Empire Petroleum Announces Modification of Terms of Previously Announced Rights Offering

Rhea-AI Summary

Empire Petroleum (EP) announces modified terms for its subscription rights offering, allowing holders of common stock to purchase shares at $5.00 per share, with gross proceeds of up to $20.66 million. The Rights Offering has been extended to April 10, 2024, with over-subscription rights available. Chairman and largest shareholders intend to participate fully. Holders of subscription rights must review provided materials and deliver full payment to the subscription agent.

Insights

Financial Analyst

The modification of the subscription rights offering by Empire Petroleum Corporation represents a strategic financial maneuver aimed at raising capital. The decision to allow shareholders to purchase additional shares at a set price can be seen as a confidence booster, signaling that the company's management believes in the long-term value of their stock. Moreover, the participation of major shareholders like Phil E. Mulacek and Energy Evolution Fund, Ltd. suggests a strong internal endorsement of the company's direction.

From a financial perspective, the gross proceeds of approximately $20.66 million could provide Empire with the necessary liquidity to fund ongoing operations or to invest in strategic initiatives. It's important to note that the rights are non-transferable and will not be listed for trading, which could limit the liquidity options for shareholders but also minimizes the dilution of share value. The ability to over-subscribe may be attractive to investors seeking a larger stake in the company.

Considering the oil and gas sector's volatility, especially with fluctuating commodity prices and regulatory changes, this capital infusion could be pivotal in maintaining Empire's competitive edge. However, investors must weigh the potential for share dilution against the benefits of the capital raise.

Market Research Analyst

Empire Petroleum's Rights Offering must be assessed within the broader context of the energy market. The oil and gas industry is capital-intensive, with companies often requiring substantial funds to manage exploration, production and operational expenses. The offering's timing suggests Empire is seeking to strengthen its financial position amidst a landscape where many energy companies are reassessing their capital structures to navigate environmental challenges and investment shifts towards renewable energies.

Investor response to the Rights Offering will be indicative of the market's confidence in Empire's asset portfolio and growth strategy. The fixed subscription price of $5.00 per share provides a tangible benchmark for investors to evaluate the company's valuation against current market conditions. Additionally, the extension of the expiration date may reflect an effort to maximize participation, possibly due to initial tepid interest or to accommodate logistical challenges faced by interested shareholders.

As the Rights Offering is not open to the general public and is non-transferable, its direct impact on the stock market may be limited. However, the outcome of this offering could influence Empire's stock performance in the long term, depending on how the raised capital is deployed and how effectively the company communicates the use of proceeds to its shareholders and the wider market.

Legal Expert

The legal framework surrounding the Rights Offering is important for ensuring regulatory compliance and protecting shareholder interests. The distribution of the prospectus and subsequent supplements ensures transparency, a key component of SEC regulations. The structured approach to the Rights Offering, with detailed documentation and a defined expiration date, demonstrates Empire's adherence to securities law.

It is important for shareholders to understand the legal implications of their participation in the Rights Offering. The non-transferability of the subscription rights means that shareholders cannot sell these rights on the open market, which could affect their decision-making process. Furthermore, the indication by the company's largest shareholders of their intent to fully exercise their rights and over-subscription privileges could signal to the market that the offering is less about attracting new investment and more about consolidating existing ownership.

It is also worth noting that the news release disclaims the communication as an offer to sell or a solicitation of an offer to buy securities. This is a standard legal precaution to avoid unintentional violations of securities law, especially in jurisdictions where the offering has not been registered or qualified under state securities laws.

TULSA, Okla.--(BUSINESS WIRE)-- 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 modified the terms of its previously announced subscription rights offering (“Rights Offering”). The Company has distributed 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. As modified, each subscription right entitles the holder to purchase 0.161 shares of Common Stock at a subscription price of $5.00 per one whole share of Common Stock for gross proceeds of up to approximately $20.66 million. 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 expiration of the Rights Offering has been extended to 5:00 p.m., Eastern Time, on April 10, 2024 (“Expiration Date”), subject to further 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 have received a prospectus, a prospectus supplement, a letter from Empire describing the Rights Offering, and a subscription rights certificate. Empire will also be providing an additional prospectus supplement regarding the updated terms noted in this news release and an updated subscriptions 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 referenced below.

The Rights Offering is more fully described in the prospectus supplement filed with the Securities and Exchange Commission (“SEC”) on March 7, 2024, as supplemented by the prospectus supplement filed with the SEC on March 28, 2024. A copy of the prospectus, prospectus supplements 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240328147844/en/

Empire Petroleum Corporation:

Mike Morrisett, President and CEO

539-444-8002

info@empirepetrocorp.com

Securities Transfer Corporation, as rights agent:

(469) 633-0101

stc@stctransfer.com

Source: Empire Petroleum Corporation

FAQ

What is the ticker symbol for Empire Petroleum ?

The ticker symbol for Empire Petroleum is EP.

What are the modified terms of Empire Petroleum 's subscription rights offering?

Empire Petroleum has modified its subscription rights offering to allow holders of common stock to purchase 0.161 shares of Common Stock at a subscription price of $5.00 per one whole share, with gross proceeds of up to approximately $20.66 million.

When is the expiration date for Empire Petroleum 's Rights Offering?

The expiration date for Empire Petroleum 's Rights Offering has been extended to 5:00 p.m., Eastern Time, on April 10, 2024.

Who are the key individuals intending to participate in Empire Petroleum 's Rights Offering?

Phil E. Mulacek, Chairman of the Board of Empire, and Energy Evolution Fund, , the largest shareholders, have indicated their intention to participate fully in the Rights Offering.

What materials have holders of subscription rights received from Empire Petroleum ?

Holders of subscription rights who hold their shares directly have received a prospectus, a prospectus supplement, a letter from Empire describing the Rights Offering, and a subscription rights certificate.

How can holders of subscription rights participate in Empire Petroleum 's Rights Offering?

Holders should review all provided materials, complete and execute the subscription rights certificates, and deliver the certificates and full payment to Securities Transfer , the subscription agent for the Rights Offering.