What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-08-13 compared with 2025-05-14 · 228 added, 229 removed, 41 unchanged (92% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q, including

this section, includes certain statements that may be deemed "forward-looking statements” within the meaning of federal securities

All statements, other than statements of historical facts, which address activities, events, or developments that Empire expects,

believes, or anticipates will or may occur in the future, including future sources of financing and other possible business developments,

are forward-looking statements.

Such statements are subject to a number of assumptions, risks and uncertainties and could be affected

by a number of distinct factors, including Empire’s failure to secure short and long-term financing necessary to sustain and grow

its operations, increased competition, changes in the markets in which Empire participates, the technology utilized by Empire, new legislation

regarding environmental matters and general economic conditions including inflation, tariffs and interest rates.

These risks and other

risks that could affect Empire's business are more fully described in reports Empire files with the SEC, including its Annual Report

on Form 10-K for the year ended December 31, 2024.

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING

Quarterly Report on Form 10-Q, including this section, includes certain statements that may be deemed "forward-looking statements”

within the meaning of federal securities laws.

All statements, other than statements of historical facts, which address activities, events,

or developments that Empire expects, believes, or anticipates will or may occur in the future, including future sources of financing

and other possible business developments, are forward-looking statements.

Such statements are subject to a number of assumptions, risks

and uncertainties and could be affected by a number of distinct factors, including Empire’s failure to secure short and long-term

financing necessary to sustain and grow its operations, increased competition, changes in the markets in which Empire participates, the

technology utilized by Empire, new legislation regarding environmental matters, general economic conditions including inflation, tariffs

and interest rates, uncertainties associated with legal and regulatory matters and successful completion of the August Rights Offering,

including future exercise of the warrants issued as part of the August Rights Offering.

These risks and other risks that could affect

Empire's business are more fully described in reports Empire files with the SEC, including its Annual Report on Form 10-K for the year

ended December 31, 2024.

Actual results may vary materially from the forward-looking statements.

Empire undertakes

no duty to update any of the forward-looking statements in this Form 10-Q.

Our primary business is the optimization and development

of oil and gas interests.

Empire undertakes no duty to update

any of the forward-looking statements in this Form 10-Q.

primary business is the optimization and development of oil and gas interests.

We have incurred losses from operations in 2025 and 2024.

There is no assurance that we will be profitable

or obtain the funds necessary to finance our future operations.

We seek to increase shareholder value by growing

reserves, production, revenues, and cash flow from operating activities by executing our mission to use highly skilled personnel to thoughtfully

and expertly spend capital to realize reserves on producing properties as well as further develop fields.

Management places emphasis on operating cash flow

in managing our business, as operating cash flow considers the cash expenses incurred during the period and excludes non-cash expenditures

not related directly to our operations.

There is no assurance that we will be profitable or obtain the funds necessary to finance our future operations.

seek to increase shareholder value by growing reserves, production, revenues, and cash flow from operating activities by executing our

mission to use highly skilled personnel to thoughtfully and expertly spend capital to realize reserves on producing properties as well

as further develop fields.

places emphasis on operating cash flow in managing our business, as operating cash flow considers the cash expenses incurred during the

period and excludes non-cash expenditures not related directly to our operations.

Concentration

The Company’s producing

properties and oil and natural gas reserves are all located in Louisiana, New Mexico, North Dakota, Montana, and Texas.

Because of the

concentration, the Company is exposed to the impact of regional supply and demand factors, processing or transportation capacity constraints,

severe weather events, water shortages, and government regulations specific to the geographic area.

The Company also sells a large portion

of its oil and natural gas production to a few customers, which increases the risk of temporary sales interruption or a lower price for

production if one of these purchasers were lost.

The effect of inflation on the Company has generally

been to increase its cost of operations, general and administrative costs and direct costs associated with oil and natural gas production.

We are an independent operator in four geographic

areas in the United States.

For our operated properties, we manage and influence production using a combination of experienced field

personnel and third-party service providers to execute our mission.

Our producing properties have reasonably predictable production profiles

and cash flows, subject to commodity price and cost fluctuations.

As is common in the industry in which we operate, we selectively participate

in drilling and developmental activities in non-operated properties.

Decisions to participate in non-operated properties are made after

technical and economic analysis of the projects which also considers the operating expertise and historical track record of the operators.

Seasonality of Business

Weather conditions often affect the demand for,

and prices of, natural gas and can also delay oil and natural gas production.

