas properties for the six months ended June 30, 2024 and 2023 was approximately $4,044,000 and $1,221,000, respectively.

The Company has completed eight wells in North Dakota related to our Starbuck Drilling program during the first half of 2024.

On April 9, 2024, the Company partially exercised a purchase option originally issued on August 9, 2023 (the “Purchase Option”) to acquire additional working interests in certain of the Company’s New Mexico properties from Energy Evolution, a related party. The additional assets acquired represent approximately 60% of the total assets collectively acquired by the Company and Energy Evolution in the third quarter of 2023 (the “Option Assets”). As consideration, upon closing of the partial exercise of the Purchase Option, the Company issued Energy Evolution 600,000 shares of common stock of the Company based on an agreed upon price of $5.00 per share for an aggregate agreed upon value of $3,000,000 which was 60% of the purchase price of $5,000,000 under the Purchase Option. Pursuant to the remaining unexercised portion of the Purchase Option, the Company had the right to extend the initial one-year Purchase Option period for two successive one-year periods by agreeing to issue additional shares of common stock prior to the end of the one-year period then in effect. On August 8, 2024, the Company successfully extended the Purchase Option with the issuance of 16,800 shares of common stock to Energy Evolution, and as such, the Company has the right to acquire the remaining Option Assets for an exercise price of $2,000,000, subject to certain adjustments and payable in cash, unless the parties agree that some or all may be paid by issuance of common stock to Energy Evolution. The Purchase Option now expires on August 9, 2026.

Other property and equipment consists of operating lease assets, vehicles, office furniture, and equipment with lives ranging from three to five years. The capitalized costs of other property and equipment are as follows:

	June 30, 2024			December 31, 2023
Other property and equipment, at cost	$	3,117,909		$	2,998,018
Less: Accumulated depreciation		(1,492,039	)		(1,114,807	)
Other property and equipment, net	$	1,625,870		$	1,883,211

Depreciation expense related to other property and equipment for the three months ended June 30, 2024 and 2023 was approximately $64,000 and $54,000, respectively. Depreciation expense related to other property and equipment for the six months ended June 30, 2024 and 2023 was approximately $123,000 and $113,000, respectively.

Note 4 - Asset Retirement Obligations

The Company’s asset retirement obligations represent the estimated present value of the estimated cash flows the Company will incur to plug, abandon, and remediate its producing properties at the end of their productive lives, in accordance with applicable state laws. Market risk premiums associated with asset retirement obligations are estimated to represent a component of the Company’s credit-adjusted risk-free rate that is utilized in the calculations of asset retirement obligations.

The Company’s asset retirement obligation activity is as follows:


	For the Six Months Ended June 30,
	2024			2023
Asset retirement obligations, beginning of period	$	28,168,427		$	25,000,740
Additions		788,473			—
Liabilities settled		(585,198	)		(656,249	)
Revisions		—			2,303,939
Accretion expense		977,798			806,636
Asset retirement obligation, end of period	$	29,349,500		$	27,455,066
Less current portion included in Accrued Expenses		700,000			—
Asset retirement obligation, long-term	$	28,649,500		$	27,455,066

The additions in 2024 primarily relate to the completion of new wells as part of the Company’s North Dakota Starbuck Drilling Program and additional working interest acquired in New Mexico (see Note 3).

Note 5 – 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 swaps and put options.

The Company does not designate its derivative instruments in such a way that would qualify for hedge accounting. Accordingly, the Company reflects changes in the fair value of its derivative instruments in its consolidated statements of operations as they occur. Unrealized gains and losses related to the contracts are recognized and recorded as changes to the derivative asset or liability on the Company’s consolidated balance sheets.

The following table summarizes the net realized and unrealized losses reported in earnings related to the commodity derivative instruments for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Loss on Derivatives:
Oil derivatives (a)	$	(1,453	)	$	(66,657	)	$	(859,603	)	$	(133,480	)

________

(a)

Includes $251,177 of unrealized derivative gain and $66,657 of unrealized derivative losses for the three months ended June 30, 2024 and 2023, respectively, and includes $596,273 and $92,293 of unrealized derivative losses for six months ended June 30, 2024 and 2023, respectively.

The following represents the Company’s net settlements related to derivatives for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30,					Six Months Ended June 30,
	2024			2023		2024			2023

Oil derivatives	$	(252,630	)	$	—	$	(263,330	)	$	(41,187	)

The following table sets forth the Company’s outstanding derivative contracts at June 30, 2024:

	3rd Quarter 2024		4th Quarter 2024

WTI Fixed-Price Swaps:
Quarterly volume (MBbls)		30.00		30.00
Weighted-average fixed price (Bbl)	$	77.02	$	75.57

Note 6 – Accounts Receivable

The following table represents the Company’s accounts receivable as of June 30, 2024 and December 31, 2023:

	June 30, 2024		December 31, 2023

Oil, Gas and NGL Receivables	$	3,572,430	$	2,784,745
Joint Interest Billings		5,066,830		5,444,331
Other		143,791		125,560
Total Accounts Receivable	$	8,783,051	$	8,354,636

Note 7 – Accrued Expenses

The following table represents the Company’s accrued expenses as of June 30, 2024 and December 31, 2023:

	June 30, 2024		December 31, 2023

Accrued and suspended third-party revenue	$	5,340,541	$	4,049,984
Accrued salaries and payroll taxes		678,678		1,059,295
Accrued production taxes		1,016,238		829,226
Other		1,069,545		1,136,797
	$	8,105,002	$	7,075,302

Note 8 – Debt Including Debt with Related Parties

The following table represents the Company’s outstanding debt as of June 30, 2024 and December 31, 2023:

	As of June 30, 2024			As of December 31, 2023

Equity Bank Credit Facility	$	8,442,484		$	4,492,484


Note Payable – Related Party		1,060,004			1,060,004

Equipment and vehicle notes, 0.00% to 9.00% interest rates, due in 2025 to 2028 with monthly payments ranging from $900 to $1,400 per month		126,632			148,516

Note Payable to insurance provider, bears 7.29% interest, matures January 2025, monthly payments of principal and interest of $51,067		294,465			—

Total Debt		9,923,585			5,701,004
Less: Current Maturities		(339,825	)		(44,225	)
Less: Note Payable – Related Party		(1,060,004	)		(1,060,004	)
Long-Term debt	$	8,523,756		$	4,596,775

On December 29, 2023, Empire North Dakota and Empire NDA ("Borrowers”), entered into a Revolver Loan Agreement with Equity Bank (the "Credit Facility”). Pursuant to the Credit Facility (a) the initial revolver commitment amount is $10,000,000; (b) the maximum revolver commitment amount is $15,000,000; (c) commencing on January 31, 2024, and occurring on the last day of each calendar month thereafter, the revolver commitment amount is reduced by $150,000; (d) commencing on March 31, 2024, there are scheduled semiannual collateral borrowing base redeterminations each year on March 31 and September 30; (e) the final maturity date is December 29, 2026; (f) outstanding borrowings bear interest at a rate equal to the prime rate of interest plus 1.50%, and in no event lower than 8.50%; (g) a quarterly commitment fee is based on the unused portion of the commitments; and (h) Borrowers have the right to prepay loans under the Credit Facility at any time without a prepayment penalty.

The Credit Facility is guaranteed by the Company. Borrowers entered into a security agreement, pursuant to which the obligations under the Credit Facility are secured by liens on substantially all of the assets of Borrowers. Furthermore, the obligations under the Credit Facility are secured by a continuing, first priority mortgage lien, pledge of and security interest in not less than 80% of Borrowers’ producing oil, gas and other leasehold and mineral interests, including without limitation, those situated in the States of North Dakota and Montana.

The Credit Facility requires Borrowers to, commencing as of the fiscal quarter ended December 31, 2023, maintain (a) a current ratio of 1.0 to 1.0 or more and (b) a ratio of funded debt to EBITDAX, calculated quarterly and annually based on a trailing twelve-month basis, of no more than 3.50 to 1.00. The Company was not in compliance with the current ratio covenant as of June 30, 2024, however the Company received a compliance waiver from the lender for June 30, 2024.

Promissory Note – Related Party

On February 16, 2024, the Company issued a Promissory Note in the aggregate principal amount of $5,000,000 (the "Note”) to Energy Evolution. Energy Evolution advanced the Company $5,000,000 under the Note. The proceeds of the Note were used by the Company to fund, in part, its ongoing oil and gas drilling program and for working capital purposes.

The Note matures on February 15, 2026 (the "Maturity Date”) and accrues interest at the rate of 7% per annum. After the Maturity Date, any principal balance of the Note remaining unpaid accrues interest at the rate of 9% per annum. At the option of Energy Evolution, interest payments will be paid either in cash or in shares of common stock of the Company on each of the following dates (or if any such date is not a business day, the next following business day) (each an "Interest Payment Date”), except upon the occurrence of an Event of Default, in which case interest will accrue and be paid in cash on demand: (i) March 31, 2024; (ii) June 30, 2024; (iii) September 30, 2024; (iv) December 31, 2024; (v) March 31, 2025; (vi) June 30, 2025; (vii) September 30, 2025; (viii) December 31, 2025; and (ix) the Maturity Date. All or any portion of the outstanding principal amount of the Note may be converted into shares of common stock of the Company at a conversion price of $6.25 per share (the "Conversion Price”), at the option of Energy Evolution, at any time and from time to time. If the full principal amount of the Note is drawn and converted into shares of common stock of the Company, 800,000 shares would be issued (without giving effect to any interest that may be converted). Accrued interest on the principal amount converted will be due on the applicable date of conversion in cash or, at the option of Energy Evolution, by issuance of shares of common stock of the Company in the manner set forth in the Note (where the date of conversion is the relevant Interest Payment Date”). The Conversion Price is subject to customary adjustments. The Note may be prepaid at any time or from time to time without the consent of Energy Evolution and without penalty or premium, provided that the Company provides Energy Evolution with at least five business days prior written notice, each principal payment is made in cash and all accrued interest is paid in cash, or at the option of Energy Evolution, the accrued interest may be paid by issuance of shares of common stock of the Company in the manner set forth in the Note (where the Interest Payment Date is the date of prepayment).

The Company determined that an embedded conversion feature included in the Note required bifurcation from the host contract that is recognized as a separate derivative liability carried at fair value. The estimated fair value of the derivative liability, which represents a Level 3 valuation, was $1,292,000 as of March 31, 2024 and was determined using a binomial lattice model using certain assumptions and inputs discussed in Note 2. Accordingly, the Company recognized a gain on the fair value adjustment of the derivative liability in the amount of approximately $738,000 in Other Income (Expense) in the Condensed Consolidated Statements of Operations for the quarter ended March 31, 2024. The conversion option was exercised by Energy Evolution on May 24, 2024, and the fair value of the derivative was revalued as of that date resulting in a loss of $1,736,000 in the second quarter of 2024. All of the other embedded features of the Note were clearly and closely related to the debt host and did not require bifurcation as a derivative liability.

On May 24, 2024, Energy Evolution elected to convert the Note to shares of common stock of the Company and received 800,000 shares under the terms of the Note.

Note Payable – Related Party

In August 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. Concurrent with the JDA with PIE, the Company entered into a term loan agreement dated August 1, 2020, whereby PIE will loan up to $2,000,000, at an interest rate of 6% per annum, maturing August 6, 2024 unless terminated earlier by PIE. The loan proceeds were used for recompletion or workover of certain designated wells. In addition, the Company assigned 85% working and revenue interest to PIE in the designated wells which will be applied to repayment of the loan. As of June 30, 2024, $1,060,004 has been advanced from the PIE loan.

