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Debt and Long Term Note Payable - Related Party
 6 Months Ended
Jun. 30, 2023
Debt Disclosure [Abstract]  
Debt and Long Term Note Payable - Related Party

Note 8 – Debt and Long Term Note Payable - Related Party

 

The following table represents the Company’s outstanding debt as of June 30, 2023 and December 31, 2022:

 

        
   As of June 30,
2023		   As of December 31,
2022		 
         
Senior Revolver Loan Agreement  $4,869,500   $5,869,500 
           
Long Term Note Payable – Related Party   1,060,004    1,076,987 
           
Equipment and vehicle notes, 0% to 9.0% interest rates, due in 2025 to 2027 with monthly payments ranging from $400 to $1,400 per month   167,988    252,924 
           
Note Payable to insurance provider, bears 5.78%
    interest, matures January 2024, monthly payments
    of principal and interest of $46,928		   272,828    — 
Total debt   6,370,320    7,199,411 
Less: Current maturities   (2,315,816)   (2,059,309)
Less: Long Term Note Payable – Related Party   (1,060,004)   (1,076,987)
Long-Term debt  $2,994,500   $4,063,115 
           

 

 

On July 7, 2021, the Company entered into the Fourth Amendment to its Senior Revolver Loan Agreement with CrossFirst Bank (“CrossFirst”) as further amended by Letter Agreements in conjunction with redetermination dates (“the Amended Agreement” or “Credit Facility”). The borrowers under this Amended Agreement are Empire Louisiana, LLC and Empire North Dakota, LLC (collectively the “Borrowers”) and Empire is the guarantor. The maximum amount that can be advanced under the Amended Agreement is $20,000,000 and the existing commitment amount following an August 9, 2023 amendment agreement is $5,180,000 which is reduced by $500,000 per calendar quarter and includes interest at Wall Street Journal Prime plus 150 basis points (9.75% as of June 30, 2023). The Amended Agreement, which originally matured on May 26, 2024, has been extended to August 23, 2024 through the August 9, 2023 amendment. Collateral for the loan is a lien on all of the assets of Empire Louisiana and Empire North Dakota, wholly owned subsidiaries of the Company, and a first priority mortgage lien, pledge of and security interest in not less than 80% of Empire Louisiana’s and Empire North Dakota’s producing oil, gas and other leasehold and mineral interests. The Amended Agreement requires the Borrowers maintain commodity derivatives at certain thresholds based on projected production and, beginning March 31, 2021, to maintain certain covenants including an EBITDAX to interest expense of at least 3:1 and funded debt to EBITDAX of 4:1 on a trailing twelve-month basis. Beginning with the quarter ending September 30, 2023, the funded debt to EBITDAX is a maximum of 3:1 on a trailing twelve-month basis and an additional covenant of a 1:1 current ratio. The current maturities of the Amended Agreement is $2,000,000. The Company was in compliance with the loan covenants at June 30, 2023.

 

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, a related party, 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 7, 2024 unless terminated earlier by PIE. The loan proceeds were used for recompletion or workover of certain designated wells. As part of the JDA, Empire Texas will assign to PIE a combined 85% working and revenue interest in the Workover Wells. Of the assigned interest, 70% working and revenue interest will be used to repay the obligations under the term loan agreement. Once the term loan is repaid, PIE will reassign a 35% working and revenue interest to Empire Texas in each of the Workover Wells and retain a 50% working and revenue interest. To the extent the cash flows from the revenue interest are insufficient to repay the obligations under the term loan, the Company remains required to repay the obligation.