Empire Petroleum Announces Commencement of Previously Announced Rights Offering

Rhea-AI Summary

Empire Petroleum Corporation (EP) has initiated a subscription rights offering to raise up to $25.0 million, distributing one subscription right for each share of Common Stock held. The Rights Offering allows holders to purchase 0.161 shares of Common Stock at $6.05 per share, with the opportunity to over-subscribe for additional shares. The offering is expected to expire on April 3, 2024, with key shareholders, including Phil E. Mulacek and Energy Evolution Fund, Ltd., indicating their participation and full subscription. Holders can obtain more information from the prospectus supplement filed with the SEC.

Insights

Financial Analyst

Empire Petroleum Corporation's Rights Offering is a strategic move to bolster its capital structure, aiming to raise approximately $25 million. The offering price of $6.05 per share is a pivotal figure, as it sets the tone for current investors and potential participants. It's essential to assess the offering's attractiveness by comparing it with the current market price and historical performance of Empire's stock. If the subscription price is at a discount, it may signal confidence to the market, potentially leading to a positive reception.

Furthermore, the commitment from major shareholders to fully subscribe indicates strong insider confidence, which can be a positive signal to the market. However, investors should be cautious about potential dilution of their holdings. The additional capital may fuel growth or operational expansions, but it's critical to evaluate the company's past capital allocation efficiency to gauge future expectations.

Market Research Analyst

The oil and gas sector is highly volatile, with prices influenced by geopolitical events, regulatory changes and shifts in supply and demand. Empire's decision to raise capital through a Rights Offering should be viewed in the context of the industry's capital-intensive nature. The infusion of $25 million could enable Empire to invest in new technologies, secure additional assets, or pay down debt, which could enhance its competitive position.

It is also important to note the non-transferability of the rights and the absence of their trading on stock exchanges. This approach can limit liquidity for the rights but may also prevent speculative trading that could lead to price volatility. Investors should monitor the uptake of the Rights Offering and the subsequent use of proceeds for indications of the company's strategic direction and financial health.

Legal Expert

Empire's Rights Offering is subject to legal and regulatory scrutiny, as indicated by the involvement of the SEC and the necessity of a prospectus supplement. Compliance with securities laws is crucial to avoid legal repercussions and maintain investor trust. The restriction of the sale of securities in certain states until registration or qualification under those states' securities laws is a standard regulatory safeguard.

Investors should be aware of the legal framework governing such offerings, including their rights and the company's obligations. The fact that Empire's largest shareholders have indicated their intention to participate fully is a sign of commitment but also raises questions about potential changes in control and influence within the company, which are factors that should be considered from a legal and governance standpoint.

TULSA, Okla., March 07, 2024 (GLOBE NEWSWIRE) -- Empire Petroleum Corporation (NYSE American: EP) ("Empire" or the "Company"), an oil and gas company with current producing assets in New Mexico, North Dakota, Montana, Texas, and Louisiana, announced today that it has commenced its previously announced subscription rights offering (“Rights Offering”) pursuant to which it intends to raise gross proceeds of up to approximately $25.0 million. The Company is distributing at no charge to holders of its common stock, par value $0.001 per share (“Common Stock”), as of the close of business on March 7, 2024 (the record date for the Rights Offering), one subscription right for each share of Common Stock held. Each subscription right entitles the holder to purchase 0.161 shares of Common Stock at a subscription price of $6.05 per share per one whole share of Common Stock. As a result, a stockholder must hold at least seven shares of Common Stock to receive subscription rights to purchase at least one share of Common Stock. The subscription rights are non-transferable, and will not be listed for trading on any stock exchange or market. In addition, holders of subscription rights who fully exercise their subscription rights are entitled to over-subscribe for additional shares of Common Stock, subject to proration.

The Rights Offering is expected to expire at 5:00 p.m., Eastern Time, on April 3, 2024 (“Expiration Date”), subject to extension or earlier termination.

Phil E. Mulacek, Chairman of the Board of Empire, and Energy Evolution Fund, Ltd., our largest shareholders, have indicated that they intend to participate in the Rights Offering and fully subscribe to the shares of Common Stock corresponding to their subscription rights. They have each also indicated that they intend to fully exercise their over-subscription rights to purchase their pro rata share of the underlying securities related to the Rights Offering that remain unsubscribed at the Expiration Date.

Holders of subscription rights who hold their shares directly will receive a prospectus, a prospectus supplement, a letter from Empire describing the Rights Offering, and a subscription rights certificate. Those holders who intend to exercise their subscription rights and over-subscription rights should review all of these materials, properly complete and execute the subscription rights certificates, and deliver the subscription rights certificates and full payment to Securities Transfer Corporation, the subscription agent for the Rights Offering, at the address set forth in the prospectus supplement.

The Rights Offering is more fully described in the prospectus supplement filed with the Securities and Exchange Commission (“SEC”) on March 7, 2024. A copy of the prospectus, prospectus supplement or further information with respect to the Rights Offering may be obtained by contacting Securities Transfer Corporation, the subscription and information agent for the Rights Offering, at (469) 633-0101.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any offer, solicitation or sale of securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

About Empire Petroleum
Empire Petroleum Corporation is a publicly traded, Tulsa-based oil and gas company with current producing assets in New Mexico, North Dakota, Montana, Texas, and Louisiana. Management is focused on organic growth and targeted acquisitions of proved developed assets with synergies with its existing portfolio of wells. More information about Empire can be found at www.empirepetroleumcorp.com.

Safe Harbor Statement
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements involve a wide variety of risks and uncertainties, and include, without limitations, statements with respect to the Company’s estimates, strategy and prospects. Such statements are subject to certain risks and uncertainties which are disclosed in the Company’s reports filed with the SEC, including its Form 10-K for the fiscal year ended December 31, 2022, and its other filings with the SEC. Readers and investors are cautioned that the Company’s actual results may differ materially from those described in the forward-looking statements due to a number of factors, including, but not limited to, the Company’s ability to acquire productive oil and/or gas properties or to successfully drill and complete oil and/or gas wells on such properties, general economic conditions both domestically and abroad, and other risks and uncertainties related to the conduct of business by the Company. Other than as required by applicable securities laws, the Company does not assume a duty to update these forward-looking statements, whether as a result of new information, subsequent events or circumstances, changes in expectations, or otherwise.

Contacts

Empire Petroleum Corporation:
Mike Morrisett, President and CEO
539-444-8002
info@empirepetrocorp.com

Investor Relations:
Al Petrie Advisors
Wes Harris, Partner
281-740-1334
wes@alpetrie.com

FAQ

What is Empire Petroleum Corporation's ticker symbol?

Empire Petroleum Corporation's ticker symbol is EP.

How much does Empire Petroleum Corporation aim to raise through the Rights Offering?

Empire Petroleum Corporation aims to raise up to approximately $25.0 million through the Rights Offering.

What is the subscription price per share in the Rights Offering?

The subscription price per share in the Rights Offering is $6.05.

Who are the key shareholders participating in the Rights Offering?

Key shareholders, including Phil E. Mulacek and Energy Evolution Fund, Ltd., have indicated their intention to participate in the Rights Offering.

How can holders obtain more information about the Rights Offering?

Holders can contact Securities Transfer Corporation, the subscription and information agent for the Rights Offering, at (469) 633-0101 to obtain more information.