XML 20 R9.htm IDEA: XBRL DOCUMENT v3.24.3
Property
 9 Months Ended
Sep. 30, 2024
Property, Plant and Equipment [Abstract]  
Property

Note 3 – Property

 

Empire 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 nine months ended September 30, 2024.

  

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

 

   September 30, 2024   December 31, 2023 
Proved properties  $129,301,577   $75,346,623 
Unproved properties   3,708,866    3,245,431 
Work in process   3,380,612    14,917,749 
Gross capitalized costs   136,391,055    93,509,803 
           
Depreciation, depletion, amortization and impairment   (29,561,539)   (22,996,805)
Total oil and gas properties, net  $106,829,516   $70,512,998 

 

Depletion and amortization expense related to oil and gas properties for the three months ended September 30, 2024 and 2023, was approximately $2,521,000 and $677,000, respectively. Depletion and amortization expense related to oil and gas properties for the nine months ended September 30, 2024 and 2023, was approximately $6,565,000 and $1,897,000, respectively.

 

Empire has completed 13 wells in North Dakota related to our Starbuck Drilling Program during the first three quarters of 2024.

 

On April 9, 2024, Empire partially exercised a purchase option originally issued on August 9, 2023, (the “Purchase Option”) to acquire additional working interests in certain of Empire’s New Mexico properties from Energy Evolution, a related party. The additional assets acquired represent approximately 60% of the total assets collectively acquired by Empire and Energy Evolution in the third quarter of 2023 (the “Option Assets”). As consideration, upon closing of the partial exercise of the Purchase Option, Empire issued Energy Evolution 600,000 shares of common stock of Empire 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, Empire 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, Empire successfully extended the Purchase Option with the issuance of 16,800 shares of common stock to Energy Evolution, and as such, Empire 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 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:

         
   September 30, 2024   December 31, 2023 
Other property and equipment, at cost  $3,137,500   $2,998,018 
Less: Accumulated depreciation   (1,701,009)   (1,114,807)
Other property and equipment, net  $1,436,491   $1,883,211 

 

 

Depreciation expense related to other property and equipment for the three months ended September 30, 2024 and 2023, was approximately $76,000 and $51,000, respectively. Depreciation expense related to other property and equipment for the nine months ended September 30, 2024 and 2023, was approximately $199,000 and $164,000, respectively.