Demand for natural gas is traditionally higher in the winter,

resulting in higher natural gas prices during the first and fourth quarters.

Due to these seasonal fluctuations, results of operations

for individual quarterly periods may not be indicative of the results realized on an annual basis.

Business Strategy

Our business strategy is to obtain long-term

growth in reserves and cash flow on a cost-effective basis.

Management regularly evaluates potential acquisitions of properties that

would enhance current core areas of operation.

Critical Accounting

The preparation of financial statements in conformity

with US GAAP requires management to use judgment to make estimates and assumptions that affect certain amounts reported in the unaudited

interim consolidated financial statements.

As additional information becomes available, these estimates and assumptions are subject to

change and thus impact amounts reported in the future.

Because estimates and assumptions require significant judgment, future actual

results could differ from those estimates and could have a significant impact on our results of operations, financial position and cash

We re-evaluate our estimates and assumptions at least on a quarterly basis and periodically update the estimates used in the preparation

of the financial statements based on management’s latest assessment of the current and projected business and general economic

There have been no significant changes to Empire’s critical accounting estimates during the three months ended March

LIQUIDITY AND CAPITAL

Empire’s primary sources of short-term

liquidity are cash and cash equivalents, net cash provided by operating activities, our Credit Facility and issuance of debt or equity

Empire’s short- and long-term liquidity requirements consist primarily of capital expenditures, acquisitions of oil

and natural gas properties, payments of contractual obligations, and working capital obligations.

Funding for these requirements may

be provided by any combination of Empire’s sources of liquidity.

Although Empire expects that its sources of funding will be adequate

to fund its liquidity requirements, no assurance can be given that such funding sources will be adequate to meet Empire’s future

As noted below, our working capital is negative

as of March 31, 2025, which is primarily the result of a lower cash balance due to capital spending as part of our Starbuck Drilling

Program, return-to-production efforts in Texas and a reduction-to-production due to five wells being down in North Dakota during the

first quarter of 2025.

As of March 31, 2025, we had approximately $1.1 million in cash on hand and approximately $7.8 million available

under our Credit Facility;

however, the Company’s available borrowing capacity under the Credit Facility continues to decrease

due to a subsequent borrowing of $3.0 million in April 2024 and monthly reductions to the borrowing capacity under the Credit Facility

(See Note 8).

Empire will require additional funds to satisfy the payables discussed above which are greater than estimated cash flow

from operations over the next 12 months.

Phil Mulacek and Energy Evolution, both related parties of Empire and our largest two stockholders,

owning 21.1% and 31.8%, respectively, of the common shares outstanding as of March 31, 2025, have indicated that they will, and have

Company’s producing properties and oil and natural gas reserves are all located in Louisiana, New Mexico, North Dakota, Montana,

Because of the concentration, the Company is exposed to the impact of regional supply and demand factors, processing or transportation

capacity constraints, severe weather events, water shortages, and government regulations specific to the geographic area.

also sells a large portion of its oil and natural gas production to a few customers, which increases the risk of temporary sales interruption

or a lower price for production if one of these purchasers were lost.

effect of inflation on the Company has generally been to increase its cost of operations, general and administrative costs and direct

costs associated with oil and natural gas production.

are an independent operator in four geographic areas in the United States.

For our operated properties, we manage and influence production

using a combination of experienced field personnel and third-party service providers to execute our mission.

Our producing properties

have reasonably predictable production profiles and cash flows, subject to commodity price and cost fluctuations.

As is common in the

industry in which we operate, we selectively participate in drilling and developmental activities in non-operated properties.

to participate in non-operated properties are made after technical and economic analysis of the projects which also considers the operating

expertise and historical track record of the operators.

conditions often affect the demand for, and prices of, natural gas and can also delay oil and natural gas production.

Demand for natural

gas is traditionally higher in the winter, resulting in higher natural gas prices during the first and fourth quarters.

seasonal fluctuations, results of operations for individual quarterly periods may not be indicative of the results realized on an annual

business strategy is to obtain long-term growth in reserves and cash flow on a cost-effective basis.

Management regularly evaluates potential

acquisitions of properties that would enhance current core areas of operation.

Accounting Estimates

preparation of financial statements in conformity with US GAAP requires management to use judgment to make estimates and assumptions

that affect certain amounts reported in the unaudited interim consolidated financial statements.

As additional information becomes available,

these estimates and assumptions are subject to change and thus impact amounts reported in the future.