On July 31, 2024, PIE, Empire Texas, and the Company entered into a note repayment and loan termination agreement providing for the payment in full of the remaining outstanding amount of the $1,060,004 PIE loan and extending the loan maturity date to December 31, 2024 unless terminated earlier by PIE. As payment in full, the Company will issue PIE 205,427 shares of common stock of the Company following the approval of a supplemental listing application by the NYSE American stock exchange.

Note 9 - Leases

As a lessee, the Company leases its corporate office headquarters in Tulsa, Oklahoma and one field office. 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 also leases vehicles primarily used in our field operations. These vehicle leases typically have a three-year life.

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 approximately $271,000 and $164,000 for the six months ended June 30, 2024 and 2023, respectively. Cash paid for right-of-use leases was approximately $250,000 and $164,000 for the same periods.

Supplemental balance sheet information related to the right-of-use leases is as follows:

Schedule of right of use leases

	June 30, 2024		December 31, 2023

Net operating lease asset (included in Other Property and Equivpment)	$	840,309	$	1,077,031

Current portion of lease liability	$	425,528	$	432,822
Long-term lease liability		338,953		544,382
Total right-of-use lease liabilities	$	764,481	$	977,204

The weighted-average remaining term for the Company’s right-of-use leases is 1.8 years. The weighted-average discount rate was 8.44% for the second quarter of 2024.

Maturities of lease liabilities are as follows as of June 30, 2024:


Year 1	$	472,636
Year 2		315,124
Year 3		39,996
Year 4		—
Year 5		—
Total lease payments		827,756
Less imputed interest		(63,275	)
Total lease obligation	$	764,481

Note 10 – Equity

Pursuant to the Company’s Amended and Restated Certificate of Incorporation (“Charter”), effective as of March 4, 2022, the total number of shares of all classes of stock that the Company has the authority to issue is 200,000,000, consisting of 190,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share.

Preferred Stock

Preferred stock may be issued from time to time in one or more series at the direction of the Board of Directors and the directors also have the ability to fix dividend rates and rights, liquidation preferences, voting rights, conversion rights, rights and terms of redemption and other rights, preferences, privileges and restrictions as determined by the Board of Directors, subject to certain limitations set forth in the Charter.

Series A Voting Preferred Stock

On March 8, 2022, the Company formalized the issuance of preferred stock as was required under the terms of the Company's May 2021 financing agreements with Energy Evolution and issued six shares of Series A Voting Preferred Stock. The Series A Voting Preferred Stock was issued in connection with the strategic investment in the Company by Energy Evolution. For so long as the Series A Voting Preferred Stock is outstanding, the Company’s Board of Directors will consist of six directors. Three of the directors are designated as the Series A Directors and the three other directors (each, a “common director”) are elected by the holders of common stock and/or any preferred stock (other than the Series A Voting Preferred Stock) granted the right to vote on the common directors. Any Series A Director may be removed with or without cause but only by the affirmative vote of the holders of a majority of the Series A Voting Preferred Stock voting separately and as a single class. The holders of the Series A Voting Preferred Stock have the exclusive right, voting separately and as a single class, to vote on the election, removal and/or replacement of the Series A Directors. Holders of common stock or other preferred stock do not have the right to vote on the Series A Directors. The approval of the holders of the Series A Voting Preferred Stock, voting separately and as a single class, is required to authorize any resolution or other action to issue or modify the number, voting rights or any other rights, privileges, benefits, or characteristics of the Series A Voting Preferred Stock, including without limitation, any action to modify the number, structure and/or composition of the Company’s current Board of Directors.

The Series A Voting Preferred Stock is held by Phil Mulacek, chairman of the Board of Directors and one of the principals of Energy Evolution, as Energy Evolution’s designee (the “Initial Holder”). The Series A Voting Preferred Stock may be transferred only to certain controlled affiliates of the Initial Holder (“Permitted Transferees”), and the voting rights of the Series A Voting Preferred Stock are contingent upon the Initial Holder and Permitted Transferees (collectively, the “Series A Holders”) holding together at least 3,000,000 shares of the Company’s outstanding common stock.

The Series A Voting Preferred Stock is not entitled to receive any dividends or distributions of cash or other property except in the event of any liquidation, dissolution or winding up of the Company’s affairs. In such event, before any amount is paid to the holders of the Company’s common stock but after any amount is paid to the holders of the Company’s senior securities, the holders of the Series A Voting Preferred Stock will be entitled to receive an amount per share equal to $1.00.

Except as discussed above or as otherwise set forth in the certificate of designation of the Series A Voting Preferred Stock, the holders of the Series A Voting Preferred Stock have no voting rights.

The Series A Voting Preferred Stock is not redeemable at the Company’s election or the election of any holder, except the Company may elect to redeem the Series A Voting Preferred Stock for $1.00 per share following satisfaction of its notice and cure requirements in the event that:

	•	any or all shares of Series A Voting Preferred Stock are held by anyone other than the Initial Holder or a Permitted Transferee; or
	•	the Series A Holders together hold less than 3,000,000 shares of the Company’s outstanding common stock.

The Series A Voting Preferred Stock is not convertible into common stock or any other security.

Common Stock

On August 27, 2021, the Company’s Board of Directors approved a one-for-four reverse stock split such that every holder of the Company’s common stock would receive one share of common stock for every four shares owned. The reverse stock split was effective as of 6:00 p.m. Eastern Time on March 7, 2022, immediately prior to the Company’s listing of its common stock on the NYSE American.

The holders of shares of common stock are entitled to one vote per share for all matters on which common stockholders are authorized to vote on. Examples of matters that common stockholders are entitled to vote on include, but are not limited to, election of three of the six directors and other common voting situations afforded to common stockholders.

In April 2024, the Company completed a subscription rights offering (“Rights Offering”) which raised gross proceeds of $20.66 million. The Company distributed at no charge to holders of its common stock, as of the close of business on March 7, 2024 (the record date for the Rights Offering), one subscription right for each share of common stock held. Each subscription right entitled the holder to purchase 0.161 shares of common stock at a subscription price of $5.00 per share per one whole share of common stock. The subscription rights were non-transferable and not listed for trading on any stock exchange or market.

On May 29, 2024, the Company issued Energy Evolution a warrant certificate granting them the right to purchase 128,800 shares of common stock of the Company at $5.00 per share. On June 28, 2024, Energy Evolution exercised the warrants and received 128,800 shares in exchange for $644,000.

Earnings Per Share

The computation of diluted shares outstanding for the three and six months ended June 30, 2024 excluded 1,086,673 and 1,078,029 shares, respectively, related to stock options, warrants, outstanding RSUs, and convertible debt as their effect would have been anti-dilutive. The computation of diluted shares outstanding for the three and six months ended June 30, 2023 excluded 2,102,635 and 2,153,158 shares, respectively, related to stock options, warrants, and outstanding RSUs, as their effect would have been anti-dilutive.

Note 11 – Stock-Based Compensation

The Company recognizes stock-based compensation expense associated with granted stock options and restricted stock units (RSUs). The Company accounts for forfeitures of equity-based incentive awards as they occur. Stock-based compensation expense related to time-based restricted stock units is based on the price of the common stock on the grant date and recognized as vesting occurs. For options, the fair value is determined using the Black-Scholes option valuation assumptions on dividend yield, expected annual volatility, risk-free interest rate and an expected useful life. Stock-based compensation is recorded with a corresponding increase in Additional Paid-in Capital within the Condensed Consolidated Balance Sheets.

The following summary reflects nonvested restricted stock unit activity and related information for the six months ended June 30, 2024.

				Weighted Average
	RSUs			Fair Value (a)

Outstanding, December 31, 2023		204,817		$	10.61
Granted		36,060			5.18
Vested		(104,874	)		11.71
Forfeited		(22,500	)		11.05
Outstanding, June 30, 2024		113,503		$	7.79

(a) Shares are valued at the grant-date market price.

The following summary reflects stock option activity and related information:

				Weighted Average
	Options			Exercise Price

Outstanding, December 31, 2023		2,065,381		$	4.89
Granted		—			—
Exercised		(184,100	)		1.35
Cancelled		—			—
Outstanding, June 30, 2024		1,881,281		$	5.23

The following table summarizes information about stock options outstanding as of June 30, 2024.

Range of	Options	Weighted Average	Weighted	Options	Weighted
Exercise	Outstanding	Remaining	Average	Exercisable	Average
Prices	at 6/30/24	Contractual Life	Exercise Price	at 6/30/24	Exercise Price

$1.32 to $12.36	1,881,281	4.35 years	$5.23	1,620,860	$4.25

Note 12 – Executive Separations

On March 16, 2023, Thomas W. Pritchard resigned as Chief Executive Officer and a director of the Company to pursue other opportunities. Although not required under Mr. Pritchard’s Employment Agreement with the Company, in recognition of Mr. Pritchard’s past service to the Company, the Company will pay Mr. Pritchard severance benefits in the amount of approximately $360,000, as set forth in Section 4.2 of his Employment Agreement, in one lump sum payment within 30 days after March 23, 2023, rather than in monthly installments. This was accrued as of March 31, 2023, and payment was made in April 2023. The Company also extended the period under which Mr. Pritchard has the right to exercise his outstanding vested non-qualified stock options from three months after the date of his termination of employment to September 16, 2024.  In addition, Mr. Pritchard has surrendered to the Company 340,234 RSUs and options as satisfaction for the $2.1 million receivable that primarily resulted from incorrect withholdings associated with an April 2022 option exercise by Mr. Pritchard. The Company also had a $2.1 million liability recorded at December 31, 2022, related to withholding payables that were remitted in 2023. 

On March 17, 2023, the Board of Directors appointed Michael R. Morrisett to the position of Chief Executive Officer. Mr. Morrisett did not receive any additional compensation for assuming the role of Chief Executive Officer.

Note 13 – Income Taxes

For all periods presented, the Company’s effective tax rate is 0%. Other than the full year of 2022, the Company has generated net operating losses since inception, which would normally reflect a tax benefit in the Condensed Consolidated Statement of Operations and a deferred asset on the Condensed Consolidated Balance Sheet. However, because of the current uncertainty as to the Company’s ability to achieve sustained profitability, a valuation reserve has been established that offsets the amount of any tax benefit available for each period presented in the Condensed Consolidated Statements of Operations. The following table presents a reconciliation of its effective income tax rate to the U.S. statutory income tax rate for the three and six months ended June 30, 2024 and 2023.

	For the Three Months Ended June 30,										For the Six Months Ended June 30,
	2024					2023					2024					2023
	$			%		$			%		$			%		$			%

Provision (benefit) at statutory rate		(921,852	)		21.0%		(517,631	)		21.0%		(1,756,643	)		21.0%		(1,034,145	)		21.0%
State Taxes (net of federal impact)		(210,849	)		4.8%		(118,589	)		4.8%		(401,786	)		4.8%		(236,923	)		4.8%
Nondeductible Expenses		3,123			-0.1%		1,972			-0.1%		9,524			-0.1%		3,940			-0.1%
Stock Options Exercised		(26,831	)		0.6%		—			0.0%		(130,627	)		1.6%		—			0.0%
Valuation Allowance		1,156,409			-26.3%		634,248			-25.7%		2,279,532			-27.3%		1,267,128			-25.7%
Income tax provision (benefit)		—			0.0%		—			0.0%		—			0.0%		—			0.0%

Note 14 – Related Party Transactions

Energy Evolution is a related party of the Company as it beneficially owns approximately 31.6% of the Company’s outstanding shares of common stock as of June 30, 2024. Additionally, a board member of Energy Evolution was appointed to the Company’s board in October 2021. This board member separately beneficially owns approximately 19.9% of the Company’s outstanding shares of common stock as of June 30, 2024. The board member also is a majority owner of PIE. In October 2021 another Energy Evolution member was appointed to the Company’s board of directors.

