Empire Petroleum Corp (NYSE: EP)

Sector: Energy Industry: Oil & Gas E&P CIK: 0000887396
Market Cap 97.44 Mn
P/B 1.82
P/E -5.63
P/S 2.62
ROIC (Qtr) -23.00
Div Yield % 0.00
Rev 1y % (Qtr) -17.48
Total Debt (Qtr) 16.35 Mn
Debt/Equity (Qtr) 0.30
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About

Empire Petroleum Corporation (EP), a key player in the independent energy industry, is dedicated to the exploration, production, and sale of oil and natural gas. With a primary focus on increasing shareholder value, the company operates in the United States, developing existing producing properties. EP's main business activities encompass the oil and natural gas industry, with operations centered in three primary segments: Empire New Mexico, Empire North Dakota, and Empire Texas. Each segment has a distinct geographical focus and set of assets....

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Investment thesis

Bull case

  • Healthy cash reserves of 4.60M provide 6.24x coverage of short-term debt 737000, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 122.99M provides 7.52x coverage of total debt 16.35M, indicating robust asset backing and low credit risk.
  • Tangible assets of 122.99M provide robust 10.25x coverage of other current liabilities 12M, indicating strong asset backing.
  • Cash reserves of 4.60M exceed inventory value of 1.22M by 3.78x, indicating strong liquidity and inventory management.
  • Tangible assets of 122.99M provide robust 5.28x coverage of current liabilities 23.31M, showing strong asset backing.

Bear case

  • The company's operating cash flow of (9.96M) shows concerning coverage of stock compensation expenses of 1.77M, with a -5.61 ratio indicating potential earnings quality issues.
  • High receivables of 8.33M relative to inventory of 1.22M (6.84 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Free cash flow of (17.93M) provides weak coverage of capital expenditures of 7.98M, with a -2.25 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of (16.03M) show weak coverage of depreciation charges of 10.58M, with a -1.51 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of (17.93M) represents just -2.54x of debt issuance 7.06M, suggesting concerning reliance on leverage rather than internal cash generation for growth.

Peer comparison

Companies in the Oil & Gas E&P
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 COP Conocophillips 136.62 Bn 17.10 2.22 23.44 Bn
2 CNQ Canadian Natural Resources Ltd 85.21 Bn 17.67 3.04 12.51 Bn
3 EOG Eog Resources Inc 66.33 Bn -60.48 8.67 8.13 Bn
4 FANG Diamondback Energy, Inc. 49.64 Bn -2,818.83 314.47 16.24 Bn
5 OXY Occidental Petroleum Corp /De/ 37.18 Bn 15.36 2.56 22.88 Bn
6 WDS Woodside Energy Group Ltd 34.64 Bn 11.73 2.51 -
7 TPL Texas Pacific Land Corp 29.74 Bn 126.16 78.66 0.02 Bn
8 DVN Devon Energy Corp/De 18.80 Bn 3.24 1.91 8.55 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.92 1.02
EV to Cash from Ops. EV/CFO -11.31 18.21
EV to Debt EV to Debt 6.89 54.57
EV to EBIT EV/EBIT -7.03 29.98
EV to EBITDA EV/EBITDA -19.58 19.64
EV to Free Cash Flow [EV/FCF] EV/FCF -6.28 39.33
EV to Market Cap EV to Market Cap 1.16 1.57
EV to Revenue EV/Rev 3.03 11.47
Price to Book Value [P/B] P/B 1.82 2.97
Price to Earnings [P/E] P/E -5.63 -25.98
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 26.80
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 31.86
Dividend per Basic Share Div per Share (Qtr) 0.00 0.78
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 1.05
Interest Coverage Int. cover (Qtr) -12.46 -4.97
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 86.37 -533.65
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 46.08 52.06
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -5.45
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -5.25 6.14
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 1.94 105.89
EBIT Growth (1y) % EBIT 1y % (Qtr) -5.27 75.94
EBT Growth (1y) % EBT 1y % (Qtr) -3.06 17.44
EPS Growth (1y) % EPS 1y % (Qtr) 19.05 3.07
FCF Growth (1y) % FCF 1y % (Qtr) 62.27 -43.36
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -9.72 149.32
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.30 0.33
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.07
Cash Ratio Cash Ratio (Qtr) 0.20 1.32
Current Ratio Curr Ratio (Qtr) 0.63 2.37
Debt to Equity Ratio Debt/Equity (Qtr) 0.30 0.34
Interest Cover Ratio Int Coverage (Qtr) -12.46 -4.97
Times Interest Earned Times Interest Earned (Qtr) -12.46 -4.97
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -14.60 16.19
EBIT Margin % EBIT Margin % (Qtr) -43.05 -16.83
EBT Margin % EBT Margin % (Qtr) -46.51 -24.06
Gross Margin % Gross Margin % (Qtr) 27.80 58.92
Net Profit Margin % Net Margin % (Qtr) -46.50 -28.75