Because estimates and assumptions

require significant judgment, future actual results could differ from those estimates and could have a significant impact on our results

of operations, financial position and cash flows.

We re-evaluate our estimates and assumptions at least on a quarterly basis and periodically

update the estimates used in the preparation of the financial statements based on management’s latest assessment of the current

and projected business and general economic environment.

There have been no significant changes to Empire’s critical accounting

estimates during the six months ended June 30, 2025.

AND CAPITAL RESOURCES

primary sources of short-term liquidity are cash and cash equivalents, net cash provided by operating activities, our Credit Facility

and issuance of debt or equity securities.

Empire’s short- and long-term liquidity requirements consist primarily of capital expenditures,

acquisitions of oil and natural gas properties, payments of contractual obligations, and working capital obligations.

Funding for these

requirements may be provided by any combination of Empire’s sources of liquidity.

Although Empire expects that its sources of funding

will be adequate to fund its liquidity requirements, no assurance can be given that such funding sources will be adequate to meet Empire’s

future needs.

noted below, our working capital is negative as of June 30, 2025, which is primarily the result of a lower cash balance due to capital

spending as part of our Starbuck Drilling Program, return-to-production efforts in Texas and a decrease in production due to operational

challenges with five wells in North Dakota during the first quarter of 2025.

As of June 30, 2025, we had approximately $2.3 million in

cash on hand and approximately $4.0 million available under our Credit Facility;

however, the Company’s available borrowing capacity

under the Credit Facility continues to decrease due to a monthly reduction to the borrowing capacity under the Credit Facility (see Note

Empire also entered into a promissory note with Phil Mulacek for up to a total available principal amount of $4.0 million, of which

$2.0 million was obtained upon entering into the note.

Finally, the Company is scheduled to complete a subscription rights offering in

August 2025 which is expected to raise approximately $5.0 million of gross proceeds;

however, a portion of these proceeds will be used

to settle the outstanding balance of the promissory note with Phil Mulacek.

Despite these transactions, the Company will require additional

funds to satisfy the payables discussed above which are greater than estimated cash flow from operations over the next 12 months.

Mulacek and Energy Evolution, both related parties of Empire and our largest two stockholders, have indicated that they will, and have

the ability to, provide sufficient support to sustain the operating, investing, and financing activities of Empire, as necessary.

2 unchanged sentences

Going Concern in Note 1 of Notes to Unaudited Interim Condensed Consolidated Financial Statements for further discussion of management’s

Empire expects to continue to incur costs related

to drilling activities in core areas as well as future oil and natural gas acquisitions in core areas.

During the first quarter of 2025,

Empire incurred approximately $2.7 million of additions to oil and natural gas properties, primarily related to the drilling program

in the Starbuck field of North Dakota.

It is expected that Empire will use a combination of debt or equity issuances, cash on hand, and

cash flows from operations to fund capital programs, ongoing operations, and any potential acquisitions.

Working Capital

Working capital is presented in the table below.

This change of approximately $3.5 million was primarily driven by payables related to the Starbuck Drilling Program in North Dakota and

a lower cash balance at March 31, 2025.

expects to continue to incur costs related to drilling activities in core areas as well as future oil and natural gas acquisitions in

During the first six months of 2025, Empire incurred approximately $3.3 million of total additions to oil and natural gas

properties, primarily related to the drilling program in the Starbuck field of North Dakota and return-to-production efforts in Texas.

It is expected that Empire will use a combination of debt or equity issuances, cash on hand, and cash flows from operations to fund capital

programs, ongoing operations, and any potential acquisitions.

capital is presented in the table below.

This change of approximately $2.7 million was primarily driven by payables related to the Starbuck

Drilling Program in North Dakota, costs incurred related to the return-to-production efforts in Texas and the related party promissory

note discussed above.

(in thousands)

2 unchanged sentences

Working Capital

For the Three Months Ended March 31,

Cash flows provided by (used in):

For the Six Months Ended June 30,

(in thousands)

Cash flows provided by (used in):

Operating activities

1 unchanged sentence

Financing activities

Cash Flows from Operating Activities

Cash flows from operating activities decreased

period over period primarily due to lower production volumes primarily in North Dakota and lower oil prices consistent with general market

pricing trends.

Cash Flows from Investing Activities

Cash flows from investing activities are primarily

from approximately $2.6 million of cash additions to oil and natural gas properties during the first quarter of 2025 compared to approximately

$17.0 million of cash additions to oil and natural gas properties during first quarter 2024 associated with the Starbuck Drilling Program

in North Dakota with the decline period over period due to the Company nearing completion of this project.