The Company has a JDA with PIE to perform completions or workovers on specified mutually agreed upon wells. As of June 30, 2024, the Company has incurred obligations of approximately $1.1 million as a part of the JDA. In July 2024, the Company agreed to issue PIE 205,427 shares of common stock of the Company as payment in full for this outstanding note balance (see Note 8).

On February 16, 2024, the Company issued the Note to Energy Evolution. Energy Evolution advanced the Company $5,000,000 under the Note in the first quarter of 2024. On May 24, 2024, Energy Evolution elected to convert the Note to shares of common stock of the Company and received 800,000 shares under the terms of the Note (see Note 8).

The Company elected to partially exercise a Purchase Option in the second quarter of 2024 and acquired 60% of certain New Mexico interests from Energy Evolution. See Note 3 for additional information.

On June 28, 2024, Energy Evolution exercised warrants of the Company and received 128,800 shares in exchange for $644,000. See Note 10 for additional information.

Accounts Receivable on the Condensed Consolidated Balance Sheet includes approximately $1,080,000 receivable from Energy Evolution. Accrued Expenses includes approximately $121,000 of revenue payable to Energy Evolution.

Note 15 – 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 the balance sheet date.

Agreed Compliance Order

In January 2024, the Company deposited $1 million into an escrow account in accordance with an Agreed Compliance Order (“ACO”) with the New Mexico Oil Conservation Division (“OCD”) for compliance work on certain inactive wells in New Mexico. Under the terms of the ACO, the escrow funds will be returned to the Company at a rate of $10,000 for each well as the compliance work is completed. As of June 30, 2024, all work has been completed, and the remaining escrow balance receivable of $450,000 is included in Other Noncurrent Assets in the Condensed Consolidated Balance Sheet. The Company received $250,000 of the outstanding escrow funds in July 2024 and expects to receive the remaining $200,000 later in the third quarter of 2024.

Item 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q, including this section, includes certain statements that may be deemed “forward-looking statements” within the meaning of federal securities laws. All statements, other than statements of historical facts, which address activities, events, or developments that the Company expects, believes, or anticipates will or may occur in the future, including future sources of financing and other possible business developments, are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties and could be affected by a number of distinct factors, including the Company’s failure to secure short and long-term financing necessary to sustain and grow its operations, increased competition, changes in the markets in which the Company participates and the technology utilized by the Company and new legislation regarding environmental matters. These risks and other risks that could affect the Company's business are more fully described in reports the Company files with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2023. Actual results may vary materially from the forward-looking statements. The Company undertakes no duty to update any of the forward-looking statements in this Form 10-Q.

Overview

Our primary business is the optimization and development of oil and gas interests. In 2022 we had net income from operations but have incurred losses from operations in 2023 and 2024 and in years prior to 2022. There is no assurance that we will be profitable or obtain funds necessary to finance our future operations.

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

Management places emphasis on operating cash flow in managing our business, as operating cash flow considers the cash expenses incurred during the period and excludes non-cash expenditures not related directly to our operations.

Business Strategy

Our business strategy is to obtain long-term growth in reserves and cash flow on a cost-effective basis. Management regularly evaluates potential acquisitions of properties that would enhance current core areas of operation.

Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires management to use judgment to make estimates and assumptions that affect certain amounts reported in the consolidated financial statements. As additional information becomes available, these estimates and assumptions are subject to change and thus impact amounts reported in the future. Critical accounting policies are those accounting policies that involve judgment and uncertainties affecting the application of those policies and the likelihood that materially different amounts would be reported under different conditions or using differing assumptions. Management periodically updates the estimates used in the preparation of the financial statements based on management’s latest assessment of the current and projected business and general economic environment. There have been no significant changes to the Company’s critical accounting policies during the six months ended June 30, 2024.

LIQUIDITY AND CAPITAL RESOURCES

General

The Company’s primary sources of short-term liquidity are cash and cash equivalents, net cash provided by operating activities, and issuance of debt or equity securities. The Company’s short- and long-term liquidity requirements consist primarily of capital expenditures, acquisitions of oil and natural gas properties, payments of contractual obligations, and working capital obligations. Funding for these requirements may be provided by any combination of the Company’s sources of liquidity. Although the Company expects that its sources of funding will be adequate to fund its liquidity requirements, no assurance can be given that such funding sources will be adequate to meet the Company’s future needs.

Liquidity

As noted below, our working capital is negative as of June 30, 2024 and is primarily a result of a higher level of payables related to capital spending in North Dakota. In addition, the Company was not in compliance with the current ratio covenant under its Credit Facility as of June 30, 2024; however, the Company obtained a compliance waiver from the lender for June 30, 2024. As of June 30, 2024, we had approximately $9 million in cash on hand and approximately $0.7 million available on the Credit Facility. For additional information regarding the Credit Facility, see Note 8 of Notes to Unaudited Condensed Consolidated Financial Statements presented elsewhere in this document. The Company will require additional funds to be in compliance with debt covenants and satisfy the payables discussed above which are greater than estimated cash flows from operations over the next 12 months. Management is initiating plans to raise the necessary funds for the capital spending program. Phil Mulacek and Energy Evolution Master Fund, Ltd, both related parties of the Company and largest shareholders collectively owning 51% of the common shares outstanding, have indicated that they intend to participate in management's plans to raise these additional funds. See Note 1 - Liquidity and Going Concern of Notes to Unaudited Condensed Consolidated Financial Statements presented elsewhere in this document for further discussion of management's plans.

The Company expects to incur costs related to drilling activities in core areas as well as future oil and natural gas acquisitions in core areas. As of June 30, 2024, the Company has incurred approximately $34 million of cumulative costs related to the drilling program in the Starbuck field of North Dakota. It is expected that the Company will use a combination of debt or equity issuances, cash on hand, and cash flows from operations to fund capital programs, ongoing operations, and any potential acquisitions.

Working Capital

Working capital (presented below) increased by approximately $2.8 million between December 31, 2023 and June 30, 2024. This change was primarily due to a higher cash balance and lower accounts payable period over period following the closing of the Rights Offering (see Note 10).

	June 30,			December 31,
	2024			2023

Current Assets	$	20,280,092		$	18,744,904
Current Liabilities		23,761,662			25,049,572
Working Capital	$	(3,481,570	)	$	(6,304,668	)

Cash Flows

	Six Months Ended June 30,
Cash Flows Provided By (Used In):	2024			2023			Variance

Operating Activities	$	2,106,579		$	(7,984,630	)	$	10,091,209
Investing Activities		(30,513,554	)		(1,375,988	)		(29,137,566	)
Financing Activities		29,872,240			(1,288,974	)		31,161,214

Cash Flows from Operating Activities

The impact of higher oil production, higher commodity prices, and lower workover expenses in 2024 compared to 2023 contributed to the increase in cash flows from operating activities.

Cash Flows from Investing Activities

Cash flows from investing activities in the first half of 2024 include approximately $30 million of additions to oil and natural gas properties primarily due to the development of our operations in North Dakota.

Cash Flows from Financing Activities

Cash flow from financing activities in 2024 includes net proceeds from a Rights Offering of approximately $20.5 million (see Note 10). In addition, cash flows from financing activities in 2024 includes $5 million from a promissory note issued to the Company by a related party and approximately $4 million borrowed on the Company’s Credit Facility (see Note 8).

Capital Resources

Capital Expenditures

For the six months ended June 30, 2024, the Company incurred approximately $25 million of additions to oil and natural gas properties which primarily reflects continued drilling and completions activity in North Dakota.

Production and Operating Data

The following table sets forth a summary of the Company’s production and operating data for the three and six months ended June 30, 2024 and 2023. Because of normal production declines, increased or decreased production due to future acquisitions, divestitures, and development, and fluctuations in commodity prices, the historical information presented below should not be interpreted as being indicative of future results.

	Three Months Ended June 30,					Six Months Ended June 30,
	2024			2023		2024		2023
Production and Operating Data:
Net Production Volumes:
Oil (Bbl)		160,283			128,413		291,043		248,670
Natural Gas (Mcf)		241,242			211,293		453,063		442,511
Natural Gas Liquids (Bbl)		39,612			30,678		74,397		70,434
Total (Boe)		240,102			194,306		440,951		392,856

Average Price per Unit:
Oil (Bbl)	$	76.66		$	71.24	$	74.66	$	72.73
Natural Gas (Mcf)	$	(0.48	)	$	1.18	$	0.58	$	2.04
Natural Gas Liquids (Bbl)	$	15.58		$	11.81	$	13.89	$	12.31
Total (Boe)	$	53.26		$	50.22	$	52.21	$	50.55

Operating Costs and Expenses per Boe:
Lease Operating Expense	$	31.41		$	36.54	$	33.86	$	34.67
Production and Ad Valorem Taxes	$	4.44		$	3.71	$	4.31	$	3.77
Depreciation, Depletion, Amortization and Accretion	$	13.20		$	5.75	$	11.67	$	5.45
General and Administrative Expense:
General and Administrative Expense	$	9.80		$	9.75	$	11.87	$	12.52
Stock-Based Compensation	$	2.46		$	6.08	$	2.95	$	5.42
Total General and Administrative Expense	$	12.27		$	15.83	$	14.82	$	17.94

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

Mcf – One thousand cubic feet of natural gas.

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

Three Months Ended June 30, 2024 and 2023

Results of Operations

The following table reflects the Company’s summary operating information. Because of normal production declines, increased or decreased drilling activity and the effects of acquisitions, the historical information presented below should not be interpreted as indicative of future results.

	Three Months Ended June 30,
	2024			2023			Variance			Variance %

Oil Revenues	$	12,287,272		$	9,147,611		$	3,139,661			34%
Natural Gas Revenues		(115,833	)		248,686			(364,519	)		-147%
NGL Revenues		617,029			362,181			254,848			70%
Total Product Revenues		12,788,468			9,758,478

Lease Operating Expense (Including Workovers)		7,542,685			7,099,000			443,685			6%
Production and Ad Valorem Taxes		1,065,718			721,275			344,443			48%
Depreciation, Depletion, Amortization and Accretion		3,169,430			1,116,403			2,053,027			184%
General and Administrative Expense:
General and Administrative Expense		2,354,080			1,894,204			459,876			24%
Stock-based Compensation		591,635			1,180,806			(589,171	)		-50%
Total General and Administrative Expense		2,945,715			3,075,010			(129,295	)		-4%

Interest Expense		735,220			184,887			550,333			NM

Operating Income (Loss)		(1,925,306	)		(2,301,506	)		376,200			-16%
Net Income (Loss)		(4,389,771	)		(2,464,909	)		(1,924,862	)		78%

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

Revenues

Revenues for the three months ended June 30, 2024 increased compared to the prior year primarily due to higher oil sales volumes, higher realized oil prices and higher NGL prices.

Net oil sales volumes were approximately 160,000 Bbls for the three months ended June 30, 2024, an increase of approximately 25% over the same period in the prior year. Oil volumes in second-quarter 2024 increased primarily due to new wells completed in North Dakota during the period as well as the acquisition of additional working interest in New Mexico.

Realized oil prices for the three months ended June 30, 2024 were approximately $76.66 per barrel, while realized prices for the same period in the prior year were approximately $71.24 per barrel, an increase in price of approximately 8%.

Realized natural gas prices for the three months ended June 30, 2024 were approximately $(.48) per mcf, while realized prices for the same period in the prior year were approximately $1.18 per mcf. This is primarily due to the depressed natural gas prices in the second quarter of 2024 in New Mexico leading to below zero prices as deductions exceeded the natural gas prices.

Realized NGL prices for the three months ended June 30, 2024 were approximately $15.58 per barrel, while realized prices for the same period in the prior year were approximately $11.81 per barrel, an increase in price of approximately 32%.

