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Commodity Derivative Financial Instruments

9 Months Ended

Sep. 30, 2024

Investments, All Other Investments [Abstract]

Commodity Derivative Financial Instruments

Note 5 – Commodity Derivative Financial Instruments

Empire 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 Empire produces and sells. Empire does not enter into derivative financial instruments for speculative or trading purposes. Empire’s derivative financial instruments consist of swaps and put options.

Empire does not designate its derivative instruments in such a way that would qualify for hedge accounting. Accordingly, Empire 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 Empire’s consolidated balance sheets.

The following table summarizes the net realized and unrealized gains and (losses) reported in earnings related to the commodity derivative instruments for the periods presented:

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Gain (Loss) on Derivatives:
Oil derivatives (a)		$	470,717			$	(1,185,921	)		$	(388,886	)		$	(1,319,401	)

_______

(a)

Includes $189,188 of unrealized derivative gain and $1,140,066 of unrealized derivative losses for the three months ended September 30, 2024 and 2023, respectively, and includes $407,086 and $1,232,359 of unrealized derivative losses for the nine months ended September 30, 2024 and 2023, respectively.

The following represents Empire’s net settlements received (paid) related to derivatives for the periods presented:

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023

Oil derivatives		$	281,530			$	(45,855	)		$	18,200			$	(87,042	)

As of September 30, 2024, Empire did not have any outstanding derivative contracts. In late third-quarter 2024, we settled all outstanding derivative positions for a net realized gain of $300,000.