Cash Flows from Financing Activities

Cash flows from financing activities in 2024

includes $5.0 million from a promissory note issued to Empire by a related party (see Note 8) and approximately $4.0 million borrowed

on Empire’s Credit Facility.

Capital Resources

Capital Expenditures

For the three months ended March 31, 2025, Empire

incurred approximately $2.7 million of total additions to oil and natural gas properties which is primarily from continued drilling and

completions activity related to our Starbuck Drilling Program in North Dakota.

Production and Operating Data

The following table sets forth a summary of

Empire’s production and operating data for the three months ended March 31, 2025 and 2024.

Because of normal production declines,

increased or decreased production due to future acquisitions, divestitures, development, and fluctuations in commodity prices, the historical

information presented below should not be interpreted as being indicative of future results.

For the Three Months Ended March 31,

Flows from Operating Activities

flows from operating activities decreased period over period primarily due to lower production volumes in North Dakota and New Mexico

and lower realized commodity prices consistent with general market pricing trends.

Flows from Investing Activities

flows from investing activities are primarily related to approximately $3.2 million of cash additions to oil and natural gas properties

during the first six months of 2025 compared to approximately $30.1 million of cash additions to oil and natural gas properties during

first half of 2024 associated with the Starbuck Drilling Program in North Dakota with the decline period over period due to the Company

nearing completion of this project.

Flows from Financing Activities

flows from financing activities include $2.0 million and $5.0 million in 2025 and 2024, respectively, from promissory notes issued to

Empire by various related parties (see Note 8).

Empire also borrowed approximately $3.0 million and $4.0 million on its Credit Facility

during the same respective periods.

In the first half of 2024, the Company also completed its April Rights Offering and issued warrants

to Energy Evolution that were exercised in the period (see Note 10).

the six months ended June 30, 2025, Empire incurred approximately $3.3 million of total additions to oil and natural gas properties which

is primarily from finalizing drilling and completions activity related to our Starbuck Drilling Program in North Dakota and continued

return-to-production efforts in Texas.

and Operating Data

following table sets forth a summary of Empire’s production and operating data for the three and six months ended June 30, 2025

Because of normal production declines, increased or decreased production due to future acquisitions, divestitures, development,

and fluctuations in commodity prices, the historical information presented below should not be interpreted as being indicative of future

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Production and Operating Data:

13 unchanged sentences

Excludes the effect of net cash receipts from (payments on) derivatives.

Bbl – One stock tank barrel, of

– One stock tank barrel, of 42 U.S.

gallons liquid volume, used herein in reference to oil, condensate, or natural gas liquids.

Mcf – One thousand cubic feet of

One barrel of oil equivalent, a standard convention used to express oil and natural gas volumes on a comparable oil equivalent basis.

Natural gas equivalents are determined under the relative energy content method by using the ratio of 6.0 Mcf of natural gas to 1.0 Bbl

of oil or condensate.

Three Months Ended March 31, 2025 and

Results of Operations

The following table reflects Empire’s

summary operating information.

Because of normal production declines, increased or decreased drilling activity and the effects of acquisitions,

the historical information presented below should not be interpreted as indicative of future results.

For the Three Months Ended March 31,

– One thousand cubic feet of natural gas.

– One barrel of oil equivalent, a standard convention used to express oil and natural gas volumes on a comparable oil equivalent

Natural gas equivalents are determined under the relative energy content method by using the ratio of 6.0 Mcf of natural gas to

1.0 Bbl of oil or condensate.

Months Ended June 30, 2025 and 2024

of Operations

following table reflects Empire’s summary operating information for the three months ended June 30, 2025 and 2024.

Because of normal

production declines, increased or decreased drilling activity and the effects of acquisitions, the historical information presented below

should not be interpreted as indicative of future results.

For the Three Months Ended June 30,

(in thousands)

Natural gas revenues

Total Product Revenues

1 unchanged sentence

Production and Ad Valorem Taxes

Depreciation, depletion, amortization and accretion

General and administrative expense (excluding

stock-based compensation)

Depreciation, Depletion, Amortization & Accretion

General and Administrative (excluding stock-based compensation)

Stock-Based Compensation

2 unchanged sentences

Operating Loss

Revenues for the three months ended March 31,

2025, decreased compared to the prior year primarily due to lower oil and NGLs sales volumes and lower realized oil prices.