Lease Operating Expense and Production Taxes

Lease operating expense was higher in second-quarter 2024 compared to 2023 primarily associated with an increase in production, partially offset by lower workover costs. Lease operating expense includes approximately $1.6 million of workover expense for the three months ended June 30, 2024 as compared to $2.9 million for the same period in 2023. The higher workover expense in 2023 was primarily in New Mexico as the Company continued to work over wells in the region to enhance production.

Production taxes were higher for the second quarter 2024 compared to 2023 as a result of the higher product revenues discussed above.

Depreciation, Depletion, Amortization and Accretion

The higher DD&A for the second quarter of 2024 is due in part to the increase in production, the acquisition of additional working interest as well as the impact of the capitalized costs associated with the new drilling activity in North Dakota.

General and Administrative Expense

General and administrative expense, excluding stock-based compensation, increased in the second quarter of 2024 compared to 2023 primarily due to an increase in salaries and benefits period over period associated with an increase in employee headcount.

Stock-based Compensation

The Company utilizes stock-based compensation to compensate the Board, members of management, and retain talented personnel. The Company anticipates stock-based compensation to continue to be utilized in 2024 and beyond to attract and retain talented personnel and compensate Board members and consultants.

Interest Expense

Interest expense increased in the second quarter of 2024 compared to the same period in 2023 primarily due to higher cash interest expense and the amortization of the debt discount both associated with the Promissory Note that was issued in 2024 (see Note 8).

Six Months Ended June 30, 2024 and 2023

Results of Operations

	Six Months Ended June 30,
	2024			2023			Variance			Variance %

Oil Revenues	$	21,729,236		$	18,086,326		$	3,642,910			20%
Natural Gas Revenues		261,297			904,721			(643,424	)		-71%
NGL Revenues		1,033,240			867,135			166,105			19%
Total Product Revenues		23,023,773			19,858,182

Lease Operating Expense (Including Workovers)		14,930,108			13,619,163			1,310,945			10%
Production and Ad Valorem Taxes		1,899,165			1,479,389			419,776			28%
Depreciation, Depletion, Amortization and Accretion		5,144,909			2,140,167			3,004,742			140%
General and Administrative Expense:
General and Administrative Expense		5,233,117			4,917,483			315,634			6%
Stock-based Compensation		1,301,637			2,130,445			(828,808	)		-39%
Total General and Administrative Expense		6,534,754			7,047,928			(513,174	)		-7%

Interest Expense		1,050,269			422,186			628,083			149%

Operating Income (Loss)		(6,323,453	)		(4,524,220	)		(1,799,233	)		40%
Net Income (Loss)		(8,364,967	)		(4,924,500	)		(3,440,467	)		70%

Revenues

Revenues for the six months ended June 30, 2024 increased compared to the prior year primarily due to higher oil sales volumes and higher realized oil prices.

Net oil sales volumes were approximately 291,000 Bbls for the six months ended June 30, 2024, an increase of approximately 17% over the same period in the prior year. Oil volumes in 2024 increased primarily due to new wells completed in North Dakota during the period as well as the acquisition of additional working interest in New Mexico.

Realized oil prices for the six months ended June 30, 2024, were approximately $74.66 per barrel, while realized prices for the same period in the prior year were approximately $72.73, an increase in price of approximately 3%.

Realized natural gas prices for the six months ended June 30, 2024, were approximately $.58 per mcf, while realized prices for the same period in the prior year were approximately $2.04, a decrease in price of approximately 72%. The lower prices in 2024 are primarily due to depressed natural gas prices in New Mexico during the period.

Realized NGL prices for the six months ended June 30, 2024, were approximately $13.89 per barrel, while realized prices for the same period in the prior year were approximately $12.31 per barrel, an increase in price of approximately 13%.

Lease Operating Expense and Production Taxes

Lease operating expense was higher in 2024 primarily associated with an increase in production, partially offset by lower workover expenses year over year. Lease operating expense includes approximately $3.6 million of workover expense for the six months ended June 30, 2024 as compared to $5.7 million for the same period in 2023. The higher workover expense in 2023 was primarily in New Mexico as the Company continued to work over wells in the region to enhance production.

Production taxes were higher for the first half of 2024 compared to 2023 as a result of the higher product revenues discussed above.

Depreciation, Depletion, Amortization and Accretion

The higher DD&A in 2024 is due in part to the increase in production, the acquisition of additional working interest as well as the impact of the capitalized costs associated with the new drilling activity in North Dakota.

General and Administrative Expense

General and administrative expense, excluding stock-based compensation, increased in 2024 compared to 2023 primarily due to an increase in salaries and benefits period over period associated with an increase in employee headcount.

Stock-based Compensation

The Company utilizes stock-based compensation to compensate members of the Board, management, and retain talented personnel. The Company anticipates stock-based compensation to continue to be utilized in 2024 and beyond to attract and retain talented personnel and compensate Board members and consultants. The decrease year over year is primarily due to Board awards in 2023.

Interest Expense

Interest expense increased in 2024 compared to the same period in 2023 primarily due to higher cash interest expense and the amortization of the debt discount both associated with the Promissory Note that was issued in 2024 (see Note 8).

Item 3.         QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

Item 4.         CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

Changes in Internal Control Over Financial Reporting

While we continue to implement design enhancements to our internal control procedures, there were no changes to our internal control over financial reporting during the three months ended June 30, 2024, which were identified in connection with the evaluation that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. It is management’s expectation that the Company will implement enhanced controls throughout 2024 with additional controls implemented as they are identified by management. Management will continue to diligently and rigorously review the financial reporting controls and procedures on an ongoing basis.

Inherent Limitations on Effectiveness of Controls

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

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

For information regarding legal proceedings, see Note 15 of the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Item 1A.

Risk Factors

Not applicable.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information

The Company was not informed by any of its directors or Section 16 officers of the adoption or termination of a "Rule 10b5-1 trading arrangement” or "non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K, during the second quarter of 2024.

Item 6.

Exhibits

4		Common Share Warrant Certificate No. Energy Evolution – 2 dated May 31, 2024 (incorporated herein by reference to Exhibit 4 to the Company’s Form 8-K dated May 24, 2024, which was filed on May 31, 2024).
10.1		Empire Petroleum Corporation 2024 Stock and Incentive Compensation Plan (incorporated herein by reference to Annex A to the Company’s Proxy Statement on Schedule 14A filed on April 29, 2024).
10.2		Note Repayment and Loan Termination Agreement dated as of July 31, 2024 by and among Petroleum Independent & Exploration, LLC, Empire Texas LLC and Empire Petroleum Corporation (incorporated herein by reference to Exhibit 10 to the Company’s Form 8-K dated July 31, 2024, which was filed on August 6, 2024).
31.1		Rule 13a - 14 (a)/15(d) - 14(a) Certification of Michael R. Morrisett, Chief Executive Officer (submitted herewith).

31.2		Rule 13a - 14 (a)/15(d) - 14(a) Certification of Michael R. Morrisett, Chief Executive Officer (principal financial officer) (submitted herewith).
32.1		Section 1350 Certification of Michael R. Morrisett, Chief Executive Officer (submitted herewith).
32.2		Section 1350 Certification of Michael R. Morrisett, Chief Executive Officer (principal financial officer) (submitted herewith).
101		Financial Statements for Inline XBRL format (submitted herewith).
104		Cover Page Interactive Data File (embedded within Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Empire Petroleum Corporation

Date: August 14, 2024	By:	/s/ Michael R. Morrisett
		Michael R. Morrisett
		Chief Executive Officer and President
		(Principal Executive Officer and Principal Financial Officer)

Exhibit 31.1

CERTIFICATION

I, Michael R. Morrisett, certify that:

I have reviewed this quarterly report on Form 10-Q of Empire Petroleum Corporation;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 14, 2024		/s/ Michael R. Morrisett
		Michael R. Morrisett President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Michael R. Morrisett, certify that:

I have reviewed this quarterly report on Form 10-Q of Empire Petroleum Corporation;

(a)

(b)

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 14, 2024

/s/ Michael R. Morrisett

Michael R. Morrisett
President and Chief Executive Officer
(principal financial officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Empire Petroleum Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael R. Morrisett, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 14, 2024		/s/ Michael R. Morrisett
		Michael R. Morrisett President and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Report and shall not be considered filed as part of the Report.

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Empire Petroleum Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael R. Morrisett, President and Chief Executive Officer (principal financial officer) of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 14, 2024

/s/ Michael R. Morrisett

Michael R. Morrisett
President and Chief Executive Officer

(principal financial officer)

The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Report and shall not be considered filed as part of the Report.

Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2024	Aug. 09, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2024
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2024
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 S. 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
Title of 12(b) Security	Common Stock $.001 par value
Trading Symbol	EP
Security Exchange Name	NYSEAMER
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		31,381,647

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Current Assets:
Cash	$ 9,257,773	$ 7,792,508
Accounts Receivable	8,783,051	8,354,636
Derivative Instruments		406,806
Inventory	1,451,195	1,433,454
Prepaids	788,073	757,500
Total Current Assets	20,280,092	18,744,904
Property and Equipment:
Oil and Natural Gas Properties, Successful Efforts	123,509,574	93,509,803
Less: Accumulated Depreciation, Depletion and Impairment	(27,040,862)	(22,996,805)
Total Oil and Gas Properties, Net	96,468,712	70,512,998
Other Property and Equipment, Net	1,625,870	1,883,211
Total Property and Equipment, Net	98,094,582	72,396,209
Other Noncurrent Assets	1,570,531	1,474,503
Total Assets	119,945,205	92,615,616
Current Liabilities:
Accounts Payable	13,641,835	16,437,219
Accrued Expenses	8,105,002	7,075,302
Derivative Instruments	189,468
Current Portion of Lease Liability	425,528	432,822
Current Portion of Note Payable - Related Party (Note 8)	1,060,004	1,060,004
Current Portion of Long-Term Debt	339,825	44,225
Total Current Liabilities	23,761,662	25,049,572
Long-Term Debt	8,523,756	4,596,775
Long Term Lease Liability	338,953	544,382
Asset Retirement Obligations	28,649,500	27,468,427
Total Liabilities	61,273,871	57,659,156
Stockholders' Equity:
Series A Preferred Stock - $.001 Par Value, 10,000,000 Shares Authorized, 6 and 6 Shares Issued and Outstanding, Respectively
Common Stock - $.001 Par Value, 190,000,000 Shares Authorized, 31,375,375 and 25,503,530 Shares Issued and Outstanding, Respectively	90,897	85,025
Additional Paid-in Capital	131,564,222	99,490,253
Accumulated Deficit	(72,983,785)	(64,618,818)
Total Stockholders' Equity	58,671,334	34,956,460
Total Liabilities and Stockholders' Equity	$ 119,945,205	$ 92,615,616

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, authorized	10,000,000	10,000,000
Preferred stock, issued	6	6
Preferred stock, outstanding	6	6
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized	190,000,000	190,000,000
Common stock, issued	31,375,375	25,503,530
Common stock, outstanding	31,375,375	25,503,530

