Empire Petroleum (EP) risk factors, FY2024 10-K

Empire Petroleum's FY2024 10-K, filed Mar 27, 2025, lists 40 risk factors. There is no earlier 10-K to compare against, so the most company-specific risks are listed below.

Risk factors listed
400 groups
Section length
11k wordsItem 1A

Empire Petroleum's biggest risks in the FY2024 10-K

  • Total indebtedness reached $11.3 million under a $19.8 million Credit Facility at year-end 2024.
  • Four customers generated 78 percent of total oil, natural gas, and NGLs revenues.
  • Proved reserves and operations are concentrated in New Mexico, North Dakota, Montana, Texas, and Louisiana.
  • Energy Evolution and Phil Mulacek serve as the two largest stockholders providing crucial capital.

The risks most specific to Empire Petroleum

  • We have indebtedness and may incur substantially more debt. Higher levels of indebtedness make us more vulnerable to economic downturns and adverse business developments

    Total indebtedness was $11.3 million with $11.1 million outstanding under the Credit Facility at December 31, 2024.

  • The loss or unavailability of capital provided by our two largest stockholders could have a material adverse effect on our business

    Energy Evolution Master Fund, Ltd. and Phil Mulacek are our two largest stockholders and a vital source of capital for acquisitions and drilling.

  • Our producing properties and proved reserves are concentrated in New Mexico, North Dakota, Montana, Texas, and Louisiana, making us vulnerable to risks associated with operating in limited major geographic areas

    All proved reserves and producing properties are geographically concentrated in New Mexico, North Dakota, Montana, Texas, and Louisiana.

  • A significant portion of our oil, natural gas, and NGLs sales are concentrated in only a few purchasers, which increases our exposure to substantial sales interruptions

    Four customers accounted for 78 percent of total oil, natural gas, and NGLs revenues for the year ended December 31, 2024.

  • As disclosed in our prior annual reports on Form 10-K, we identified a material weakness in internal controls over financial reporting as of December 31, 2022, and 2021. We believe that this material weakness has been successfully remediated

    Material weaknesses in internal controls over financial reporting were identified as of December 31, 2022 and 2021, though believed remediated.

  • Holders of our outstanding Series A Voting Preferred Stock have effective control of our board of directors

    Holders of the six outstanding shares of Series A Voting Preferred Stock issued to Energy Evolution have effective control of our board of directors.

All 40 risk factors

Headings as the filing states them, in filing order.