Net oil sales volumes were approximately 120,000

Bbls for the three months ended March 31, 2025, a decrease of approximately 9% over the same period in the prior year primarily due to

five wells being down to redrill in North Dakota during first quarter 2025.

Realized oil prices for the three months ended

March 31, 2025, were $67.28 per barrel, while realized prices for the same period in the prior year were $72.21 per barrel, a decrease

in price of approximately 7% due to a general decline in overall market price.

Realized natural gas prices for the three months

ended March 31, 2025, were $2.74 per Mcf, while realized prices for the same period in the prior year were $1.78 per Mcf.

is due to an increase in market price during the same period.

Realized NGLs prices for the three months ended

March 31, 2025, were $12.56 per barrel, while realized prices for the same period in the prior year were $11.97 per barrel, an increase

in price of approximately 5%.

Lease Operating Expense and Production Taxes

Lease operating expense was lower for the three

months ended March 31, 2025, compared to the same period in 2024 primarily due to lower workover costs.

Lease operating expense includes

approximately $0.4 million of workover expense for the three months ended March 31, 2025, compared to $2.0 million for the same period

The higher workover expense in 2024 was primarily in New Mexico as Empire continued work in the region to enhance and maintain

Production taxes were lower for the three months

ended March 31, 2025, compared to the same period in 2024 as a result of the lower product revenues discussed above.

Depreciation, Depletion, Amortization and

The higher DD&A for the three months ended

March 31, 2025, compared to the same period in 2024 is primarily due to the acquisition of additional working interest and the impact

of the capitalized costs associated with the new drilling activity as part of our Starbuck Drilling Program in North Dakota.

also increased slightly from prior period due to the new drilling activity.

General and Administrative Expense (excluding

stock-based compensation)

General and administrative expense, excluding

stock-based compensation, increased for the three months ended March 31, 2025, compared to the same period in 2024 primarily due to an

increase in salaries and benefits period over period associated with an increase in employee headcount.

calculation is not meaningful due to change in signs, a zero-value denominator or a percentage change that is greater than 200.

for the three months ended June 30, 2025, decreased compared to the prior year primarily due to lower oil sales volumes and lower realized

oil and NGL prices.

oil sales volumes were approximately 136,000 Bbls for the three months ended June 30, 2025, a decrease of approximately 15% over the

same period in the prior year primarily due to the redrilling efforts in North Dakota previously discussed and natural decline.

oil prices for the three months ended June 30, 2025, were $58.92 per barrel, while realized prices for the same period in the prior year

were $76.66 per barrel, a decrease of approximately 23% due to a general decline in overall market prices.

natural gas prices for the three months ended June 30, 2025, were $0.93 per Mcf, while realized prices for the same period in the prior

year were ($0.48) per Mcf.

This is primarily due to the depressed natural gas prices in the second quarter of 2024 in New Mexico leading

to below zero prices as deductions exceeded the natural gas prices.

NGLs prices for the three months ended June 30, 2025, were $13.33 per barrel, while realized prices for the same period in the prior

year were $15.58 per barrel, a decrease of approximately 14%.

Operating Expense and Production Taxes

operating expense was lower for the three months ended June 30, 2025, compared to the same period in 2024 primarily due to lower workover

Lease operating expense includes approximately $0.5 million of workover expense for the three months ended June 30, 2025, compared

to approximately $1.6 million for the same period in 2024.

The higher workover expense in 2024 was primarily in New Mexico as Empire

continued work in the region to enhance and maintain production.

taxes were lower for the three months ended June 30, 2025, compared to the same period in 2024 as a result of the lower product revenues

discussed above.

Depreciation,

Depletion, Amortization and Accretion

lower DD&A for the three months ended June 30, 2025, compared to the same period in 2024 is primarily due to lower production volumes

period over period, partially offset by the acquisition of additional working interest in New Mexico and the impact of the capitalized

costs associated with the new drilling activity as part of our Starbuck Drilling Program in North Dakota in second quarter of 2024.

also increased slightly from prior period due to the new drilling activity and additional interest.

and Administrative Expense (excluding stock-based compensation)

and administrative expense, excluding stock-based compensation, increased for the three months ended June 30, 2025, compared to the same

period in 2024 primarily due to an increase in salaries and benefits period over period associated with an increase in employee headcount.

compensation decreased period over period due to a lower number of awards in second quarter 2025.

Empire utilizes stock-based compensation

to compensate the Board, members of management, and retain talented personnel.