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenue:
Oil Sales	$ 12,287,272	$ 9,147,611	$ 21,729,236	$ 18,086,326
Gas Sales	(115,833)	248,686	261,297	904,721
NGL Sales	617,029	362,181	1,033,240	867,135
Total Product Revenues	12,788,468	9,758,478	23,023,773	19,858,182
Other	11,227	18,361	21,313	37,725
Loss on Commodity Derivatives	(1,453)	(66,657)	(859,603)	(133,480)
Total Revenue	12,798,242	9,710,182	22,185,483	19,762,427
Costs and Expenses:
Lease Operating Expense	7,542,685	7,099,000	14,930,108	13,619,163
Production and Ad Valorem Taxes	1,065,718	721,275	1,899,165	1,479,389
Depletion, Depreciation & Amortization	2,676,981	711,042	4,167,111	1,333,531
Accretion of Asset Retirement Obligation	492,449	405,361	977,798	806,636
General and Administrative Expense:
General and Administrative Expense	2,354,080	1,894,204	5,233,117	4,917,483
Stock-Based Compensation	591,635	1,180,806	1,301,637	2,130,445
Total General and Administrative Expense	2,945,715	3,075,010	6,534,754	7,047,928
Total Costs and Expenses	14,723,548	12,011,688	28,508,936	24,286,647
Operating Income (Loss)	(1,925,306)	(2,301,506)	(6,323,453)	(4,524,220)
Other Income and (Expense):
Interest Expense	(735,220)	(184,887)	(1,050,269)	(422,186)
Other Income (Expense) (Note 8)	(1,729,245)	21,484	(991,245)	21,906
Income (Loss) Before Income Taxes	(4,389,771)	(2,464,909)	(8,364,967)	(4,924,500)
Income Tax (Provision) Benefit
Net Income (Loss)	$ (4,389,771)	$ (2,464,909)	$ (8,364,967)	$ (4,924,500)
Net Income (Loss) per Common Share:
Basic	$ (0.15)	$ (0.11)	$ (0.30)	$ (0.22)
Diluted	$ (0.15)	$ (0.11)	$ (0.30)	$ (0.22)
Weighted Average Number of Common Shares Outstanding:
Basic	29,839,853	22,105,704	27,752,816	22,101,264
Diluted	29,839,853	22,105,704	27,752,816	22,101,264

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($)	Common Stock [Member]	Preferred Stock [Member]	Additional Paid-in Capital [Member]	AOCI Attributable to Parent [Member]	Total
Beginning balance, value at Dec. 31, 2022	$ 81,615		$ 75,303,479	$ (52,149,213)	$ 23,235,881
Beginning balance (in shares) at Dec. 31, 2022	22,093,503	6
Net Loss				(2,459,591)	(2,459,591)
Stock-Based Compensation	$ 11		949,628		949,639
Stock-Based Compensation (in shares)	11,089
Impact of Former CEO settlement			(2,126,131)		(2,126,131)
Ending balance, value at Mar. 31, 2023	$ 81,626		74,126,976	(54,608,804)	19,599,798
Ending balance (in shares) at Mar. 31, 2023	22,104,592	6
Beginning balance, value at Dec. 31, 2022	$ 81,615		75,303,479	(52,149,213)	23,235,881
Beginning balance (in shares) at Dec. 31, 2022	22,093,503	6
Net Loss					(4,924,500)
Ending balance, value at Jun. 30, 2023	$ 81,646		75,307,762	(57,073,713)	18,315,695
Ending balance (in shares) at Jun. 30, 2023	22,124,592	6
Beginning balance, value at Mar. 31, 2023	$ 81,626		74,126,976	(54,608,804)	19,599,798
Beginning balance (in shares) at Mar. 31, 2023	22,104,592	6
Net Loss				(2,464,909)	(2,464,909)
Stock-Based Compensation	$ 20		1,180,786		1,180,806
Stock-Based Compensation (in shares)	20,000
Ending balance, value at Jun. 30, 2023	$ 81,646		75,307,762	(57,073,713)	18,315,695
Ending balance (in shares) at Jun. 30, 2023	22,124,592	6
Beginning balance, value at Dec. 31, 2023	$ 85,025		99,490,253	(64,618,818)	34,956,460
Beginning balance (in shares) at Dec. 31, 2023	25,503,530	6
Net Loss				(3,975,196)	(3,975,196)
Stock-Based Compensation	$ 120		709,882		710,002
Stock-Based Compensation (in shares)	120,144
Ending balance, value at Mar. 31, 2024	$ 85,145		100,200,135	(68,594,014)	31,691,266
Ending balance (in shares) at Mar. 31, 2024	25,623,674	6
Beginning balance, value at Dec. 31, 2023	$ 85,025		99,490,253	(64,618,818)	34,956,460
Beginning balance (in shares) at Dec. 31, 2023	25,503,530	6
Net Loss					(8,364,967)
Ending balance, value at Jun. 30, 2024	$ 90,897		131,564,222	(72,983,785)	58,671,334
Ending balance (in shares) at Jun. 30, 2024	31,375,375	6
Beginning balance, value at Mar. 31, 2024	$ 85,145		100,200,135	(68,594,014)	31,691,266
Beginning balance (in shares) at Mar. 31, 2024	25,623,674	6
Net Loss				(4,389,771)	(4,389,771)
Stock-Based Compensation	$ 91		591,546		591,637
Stock-Based Compensation (in shares)	90,669
Rights Offering (Note 10)	$ 4,132		20,507,397		20,511,529
Rights Offering (Note 10) (in shares)	4,132,232
Conversion of Related-Party Note (Note 8)	$ 800		6,160,102		6,160,902
Conversion of Related-Party Note (Note 8) (in shares)	800,000
Partial Conversion of Option to Purchase (Note 3)	$ 600		3,155,400		3,156,000
Partial Conversion of Option to Purchase (Note 3) (in shares)	600,000
Warrants Exercised (Note 10)	$ 129		949,642		949,771
Warrants Exercised (Note 10) (in shares)	128,800
Ending balance, value at Jun. 30, 2024	$ 90,897		$ 131,564,222	$ (72,983,785)	$ 58,671,334
Ending balance (in shares) at Jun. 30, 2024	31,375,375	6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Cash Flows From Operating Activities:
Net Income (Loss)	$ (8,364,967)	$ (4,924,500)
Adjustments to Reconcile Net Income (Loss) to Net Cash
Stock-Based Compensation	1,301,637	2,130,445
Amortization of Right of Use Assets	271,467	163,785
Depreciation, Depletion and Amortization	4,167,111	1,333,531
Accretion of Asset Retirement Obligation	977,798	806,636
Loss on Commodity Derivatives	859,603	133,480
Settlement on or Purchases of Commodity Derivative Instruments	(263,330)	(41,187)
Loss on Financial Derivatives (Note 8)	998,000
Amortization of Debt Discount on Convertible Notes	500,382
Gain on extinguishment of debt	(16,611)
Change in Operating Assets and Liabilities:
Accounts Receivable	(630,061)	(2,039,189)
Inventory, Oil in Tanks	(17,741)	(265,802)
Prepaids, Current	460,201	708,549
Accounts Payable	1,854,786	(1,697,939)
Accrued Expenses	1,029,700	(3,642,305)
Other Long-Term Assets and Liabilities	(1,021,396)	(650,134)
Net Cash Provided By (Used In) Operating Activities	2,106,579	(7,984,630)
Cash Flows From Investing Activities:
Deposit for Acquistion of Oil and Natural Gas Properties		(670,000)
Additions to Oil and Natural Gas Properties (a)	(30,143,188)	(3,127,847)
Purchase of Other Fixed Assets	(119,891)	(153,036)
Cash Paid for Right of Use Assets	(250,475)	(204,105)
Sinking Fund Deposit		2,779,000
Net Cash Provided By (Used In) Investing Activities	(30,513,554)	(1,375,988)
Cash Flows From Financing Activities:
Borrowings on Credit Facility	3,950,000
Proceeds from Promissory Note - Related Party (Note 8)	5,000,000
Proceeds from Rights Offering (Net of Transaction Costs) (Note 10)	20,511,529
Principal Payments of Debt	(218,192)	(1,288,974)
Net Proceeds from Warrant Exercise (Note 10)	628,903
Net Cash Provided By (Used In) Financing Activities	29,872,240	(1,288,974)
Net Change in Cash	1,465,265	(10,649,592)
Cash - Beginning of Period	7,792,508	11,944,442
Cash - End of Period	9,257,773	1,294,850
Supplemental Cash Flow Information:
Cash Paid for Interest	$ 436,616	$ 272,471

Organization and Basis of Presentation

6 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Basis of Presentation

Note 1 - Organization and Basis of Presentation

●	Empire New Mexico, LLC (“Empire New Mexico”)
		o	Empire New Mexico LLC d/b/a Green Tree New Mexico
		o	Empire EMSU LLC
		o	Empire EMSU-B LLC
		o	Empire AGU LLC
		o	Empire NM Assets LLC
●	Empire Rockies Region
		o	Empire North Dakota LLC (“Empire North Dakota”)
		o	Empire North Dakota Acquisition LLC (“Empire NDA”)
●	Empire Texas (“Empire Texas”), consisting of the following entities:
		o	Empire Texas LLC
		o	Empire Texas Operating LLC
		o	Empire Texas GP LLC
		o	Pardus Oil & Gas Operating, LP (owned 1% by Empire Texas GP LLC and 99% by Empire Texas LLC)
●	Empire Louisiana LLC (“Empire Louisiana”)

Liquidity and Going Concern

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2 – Summary of Significant Accounting Policies

Significant Accounting Policies

Convertible Debt and Derivative Liability

Fair Value Measurements

The three-level fair value hierarchy for disclosure of fair value measurements defined by ASC Topic 820 is as follows:

Fair Value on a Nonrecurring Basis

Related Party Transactions

Concentrations of Credit Risk

Recently Adopted Accounting Standards

Property

6 Months Ended

Jun. 30, 2024

Property, Plant and Equipment [Abstract]

Property

Note 3 – Property

Costs incurred to maintain wells and related equipment and lease and well operating costs are charged to expense as incurred.

Depletion is calculated on a units-of-production basis at the field level based on total proved developed reserves.

Aggregate capitalized costs of oil and natural gas properties are as follows:

	June 30, 2024			December 31, 2023
Proved properties	$	119,421,112		$	75,346,623
Unproved properties		3,820,480			3,245,431
Work in process		267,982			14,917,749
Gross capitalized costs		123,509,574			93,509,803

Depreciation, depletion, amortization and impairment		(27,040,862	)		(22,996,805	)
Total oil and gas properties, net	$	96,468,712		$	70,512,998

The Company has completed eight wells in North Dakota related to our Starbuck Drilling program during the first half of 2024.

	June 30, 2024			December 31, 2023
Other property and equipment, at cost	$	3,117,909		$	2,998,018
Less: Accumulated depreciation		(1,492,039	)		(1,114,807	)
Other property and equipment, net	$	1,625,870		$	1,883,211

Asset Retirement Obligations

6 Months Ended

Jun. 30, 2024

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligations

Note 4 - Asset Retirement Obligations

The Company’s asset retirement obligation activity is as follows:


	For the Six Months Ended June 30,
	2024			2023
Asset retirement obligations, beginning of period	$	28,168,427		$	25,000,740
Additions		788,473			—
Liabilities settled		(585,198	)		(656,249	)
Revisions		—			2,303,939
Accretion expense		977,798			806,636
Asset retirement obligation, end of period	$	29,349,500		$	27,455,066
Less current portion included in Accrued Expenses		700,000			—
Asset retirement obligation, long-term	$	28,649,500		$	27,455,066

Commodity Derivative Financial Instruments

6 Months Ended

Jun. 30, 2024

Investments, All Other Investments [Abstract]

Commodity Derivative Financial Instruments

Note 5 – Commodity Derivative Financial Instruments

The following table summarizes the net realized and unrealized losses reported in earnings related to the commodity derivative instruments for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Loss on Derivatives:
Oil derivatives (a)	$	(1,453	)	$	(66,657	)	$	(859,603	)	$	(133,480	)

________

(a)

The following represents the Company’s net settlements related to derivatives for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30,					Six Months Ended June 30,
	2024			2023		2024			2023

Oil derivatives	$	(252,630	)	$	—	$	(263,330	)	$	(41,187	)

The following table sets forth the Company’s outstanding derivative contracts at June 30, 2024:

	3rd Quarter 2024		4th Quarter 2024

WTI Fixed-Price Swaps:
Quarterly volume (MBbls)		30.00		30.00
Weighted-average fixed price (Bbl)	$	77.02	$	75.57

Accounts Receivable

6 Months Ended

Jun. 30, 2024

Credit Loss [Abstract]

