Empire Petroleum Corporation has announced its financial results for the first quarter of 2026, detailing operational progress across its producing assets in New Mexico, North Dakota, Montana, Texas, and Louisiana. The company reported a net production of 1,880 barrels of oil equivalent per day (Boe/d), impacted by operational and weather-related disruptions. Key developments include advancements in its Texas natural gas program, a patent allowance for its proprietary steam generation technology, and progress in its Louisiana development participation.
Operational Progress and Challenges
In the first quarter of 2026, Empire Petroleum's net production reached 1,880 Boe/d, comprising 66% oil, 10% natural gas liquids (NGLs), and 24% natural gas. Production volumes were affected by operational issues in North Dakota and New Mexico, alongside weather-related disruptions in Texas. The company anticipates a recovery in production during the second quarter of 2026.
Empire continued its Texas natural gas development program, focusing on reactivation, recompletion, and field work to restore baseline production and enhance deliverability. This program began contributing production during the quarter, with three wells successfully reactivated and five more in progress. Early results indicate a 45% increase in net volumes from these reactivated wells compared to the fourth quarter of 2025. To support this growth, field infrastructure was significantly enhanced, including a more than 500% increase in field compression capacity, removing prior constraints and expanding operating capacity to approximately 3 million cubic feet per day (MMcfd). Capital deployment in Texas remained disciplined, with actual spend of approximately $1.7 million against an estimate of $2.4 million.
In North Dakota, efforts focused on the Starbuck Drilling Program, with initiatives to improve safety, reliability, and heat utilization for thermal recovery operations. Compressor relocation activities were completed to enhance operational safety and heat utilization. A preventive chemical treatment program was also initiated to mitigate scale formation and support sustained injection performance. Notably, subsequent to the quarter, Empire received a Notice of Allowance from the U.S. Patent and Trademark Office for its proprietary superheated steam generation and injection technology, which supports its thermal recovery initiatives and long-term development strategy in North Dakota.
Empire also advanced its participation in a Louisiana oil and natural gas development program, focusing on project integration, pre-drill planning, and operational coordination for a three-well program. Following the quarter, participation terms were amended to reflect Empire's full involvement, funded through a combination of equity and cost sharing.
Financial Performance and Capital Structure
Empire Petroleum reported total product revenue of $7.7 million for Q1 2026, a decrease from $9.0 million in Q1 2025, primarily attributed to lower overall production and realized prices across all commodities. The company recorded a net loss of $6.6 million, or ($0.18) per diluted share, compared to a net loss of $4.2 million, or ($0.12) per diluted share, in Q1 2025. Adjusted EBITDA for Q1 2026 was ($0.7) million, compared to ($0.6) million in Q1 2025.
The company strengthened its capital structure through a subscription rights offering in March 2026, which generated approximately $10.0 million in gross proceeds. Subscriptions exceeded 100% of available securities, with oversubscribing stockholders receiving their pro-rata share. Energy Evolution Master Fund, Ltd., the company's largest shareholder, fully participated, as did Phil E. Mulacek, Chairman of the Board. Additionally, Empire settled a $3.0 million convertible note held by Phil Mulacek in March 2026 through the issuance of 1,003,344 shares of common stock.
Capital expenditures for Q1 2026 totaled approximately $1.9 million, primarily directed towards the Texas gas development program. As of March 31, 2026, Empire had approximately $8.8 million in cash on hand and $2.7 million available on its credit facility.
Strategic Outlook and Future Plans
Phil Mulacek, Chairman of the Board, highlighted the company's focus on infrastructure readiness in Texas, with increased compression capacity aimed at de-bottlenecking production and capitalizing on higher oil prices and stronger gas sales. The company is making steady progress in existing zones and evaluating deeper production intervals. In North Dakota, continued application of thermal recovery technology is enhancing understanding of heat application, with well workovers aimed at increasing oil production.
Mike Morrisett, President & CEO, emphasized the quarter's focus on advancing projects across the portfolio, initiating production contributions in Texas supported by improved infrastructure, and strengthening the company's financial and operational position. The Louisiana program is viewed as an additional source of production and reserve growth, with defined capital exposure and a measured development process.
Looking ahead to Q2 2026, Empire expects Texas gas volumes to increase as additional reactivated wells are brought online and low-pressure booster compression units are installed, supporting throughput increases toward approximately 9 MMcfd. The company plans to continue sequencing reactivations and recompletions throughout 2026, with the first drilling rig expected on site in June 2026. Evaluation of deeper intervals, including the Cotton Valley-Bossier and Western Haynesville, is also advancing. In Louisiana, the three wells are expected to be drilled and cased by the end of Q2 2026, with a full technical update to follow.
In North Dakota, steam unit performance enhancements and water management initiatives are scheduled to begin in May 2026. The company is focused on collaborating with research and regulatory partners to support technology upgrades and longer-term thermal recovery development.
The New Mexico situation involves ongoing appeals regarding the New Mexico Conservation Commission's Order No. R-24004 and R-24004-A, which affirmed Empire's rights to the Residual Oil Zone (ROZ) and denied applications from Goodnight Midnight Permian, LLC for saltwater disposal wells. Empire is also pursuing motions to revoke existing permits for other disposal companies and advancing litigation for trespass and damages, anticipating a meaningful reduction in operating expenses and improved financial performance in New Mexico upon resolution.
Key Takeaways
- Empire Petroleum reported Q1 2026 net production of 1,880 Boe/d, with volumes impacted by operational and weather disruptions.
- The company advanced its Texas natural gas development program, reactivating wells and significantly increasing field compression capacity.
- Empire received a patent allowance for its proprietary superheated steam generation and injection technology, supporting its North Dakota thermal recovery initiatives.
- A March 2026 rights offering generated approximately $10.0 million in gross proceeds, strengthening the company's capital structure.
EnergyInsyte's Take
Empire Petroleum's first quarter 2026 results indicate a period of operational adjustments and strategic advancements. The company is actively working to restore and enhance production across its portfolio, particularly in Texas, while also pursuing technological innovation and strengthening its financial footing. The resolution of the New Mexico regulatory and legal matters is anticipated to have a positive impact on future operating expenses. Continued execution of its development programs and the successful integration of new technologies will be key to Empire's performance moving forward.
Source: Businesswire