Other

  1. 01The Standardized Measure of estimated reserves may not be accurate estimates of the current fair value of estimated proved oil and natural gas reserves
  2. 02Estimates of proved reserves and future net cash flows are not precise. The actual quantities of our proved reserves and future net cash flows may prove to be lower than estimated
  3. 03Furthermore, different reserve engineers may make different estimates of reserves and cash flows based on the same data. Our actual production, revenues and expenditures with respect to reserves will likely be different from estimates and the differences may be material
  4. 04Unless reserves are replaced, production and estimated reserves will decline, which may adversely affect our financial condition, results of operations and/or cash flows
  5. 05New technologies may cause our exploration and development methods to become obsolete, causing an adverse effect on our production
  6. 06We have indebtedness and may incur substantially more debt. Higher levels of indebtedness make us more vulnerable to economic downturns and adverse business developments
  7. 07We may incur substantially more debt in the future. The Credit Facility contains restrictions on the incurrence of additional indebtedness
  8. 08Our business requires substantial capital expenditures. Management may be unable to obtain needed capital or financing on satisfactory terms or at all, which could lead to a decline in oil and natural gas reserves
  9. 09The loss or unavailability of capital provided by our two largest stockholders could have a material adverse effect on our business
  10. 10If we are unable to comply with the covenants in our agreements governing our indebtedness, including the Credit Facility, there could be a default under the terms of such agreements, which could result in an acceleration of payment of funds that we have borrowed
  11. 11A negative shift in stakeholder sentiment towards the oil and natural gas industry and increased attention to ESG matters and conservation matters could adversely affect our ability to raise equity and debt capital
  12. 12The oil and natural gas industry is highly competitive, and our size may put us at a disadvantage in competing for resources
  13. 13A substantial or extended decline in oil and natural gas prices may adversely affect our business, financial condition or results of operations and our ability to meet our capital expenditure obligations and financial commitments
  14. 14Our producing properties and proved reserves are concentrated in New Mexico, North Dakota, Montana, Texas, and Louisiana, making us vulnerable to risks associated with operating in limited major geographic areas
  15. 15A significant portion of our oil, natural gas, and NGLs sales are concentrated in only a few purchasers, which increases our exposure to substantial sales interruptions
  16. 16Our insurance policies may not adequately protect us against certain unforeseen risks
  17. 17Hedging transactions may expose us to risk of financial loss or limit participation in commodity price increases and involve other risks
  18. 18We are subject to various environmental risks, and governmental regulation relating to environmental matters
  19. 19If forecasted prices for oil, natural gas, and NGLs decrease, we may be required to take significant future write-downs of the financial carrying values of our properties in the future
  20. 20A write-down could occur when oil and natural gas prices are low or if we have substantial downward adjustments to our estimated proved oil and natural gas reserves, or if operating costs or development costs increase over prior estimates
  21. 21Properties we acquire may not produce as projected and we may be unable to determine reserve potential, identify liabilities associated with the properties that we acquire or obtain protection from sellers against such liabilities
  22. 22Many of our properties are in areas that may have been partially depleted or drained by offset wells and certain of our wells may be adversely affected by actions we or other operators may take when drilling, completing, or operating wells that we or they own
  23. 23Acquisitions involve a number of risks, including the risk that we will discover unanticipated liabilities or other problems associated with the acquired business or property
  24. 24Our operations are subject to a series of risks arising out of the threat of climate change that could result in increased operating costs, limit the areas in which we may conduct oil, natural gas, and NGLs exploration and production activities, and reduce demand for the oil, natural gas, and NGLs we produce
  25. 25As a final note, climate change could have an effect on the severity of weather (including hurricanes, droughts and floods), sea levels, water availability and quality, and meteorological patterns. If such effects were to occur, our development and production operations have the potential to be adversely affected
  26. 26The marketability of our production is dependent upon gathering systems, transportation facilities and processing facilities that we do not own or control. If these facilities or systems are unavailable, our oil and natural gas production can be interrupted and our revenues reduced
  27. 27We operate or participate in oil and natural gas leases with third-parties who may not be able to fulfill their commitments to our projects
  28. 28Because we cannot control activities on properties we do not operate, we cannot directly control the timing of exploration. If we are unable to fund required capital expenditures with respect to non-operated properties, our interests in those properties may be reduced or forfeited
  29. 29We could be adversely affected by increased costs of service providers utilized by us
  30. 30Our ability to use our existing net operating loss carryforwards or other tax attributes could be further limited
  31. 31Climate change legislation, regulations restricting emissions of GHG’s or legal or other action taken by public or private entities related to climate change could result in increased operating costs and reduced demand for the oil and natural gas that we produce
  32. 32Any change to government regulation or administrative practices may have a negative impact on our ability to operate and our profitability
  33. 33A cyber incident could result in information theft, data corruption, operational disruption and/or financial loss
  34. 34We depend greatly on the efforts of our executive officers and other key employees to manage our operations. The loss or unavailability of any of our executive officers or other key employees could have a material adverse effect on our business
  35. 35As disclosed in our prior annual reports on Form 10-K, we identified a material weakness in internal controls over financial reporting as of December 31, 2022, and 2021. We believe that this material weakness has been successfully remediated
  36. 36We do not expect to declare or pay any dividends in the foreseeable future
  37. 37The price of our common stock may fluctuate significantly, which could negatively affect us and the holders of our common stock
  38. 38Provisions of our certificate of incorporation and bylaws and Delaware law may inhibit a takeover, which could limit the price investors might be willing to pay in the future for our common stock
  39. 39Holders of our outstanding Series A Voting Preferred Stock have effective control of our board of directors
  40. 40The credit risk of our counterparties could adversely affect us

Other Empire Petroleum 10-Ks

  • FY2025 10-K risk factors
    49 risks13 new4 dropped8 reworded

    Severe liquidity constraints and a negative working capital of $16.2 million raise going concern doubts.

    Filed Mar 13, 2026

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.