Accounts Receivable

Note 6 – Accounts Receivable

The following table represents the Company’s accounts receivable as of June 30, 2024 and December 31, 2023:

	June 30, 2024		December 31, 2023

Oil, Gas and NGL Receivables	$	3,572,430	$	2,784,745
Joint Interest Billings		5,066,830		5,444,331
Other		143,791		125,560
Total Accounts Receivable	$	8,783,051	$	8,354,636

Accrued Expenses

6 Months Ended

Jun. 30, 2024

Payables and Accruals [Abstract]

Accrued Expenses

Note 7 – Accrued Expenses

The following table represents the Company’s accrued expenses as of June 30, 2024 and December 31, 2023:

	June 30, 2024		December 31, 2023

Accrued and suspended third-party revenue	$	5,340,541	$	4,049,984
Accrued salaries and payroll taxes		678,678		1,059,295
Accrued production taxes		1,016,238		829,226
Other		1,069,545		1,136,797
	$	8,105,002	$	7,075,302

Debt Including Debt with Related Parties

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Debt Including Debt with Related Parties

Note 8 – Debt Including Debt with Related Parties

The following table represents the Company’s outstanding debt as of June 30, 2024 and December 31, 2023:

	As of June 30, 2024			As of December 31, 2023

Equity Bank Credit Facility	$	8,442,484		$	4,492,484


Note Payable – Related Party		1,060,004			1,060,004

Equipment and vehicle notes, 0.00% to 9.00% interest rates, due in 2025 to 2028 with monthly payments ranging from $900 to $1,400 per month		126,632			148,516

Note Payable to insurance provider, bears 7.29% interest, matures January 2025, monthly payments of principal and interest of $51,067		294,465			—

Total Debt		9,923,585			5,701,004
Less: Current Maturities		(339,825	)		(44,225	)
Less: Note Payable – Related Party		(1,060,004	)		(1,060,004	)
Long-Term debt	$	8,523,756		$	4,596,775

Promissory Note – Related Party

On May 24, 2024, Energy Evolution elected to convert the Note to shares of common stock of the Company and received 800,000 shares under the terms of the Note.

Note Payable – Related Party

Leases

6 Months Ended

Jun. 30, 2024

Leases

Leases

Note 9 - Leases

The Company also leases vehicles primarily used in our field operations. These vehicle leases typically have a three-year life.

Supplemental balance sheet information related to the right-of-use leases is as follows:

Schedule of right of use leases

	June 30, 2024		December 31, 2023

Net operating lease asset (included in Other Property and Equivpment)	$	840,309	$	1,077,031

Current portion of lease liability	$	425,528	$	432,822
Long-term lease liability		338,953		544,382
Total right-of-use lease liabilities	$	764,481	$	977,204

The weighted-average remaining term for the Company’s right-of-use leases is 1.8 years. The weighted-average discount rate was 8.44% for the second quarter of 2024.

Maturities of lease liabilities are as follows as of June 30, 2024:


Year 1	$	472,636
Year 2		315,124
Year 3		39,996
Year 4		—
Year 5		—
Total lease payments		827,756
Less imputed interest		(63,275	)
Total lease obligation	$	764,481

Equity

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

Equity

Note 10 – Equity

Preferred Stock

Series A Voting Preferred Stock

Except as discussed above or as otherwise set forth in the certificate of designation of the Series A Voting Preferred Stock, the holders of the Series A Voting Preferred Stock have no voting rights.

	•	any or all shares of Series A Voting Preferred Stock are held by anyone other than the Initial Holder or a Permitted Transferee; or
	•	the Series A Holders together hold less than 3,000,000 shares of the Company’s outstanding common stock.

The Series A Voting Preferred Stock is not convertible into common stock or any other security.

Common Stock

Earnings Per Share

Stock-Based Compensation

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Note 11 – Stock-Based Compensation

The following summary reflects nonvested restricted stock unit activity and related information for the six months ended June 30, 2024.

				Weighted Average
	RSUs			Fair Value (a)

Outstanding, December 31, 2023		204,817		$	10.61
Granted		36,060			5.18
Vested		(104,874	)		11.71
Forfeited		(22,500	)		11.05
Outstanding, June 30, 2024		113,503		$	7.79

(a) Shares are valued at the grant-date market price.

The following summary reflects stock option activity and related information:

				Weighted Average
	Options			Exercise Price

Outstanding, December 31, 2023		2,065,381		$	4.89
Granted		—			—
Exercised		(184,100	)		1.35
Cancelled		—			—
Outstanding, June 30, 2024		1,881,281		$	5.23

The following table summarizes information about stock options outstanding as of June 30, 2024.

Range of	Options	Weighted Average	Weighted	Options	Weighted
Exercise	Outstanding	Remaining	Average	Exercisable	Average
Prices	at 6/30/24	Contractual Life	Exercise Price	at 6/30/24	Exercise Price

$1.32 to $12.36	1,881,281	4.35 years	$5.23	1,620,860	$4.25

Executive Separations

6 Months Ended

Jun. 30, 2024

Executive Separations

Executive Separations

Note 12 – Executive Separations

Income Taxes

6 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Note 13 – Income Taxes

	For the Three Months Ended June 30,										For the Six Months Ended June 30,
	2024					2023					2024					2023
	$			%		$			%		$			%		$			%

Provision (benefit) at statutory rate		(921,852	)		21.0%		(517,631	)		21.0%		(1,756,643	)		21.0%		(1,034,145	)		21.0%
State Taxes (net of federal impact)		(210,849	)		4.8%		(118,589	)		4.8%		(401,786	)		4.8%		(236,923	)		4.8%
Nondeductible Expenses		3,123			-0.1%		1,972			-0.1%		9,524			-0.1%		3,940			-0.1%
Stock Options Exercised		(26,831	)		0.6%		—			0.0%		(130,627	)		1.6%		—			0.0%
Valuation Allowance		1,156,409			-26.3%		634,248			-25.7%		2,279,532			-27.3%		1,267,128			-25.7%
Income tax provision (benefit)		—			0.0%		—			0.0%		—			0.0%		—			0.0%

Related Party Transactions

6 Months Ended

Jun. 30, 2024

Related Party Transactions

Note 14 – Related Party Transactions

On June 28, 2024, Energy Evolution exercised warrants of the Company and received 128,800 shares in exchange for $644,000. See Note 10 for additional information.

Commitments and Contingencies

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 15 – Commitments and Contingencies

Agreed Compliance Order

Summary of Significant Accounting Policies (Policies)	6 Months Ended
Summary of Significant Accounting Policies (Policies)	Jun. 30, 2024
Accounting Policies [Abstract]
Significant Accounting Policies	Significant Accounting Policies During the six months ended June 30, 2024, the Company added one significant accounting policy and estimate relating to convertible debt and derivative liability. Besides this, there have been no material changes to significant accounting policies and estimates from the information provided in the Form 10-K for the year ended December 31, 2023.
Convertible Debt and Derivative Liability	Convertible Debt and Derivative Liability In connection with the Company’s issuance of a Promissory Note in the first quarter of 2024, the Company bifurcated the embedded conversion option, and recorded the embedded conversion option as a long-term derivative liability in the Company’s Condensed Consolidated Balance Sheet in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging. The convertible debt and the derivative liability associated with the Promissory Note were presented on the Condensed Consolidated Balance Sheet as the Long-Term Note Payable – Related Party and long-term Derivative Instruments. The convertible debt was carried at amortized cost. The derivative liability was remeasured at each reporting period using a binomial lattice model with changes in fair value recorded in the Condensed Consolidated Statements of Operations in Other Income (Expense). The conversion option related to the Promissory Note was exercised in the second quarter of 2024. See Note 8 for further details.
Fair Value Measurements	Fair Value Measurements FASB ASC Topic 820, Fair Value Measurement (ASC Topic 820), defines fair value, establishes a consistent framework for measuring fair value and establishes a fair value hierarchy based on the observability of inputs used to measure fair value. The three-level fair value hierarchy for disclosure of fair value measurements defined by ASC Topic 820 is as follows: Level 1 – Unadjusted, quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. An active market is defined as a market where transactions for the financial instrument occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 – Inputs, other than quoted prices within Level 1, that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. Level 3 – Prices or valuations that require unobservable inputs that are both significant to the fair value measurement and unobservable. Valuation under Level 3 generally involves a significant degree of judgment from management. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve a degree of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instrument’s complexity. The Company reflects transfers between the three levels at the beginning of the reporting period in which the availability of observable inputs no longer justifies classification in the original level. There were no transfers between fair value hierarchy levels for the period ended June 30, 2024. Financial instruments and other – The fair values determined for accounts receivable, accrued expenses and other current liabilities were equivalent to the carrying value due to their short-term nature. Derivatives – Derivative financial instruments are carried at fair value and measured on a recurring basis. The Company’s commodity price hedges are valued based on discounted future cash flow models that are primarily based on published forward commodity price curves; thus, these inputs are designated as Level 2 within the valuation hierarchy. The fair values of derivative instruments in asset positions include measures of counterparty nonperformance risk, and the fair values of derivative instruments in liability positions include measures of the Company’s nonperformance risk. These measurements were not material to the Condensed Consolidated Financial Statements. Assets and Liabilities Measured at Fair Value on a Recurring Basis - The Company uses a binomial lattice valuation model to value Level 3 derivative liabilities at inception and on subsequent valuation dates. This model incorporates transaction details such as the Company’s stock price, contractual terms of the Promissory Note, and unobservable inputs classified as Level 3 including risk-free rate and expected volatility. As of the conversion option exercise date of May 24, 2024, these unobservable inputs were 5.0% and 46.9%, respectively.
Fair Value on a Nonrecurring Basis	Fair Value on a Nonrecurring Basis The Company applies the provisions of fair value measurement on a non-recurring basis to its non-financial assets and liabilities, including oil and gas properties and asset retirement obligations. These assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments if events or changes in certain circumstances indicate that adjustments may be necessary. No triggering events that require assessment of such items were observed during the six months ended June 30, 2024.
Related Party Transactions	Related Party Transactions Transactions between related parties are considered to be related party transactions even though they may not be given accounting recognition. FASB ASC 850, Related Party Disclosures requires that transactions with related parties that would have influence in decision making shall be disclosed so that users of the financial statements can evaluate their significance. Related party transactions typically occur within the context of the following relationships: affiliates of the entity; entities for which investments in their equity securities is typically accounted for under the equity method by the investing entity; trusts for the benefit of employees; principal owners of the entity and members of their immediate families; management of the entity and members of their immediate families; and other parties that can significantly influence the management or operating policies of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
Concentrations of Credit Risk	Concentrations of Credit Risk The Company’s accounts receivable are primarily receivables from oil and natural gas purchasers and joint interest owners. The purchasers of the Company’s oil and natural gas production consist primarily of independent marketers, major oil and natural gas companies and gas pipeline companies. Historically, the Company has not experienced any significant losses from uncollectible accounts from its oil and natural gas purchasers. The Company operates a substantial portion of its oil and natural gas properties. As the operator of a property, the Company makes full payments for costs associated with the property and seeks reimbursement from the other working interest owners in the property for their share of those costs. Joint operating agreements govern the operations of an oil or natural gas well and, in most instances, provide for offsetting of amounts payable or receivable between the Company and its joint interest owners. The Company’s joint interest partners consist primarily of independent oil and natural gas producers. If the oil and natural gas exploration and production industry in general was adversely affected, the ability of the Company’s joint interest partners to reimburse the Company could be adversely affected.
Recently Adopted Accounting Standards	Recently Adopted Accounting Standards The FASB periodically issues new accounting standards in a continuing effort to improve standards of financial accounting and reporting. The Company has reviewed the recently issued pronouncements and concluded that the following new accounting standards are applicable: In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendments in this ASU affect entities that issue convertible instruments and/or contracts in an entity’s own equity. The amendments in this ASU primarily affect convertible instruments issued with beneficial conversion features or cash conversion features because the accounting models for those specific features are removed. However, all entities that issue convertible instruments are affected by the amendments to the disclosure requirements of this ASU. For contracts in an entity’s own equity, the contracts primarily affected are freestanding instruments and embedded features that are accounted for as derivatives under the current guidance because of failure to meet the settlement conditions of the derivatives scope exception related to certain requirements of the settlement assessment. Also affected is the assessment of whether an embedded conversion feature in a convertible instrument qualifies for the derivatives scope exception. Additionally, the amendments in this ASU affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments. The amendments in this ASU are effective for public business entities, excluding entities eligible to be smaller reporting companies, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Board decided to allow entities to adopt the guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The Company has adopted this standard for the current year and does not expect it to have a material impact on our consolidated financial statements.

Property (Tables)

6 Months Ended

Jun. 30, 2024

Property, Plant and Equipment [Abstract]

Aggregate capitalized costs of oil and natural gas properties are as follows:

	June 30, 2024			December 31, 2023
Proved properties	$	119,421,112		$	75,346,623
Unproved properties		3,820,480			3,245,431
Work in process		267,982			14,917,749
Gross capitalized costs		123,509,574			93,509,803

Depreciation, depletion, amortization and impairment		(27,040,862	)		(22,996,805	)
Total oil and gas properties, net	$	96,468,712		$	70,512,998

Schedule of other property plant and equipment

	June 30, 2024			December 31, 2023
Other property and equipment, at cost	$	3,117,909		$	2,998,018
Less: Accumulated depreciation		(1,492,039	)		(1,114,807	)
Other property and equipment, net	$	1,625,870		$	1,883,211

Asset Retirement Obligations (Tables)

6 Months Ended

Jun. 30, 2024

Asset Retirement Obligation Disclosure [Abstract]

The Company’s asset retirement obligation activity is as follows:


	For the Six Months Ended June 30,
	2024			2023
Asset retirement obligations, beginning of period	$	28,168,427		$	25,000,740
Additions		788,473			—
Liabilities settled		(585,198	)		(656,249	)
Revisions		—			2,303,939
Accretion expense		977,798			806,636
Asset retirement obligation, end of period	$	29,349,500		$	27,455,066
Less current portion included in Accrued Expenses		700,000			—
Asset retirement obligation, long-term	$	28,649,500		$	27,455,066

Commodity Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2024

Investments, All Other Investments [Abstract]

The following table summarizes the net realized and unrealized losses reported in earnings related to the commodity derivative instruments for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Loss on Derivatives:
Oil derivatives (a)	$	(1,453	)	$	(66,657	)	$	(859,603	)	$	(133,480	)

________

(a)

The following represents the Company’s net settlements related to derivatives for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30,					Six Months Ended June 30,
	2024			2023		2024			2023

Oil derivatives	$	(252,630	)	$	—	$	(263,330	)	$	(41,187	)

The following table sets forth the Company’s outstanding derivative contracts at June 30, 2024:

	3rd Quarter 2024		4th Quarter 2024

WTI Fixed-Price Swaps:
Quarterly volume (MBbls)		30.00		30.00
Weighted-average fixed price (Bbl)	$	77.02	$	75.57

Accounts Receivable (Tables)

6 Months Ended

Jun. 30, 2024

Credit Loss [Abstract]

The following table represents the Company’s accounts receivable as of June 30, 2024 and December 31, 2023:

	June 30, 2024		December 31, 2023

Oil, Gas and NGL Receivables	$	3,572,430	$	2,784,745
Joint Interest Billings		5,066,830		5,444,331
Other		143,791		125,560
Total Accounts Receivable	$	8,783,051	$	8,354,636

Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2024

Payables and Accruals [Abstract]

The following table represents the Company’s accrued expenses as of June 30, 2024 and December 31, 2023:

	June 30, 2024		December 31, 2023

Accrued and suspended third-party revenue	$	5,340,541	$	4,049,984
Accrued salaries and payroll taxes		678,678		1,059,295
Accrued production taxes		1,016,238		829,226
Other		1,069,545		1,136,797
	$	8,105,002	$	7,075,302

Debt Including Debt with Related Parties (Tables)

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

The following table represents the Company’s outstanding debt as of June 30, 2024 and December 31, 2023:

	As of June 30, 2024			As of December 31, 2023

Equity Bank Credit Facility	$	8,442,484		$	4,492,484


Note Payable – Related Party		1,060,004			1,060,004

Equipment and vehicle notes, 0.00% to 9.00% interest rates, due in 2025 to 2028 with monthly payments ranging from $900 to $1,400 per month		126,632			148,516

Note Payable to insurance provider, bears 7.29% interest, matures January 2025, monthly payments of principal and interest of $51,067		294,465			—

Total Debt		9,923,585			5,701,004
Less: Current Maturities		(339,825	)		(44,225	)
Less: Note Payable – Related Party		(1,060,004	)		(1,060,004	)
Long-Term debt	$	8,523,756		$	4,596,775

Leases (Tables)

6 Months Ended

Jun. 30, 2024

Leases

Schedule of right of use leases

	June 30, 2024		December 31, 2023

Net operating lease asset (included in Other Property and Equivpment)	$	840,309	$	1,077,031

Current portion of lease liability	$	425,528	$	432,822
Long-term lease liability		338,953		544,382
Total right-of-use lease liabilities	$	764,481	$	977,204

Maturities of lease liabilities are as follows as of June 30, 2024:


Year 1	$	472,636
Year 2		315,124
Year 3		39,996
Year 4		—
Year 5		—
Total lease payments		827,756
Less imputed interest		(63,275	)
Total lease obligation	$	764,481

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

Schedule of non vested restricted stock unit activity

				Weighted Average
	RSUs			Fair Value (a)

Outstanding, December 31, 2023		204,817		$	10.61
Granted		36,060			5.18
Vested		(104,874	)		11.71
Forfeited		(22,500	)		11.05
Outstanding, June 30, 2024		113,503		$	7.79

(a) Shares are valued at the grant-date market price.

The following summary reflects stock option activity and related information:

				Weighted Average
	Options			Exercise Price

Outstanding, December 31, 2023		2,065,381		$	4.89
Granted		—			—
Exercised		(184,100	)		1.35
Cancelled		—			—
Outstanding, June 30, 2024		1,881,281		$	5.23

Schedule of summarizes information about stock options outstanding

Range of	Options	Weighted Average	Weighted	Options	Weighted
Exercise	Outstanding	Remaining	Average	Exercisable	Average
Prices	at 6/30/24	Contractual Life	Exercise Price	at 6/30/24	Exercise Price

$1.32 to $12.36	1,881,281	4.35 years	$5.23	1,620,860	$4.25

Income Taxes (Tables)

6 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

Schedule of reconciliation of effective income tax rate

	For the Three Months Ended June 30,										For the Six Months Ended June 30,
	2024					2023					2024					2023
	$			%		$			%		$			%		$			%

Provision (benefit) at statutory rate		(921,852	)		21.0%		(517,631	)		21.0%		(1,756,643	)		21.0%		(1,034,145	)		21.0%
State Taxes (net of federal impact)		(210,849	)		4.8%		(118,589	)		4.8%		(401,786	)		4.8%		(236,923	)		4.8%
Nondeductible Expenses		3,123			-0.1%		1,972			-0.1%		9,524			-0.1%		3,940			-0.1%
Stock Options Exercised		(26,831	)		0.6%		—			0.0%		(130,627	)		1.6%		—			0.0%
Valuation Allowance		1,156,409			-26.3%		634,248			-25.7%		2,279,532			-27.3%		1,267,128			-25.7%
Income tax provision (benefit)		—			0.0%		—			0.0%		—			0.0%		—			0.0%

Aggregate capitalized costs of oil and natural gas properties are as follows: (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment [Abstract]
Proved properties	$ 119,421,112	$ 75,346,623
Unproved Properties	3,820,480	3,245,431
Work in process	267,982	14,917,749
Gross capitalized costs	123,509,574	93,509,803
Depreciation, Depletion, Amortization and Impairment	(27,040,862)	(22,996,805)
Total Oil and Gas Properties, Net	$ 96,468,712	$ 70,512,998

Schedule of other property plant and equipment (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment [Abstract]
Other property and equipment, at cost	$ 3,117,909	$ 2,998,018
Less: accumulated depreciation	(1,492,039)	(1,114,807)
Other property and equipment, net	$ 1,625,870	$ 1,883,211

Property (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
Property (Details Narrative) - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Aug. 09, 2024	May 09, 2024
Depletion and amortization expense	$ 2,613,000	$ 657,000	$ 4,044,000	$ 1,221,000
Agreed Value of purchase price for energy evolution					$ 3,000,000
Actual Value of purchase price for energy evolution					5,000,000
Exercise price of the remaining option assets					$ 2,000,000
Depreciation expense	$ 64,000	$ 54,000	$ 123,000	$ 113,000
Common Stock [Member]
Common Stock Issued For Energy Evolution						600,000
Common stock par or stated value per share for energy evolution					$ 5.00
Common Stock issued for energy evolution purchase option extension					16,800

The Company’s asset retirement obligation activity is as follows: (Details) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Asset Retirement Obligation Disclosure [Abstract]
Asset retirement obligations, beginning of period	$ 28,168,427	$ 25,000,740
Additions	788,473
Liabilities settled	(585,198)	(656,249)
Revisions		2,303,939
Accretion expense	977,798	806,636
Asset retirement obligation, end of period	29,349,500	27,455,066
Less current portion included in Accrued Expenses	700,000
Asset retirement obligation, long-term	$ 28,649,500	$ 27,455,066

The following table summarizes the net realized and unrealized losses reported in earnings related to the commodity derivative instruments for the three and six months ended June 30, 2024 and 2023: (Details) - USD ($)

3 Months Ended

6 Months Ended

Jun. 30, 2024

Jun. 30, 2023

Jun. 30, 2024

Jun. 30, 2023

Credit Derivatives [Line Items]

Gain (loss) on derivatives

$ (1,453)

$ (66,657)

$ (859,603)

$ (133,480)

Oil Derivatives [Member]

Credit Derivatives [Line Items]

Gain (loss) on derivatives

^[1]

$ (1,453)

$ (66,657)

$ (859,603)

$ (133,480)

[1]	Includes $251,177 of unrealized derivative gain and $66,657 of unrealized derivative losses for the three months ended June 30, 2024 and 2023, respectively, and includes $596,273 and $92,293 of unrealized derivative losses for six months ended June 30, 2024 and 2023, respectively.

The following represents the Company’s net settlements related to derivatives for the three and six months ended June 30, 2024 and 2023: (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Investments, All Other Investments [Abstract]
Net cash receipts from (payments on) derivatives	$ (252,630)		$ (263,330)	$ (41,187)

The following table sets forth the Company’s outstanding derivative contracts at June 30, 2024: (Details) - Oil Swaps [Member] - Two Zero Two Four [Member]	Jun. 30, 2024 $ / shares
Third Quarter [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Quarterly volume (MBbls)	30.00
Weighted-average fixed price (Bbl)	$ 77.02
Fourth Quarter [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Quarterly volume (MBbls)	30.00
Weighted-average fixed price (Bbl)	$ 75.57

The following table represents the Company’s accounts receivable as of June 30, 2024 and December 31, 2023: (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Credit Loss [Abstract]
Oil, Gas and NGL Receivables	$ 3,572,430	$ 2,784,745
Joint Interest Billings	5,066,830	5,444,331
Other	143,791	125,560
Total Accounts Receivable	$ 8,783,051	$ 8,354,636

The following table represents the Company’s accrued expenses as of June 30, 2024 and December 31, 2023: (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Payables and Accruals [Abstract]
Accrued and suspended third-party revenue	$ 5,340,541	$ 4,049,984
Accrued salaries and payroll taxes	678,678	1,059,295
Accrued production taxes	1,016,238	829,226
Other	1,069,545	1,136,797
Accrued Expenses	$ 8,105,002	$ 7,075,302

The following table represents the Company’s outstanding debt as of June 30, 2024 and December 31, 2023: (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Total debt	$ 9,923,585	$ 5,701,004
Less: current maturities	(339,825)	(44,225)
Less: note payable - related party	(1,060,004)	(1,060,004)
Long term debt	8,523,756	4,596,775
Equity Bank Credit Facility [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Total debt	8,442,484	4,492,484
Note Payable Related Party [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Total debt	1,060,004	1,060,004
Various Vehicleand Equipment Loans [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Total debt	126,632	148,516
Note Payable Insurance Provider Bears Interest Matures [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Total debt	$ 294,465

Debt Including Debt with Related Parties (Details Narrative) - USD ($)			6 Months Ended
	Feb. 16, 2024	Dec. 29, 2023	Jun. 30, 2024	Jul. 31, 2024	Feb. 15, 2024	Aug. 01, 2023
Short-Term Debt [Line Items]
Debt description		entered into a Revolver Loan Agreement with Equity Bank (the "Credit Facility”). Pursuant to the Credit Facility (a) the initial revolver commitment amount is $10,000,000; (b) the maximum revolver commitment amount is $15,000,000; (c) commencing on January 31, 2024, and occurring on the last day of each calendar month thereafter, the revolver commitment amount is reduced by $150,000; (d) commencing on March 31, 2024, there are scheduled semiannual collateral borrowing base redeterminations each year on March 31 and September 30; (e) the final maturity date is December 29, 2026; (f) outstanding borrowings bear interest at a rate equal to the prime rate of interest plus 1.50%, and in no event lower than 8.50%; (g) a quarterly commitment fee is based on the unused portion of the commitments; and (h) Borrowers have the right to prepay loans under the Credit Facility at any time without a prepayment penalty.
Subsequent Event [Member]
Short-Term Debt [Line Items]
Remaining outstanding amount				$ 1,060,004
Petroleum And Independent Exploration L L C [Member] \| August Six Two Thousand Twenty [Member] \| Joint Development Agreement [Member]
Short-Term Debt [Line Items]
Loan from related party						$ 2,000,000
Interest rate						6.00%
Description of working and revenue interest			In addition, the Company assigned 85% working and revenue interest to PIE in the designated wells which will be applied to repayment of the loan. As of June 30, 2024, $1,060,004 has been advanced from the PIE loan.
Fair Value, Inputs, Level 3 [Member] \| Energy Evolution Master Fund Ltd [Member]
Short-Term Debt [Line Items]
Description of fair value of the derivative			The estimated fair value of the derivative liability, which represents a Level 3 valuation, was $1,292,000 as of March 31, 2024 and was determined using a binomial lattice model using certain assumptions and inputs discussed in Note 2. Accordingly, the Company recognized a gain on the fair value adjustment of the derivative liability in the amount of approximately $738,000 in Other Income (Expense) in the Condensed Consolidated Statements of Operations for the quarter ended March 31, 2024. The conversion option was exercised by Energy Evolution on May 24, 2024, and the fair value of the derivative was revalued as of that date resulting in a loss of $1,736,000 in the second quarter of 2024.
Promissory Note [Member]
Short-Term Debt [Line Items]
Interest rate					7.00%
Remaining unpaid accrues interest					9.00%
Energy Evolution [Member] \| Promissory Note [Member]
Short-Term Debt [Line Items]
Principal amount	$ 5,000,000
Advances to affiliate	$ 5,000,000

Schedule of right of use leases (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Leases
Net operating lease asset (included in Other Property and Equivpment)	$ 840,309	$ 1,077,031
Current portion of lease liability	425,528	432,822
Long-term lease liability	338,953	544,382
Total right-of-use lease liabilities	$ 764,481	$ 977,204

Maturities of lease liabilities are as follows as of June 30, 2024: (Details)	Jun. 30, 2024 USD ($)
Leases
Year 1	$ 472,636
Year 2	315,124
Year 3	39,996
Year 4
Year 5
Total lease payments	827,756
Less imputed interest	(63,275)
Total lease obligation	$ 764,481

Leases (Details Narrative) - USD ($)	6 Months Ended
Leases (Details Narrative) - USD ($)	Jun. 30, 2024	Jun. 30, 2023
Property, Plant and Equipment [Line Items]
Leases expire year	The leases expire between 2024 and 2027
Renewal term	5 years
Right of use lease expense	$ 271,000	$ 164,000
Cash paid for right of use leases	$ 250,000	$ 164,000
Weighted average remaining term for right of use leases	1 year 9 months 18 days
Weighted average discount rate	8.44%
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Renewal term	5 years

Equity (Details Narrative) - USD ($)		1 Months Ended	3 Months Ended	6 Months Ended
Equity (Details Narrative) - USD ($)	May 29, 2024	Apr. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Jun. 28, 2024	Dec. 31, 2023
Class of Stock [Line Items]
Common stock, authorized				190,000,000			190,000,000
Common stock par value				$ 0.001			$ 0.001
Preferred stock, authorized				10,000,000			10,000,000
Preferred stock, par value				$ 0.001			$ 0.001
Preferred stock voting rights				the voting rights of the Series A Voting Preferred Stock are contingent upon the Initial Holder and Permitted Transferees (collectively, the “Series A Holders”) holding together at least 3,000,000 shares of the Company’s outstanding common stock.
Restricted Stock Units (RSUs) [Member]
Class of Stock [Line Items]
Anti dilutive shares			2,102,635	1,086,673	2,153,158
Energy Evolution Master Fund Ltd [Member]
Class of Stock [Line Items]
Description of warrants	the Company issued Energy Evolution a warrant certificate granting them the right to purchase 128,800 shares of common stock of the Company at $5.00 per share.
Energy Evolution Ltd [Member]
Class of Stock [Line Items]
Exercised of warrant share						128,800
Exchange share of warrants						$ 644,000
Rights [Member]
Class of Stock [Line Items]
Gross proceeds		$ 20,660,000,000,000
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock voting rights				Series A Voting Preferred Stock for $1.00 per share following satisfaction of its notice and cure requirements in the event that
Number of share oustanding				3,000,000

Schedule of non vested restricted stock unit activity (Details) - Restricted Stock Units (RSUs) [Member]	6 Months Ended
	Jun. 30, 2024 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Restricted stock unit, outstanding beginning \| shares	204,817
Weighted average fair value, beginning \| $ / shares	$ 10.61
Restricted stock unit, Granted \| shares	36,060
Weighted average fair value, Granted \| $ / shares \| $ / shares	$ 5.18
Restricted stock unit, Vested \| shares	(104,874)
Weighted average fair value, Vested \| $ / shares	$ 11.71
Restricted stock unit, Forfeited \| shares	(22,500)
Weighted average fair value, Forfeited \| $ / shares	$ 11.05
Restricted stock unit, outstanding Ending \| shares	113,503
Weighted average fair value, Ending \| $ / shares	$ 7.79

The following summary reflects stock option activity and related information: (Details) - Options Held [Member]	6 Months Ended
	Jun. 30, 2024 $ / shares shares
Offsetting Assets [Line Items]
Options outstanding, beginning \| shares	2,065,381
Weighted average exercise price, beginning \| $ / shares	$ 4.89
Options outstanding, granted \| shares
Weighted average exercise price, granted \| $ / shares
Options outstanding, exercised \| shares	(184,100)
Weighted average exercise price, exercised \| $ / shares	$ 1.35
Options outstanding, cancelled \| shares
Weighted average exercise price, cancelled \| $ / shares
Options outstanding, ending \| shares	1,881,281
Weighted average exercise price, ending \| $ / shares	$ 5.23

Schedule of summarizes information about stock options outstanding (Details) - Options Held [Member] - $ / shares	6 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Offsetting Assets [Line Items]
Range of exercise price, minimum	$ 1.32
Range of exercise price, maximum	$ 12.36
Options outstanding	1,881,281	2,065,381
Weighted average remaining contractual life	4 years 4 months 6 days
Weighted average exercise price	$ 5.23	$ 4.89
Options exercisable	1,620,860
Weighted average exercise price, exercisable	$ 4.25

Executive Separations (Details Narrative) - Chief Executive Officer [Member] - USD ($)	Mar. 16, 2023	Dec. 31, 2022
Severance benefits	$ 360,000
Issuance of stock option shares	340,234
Options receivables value	$ 2,100,000
Withholding liability payables		$ 2,100,000

Schedule of reconciliation of effective income tax rate (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Tax Disclosure [Abstract]
Provision (benefit) at statutory rate	$ (921,852)	$ (517,631)	$ (1,756,643)	$ (1,034,145)
Provision (benefit) at statutory rate, percentage	21.00%	21.00%	21.00%	21.00%
State Taxes (net of federal impact)	$ (210,849)	$ (118,589)	$ (401,786)	$ (236,923)
State Taxes (net of federal impact), percentage	4.80%	4.80%	4.80%	4.80%
Nondeductible Expenses	$ 3,123	$ 1,972	$ 9,524	$ 3,940
Nondeductible Expenses, percentage	(0.10%)	(0.10%)	(0.10%)	(0.10%)
Return to Provision	$ (26,831)		$ (130,627)
Return to Provision, percentage	0.60%	0.00%	1.60%	0.00%
Valuation Allowance	$ 1,156,409	$ 634,248	$ 2,279,532	$ 1,267,128
Valuation Allowance, percentage	(26.30%)	(25.70%)	(27.30%)	(25.70%)
Income tax provision (benefit)
Income tax provision (benefit), percentage	0.00%	0.00%	0.00%	0.00%

Income Taxes (Details Narrative)	3 Months Ended		6 Months Ended
Income Taxes (Details Narrative)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Tax Disclosure [Abstract]
Effective tax rate	0.00%	0.00%	0.00%	0.00%

Related Party Transactions (Details Narrative) - USD ($)			6 Months Ended
	May 24, 2024	Feb. 16, 2024	Jun. 30, 2024	Jun. 30, 2023	Jun. 28, 2024
Related Party Transaction [Line Items]
Accounts receivable			$ 630,061	$ 2,039,189
Term Loan [Member]
Related Party Transaction [Line Items]
Total Debt			$ 1,100,000
Energy Evolution Master Fund Ltd [Member]
Related Party Transaction [Line Items]
Percentage of ownership			31.60%
Energy Evolution Ltd [Member]
Related Party Transaction [Line Items]
Percentage of ownership			19.90%
Advance amount		$ 5,000,000
Number of share received	800,000
Exercised of warrant share					128,800
Exchange share of warrants					$ 644,000
Accounts receivable			$ 1,080,000
Revenue payable			$ 121,000
Energy Evolution Ltd [Member] \| Warrant [Member]
Related Party Transaction [Line Items]
Exercised of warrant share					128,800
Exchange share of warrants					$ 644,000

Commitments and Contingencies (Details Narrative) - USD ($)	1 Months Ended
	Jul. 31, 2024	Jan. 31, 2024	Dec. 31, 2024	Jun. 30, 2024
Public Utilities, General Disclosures [Line Items]
Remaining escrow balance receivable				$ 450,000
Subsequent Event [Member]
Public Utilities, General Disclosures [Line Items]
Outstanding escrow funds	$ 250,000
Remaining balance			$ 200,000
New Mexico Oil Conservation Division Member
Public Utilities, General Disclosures [Line Items]
Deposited into escrow account		$ 1,000,000
Agreed Compliance Order Member
Public Utilities, General Disclosures [Line Items]
Remaining escrow balance receivable		$ 10,000