Empire anticipates stock-based compensation to continue

to be utilized in 2025 and beyond to attract and retain talented personnel and compensate Board members and consultants.

expense decreased for the three months ended June 30, 2025 compared to the same period in 2024 primarily due to certain non-cash interest

expense in the second quarter of 2024 from the convertible promissory note further described in Note 8 partially offset by a higher average

outstanding balance on the Company’s Credit Facility.

Months Ended June 30, 2025 and 2024

of Operations

following table reflects Empire’s summary operating information for the six months ended June 30, 2025 and 2024.

Because of normal

production declines, increased or decreased drilling activity and the effects of acquisitions, the historical information presented below

should not be interpreted as indicative of future results.

For the Six Months Ended June 30,

(in thousands)

Total Product Revenues

Lease Operating Expense

Production and Ad Valorem Taxes

Depreciation, Depletion, Amortization & Accretion

General and Administrative (excluding stock-based compensation)

Stock-Based Compensation

Stock-based compensation decreased period over

period due to a lower number of awards in first quarter 2025.

Empire utilizes stock-based compensation to compensate the Board, members

of management, and retain talented personnel.

Empire anticipates stock-based compensation to continue to be utilized in 2025 and beyond

to attract and retain talented personnel and compensate Board members and consultants.

Interest Expense

Interest expense decreased for the three months

ended March 31, 2025 compared to the same period in 2024 primarily due to certain non-cash interest expense in first quarter 2024

from the convertible promissory note further described in Note 8 partially offset by a higher average outstanding balance on the Company’s

Credit Facility.

Cash-Based Interest Expense

Non-Cash Interest Expense

Operating Loss

for the six months ended June 30, 2025, decreased compared to the prior year primarily due to lower sales volumes across all products

and lower realized oil prices.

oil sales volumes were approximately 255,000 Bbls for the six months ended June 30, 2025, a decrease of approximately 12% over the same

period in the prior year primarily due to redrilling efforts in North Dakota.

oil prices for the six months ended June 30, 2025, were $62.84 per barrel, while realized prices for the same period in the prior year

were $74.66 per barrel, a decrease of approximately 16% due to a general decline in overall market prices.

natural gas prices for the six months ended June 30, 2025, were $1.76 per Mcf, while realized prices for the same period in the prior

year were $0.58 per Mcf.

The increase is due to depressed natural gas prices in New Mexico during second quarter of 2024.

NGLs prices for the six months ended June 30, 2025, were $12.98 per barrel, while realized prices for the same period in the prior year

were $13.89 per barrel, a decrease of approximately 7%.

Operating Expense and Production Taxes

operating expense was lower for the six months ended June 30, 2025, compared to the same period in 2024 primarily due to lower workover

Lease operating expense includes approximately $0.9 million of workover expense for the six months ended June 30, 2025, compared

to approximately $3.6 million for the same period in 2024.

The higher workover expense in 2024 was primarily in New Mexico as Empire

continued work in the region to enhance and maintain production.

taxes were lower for the six months ended June 30, 2025, compared to the same period in 2024 as a result of the lower product revenues

discussed above.

Depreciation,

Depletion, Amortization and Accretion

higher DD&A for the six months ended June 30, 2025, compared to the same period in 2024 is primarily due to the acquisition of additional

working interest in New Mexico and the impact of the capitalized costs associated with the new drilling activity as part of our Starbuck

Drilling Program in North Dakota in second quarter of 2024, partially offset by lower production volumes period over period.

also increased slightly from prior period due to the new drilling activity and additional interest.

and Administrative Expense (excluding stock-based compensation)

and administrative expense, excluding stock-based compensation, increased for the six months ended June 30, 2025, compared to the same

period in 2024 primarily due to an increase in salaries and benefits period over period associated with an increase in employee headcount.

compensation decreased period over period due to a lower number of awards in 2025.

Empire utilizes stock-based compensation to compensate

the Board, members of management, and retain talented personnel.

Empire anticipates stock-based compensation to continue to be utilized

in 2025 and beyond to attract and retain talented personnel and compensate Board members and consultants.

expense decreased for the six months ended June 30, 2025 compared to the same period in 2024 primarily due to certain non-cash interest

expense in 2024 from the convertible promissory note further described in Note 8 partially offset by a higher average outstanding balance

on the Company’s Credit Facility.

AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by

Rule 12b-2 of the Securities Exchange Act of 1934 (the “Exchange Act”) and are not required to provide this information.

AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period

covered by this report, the Company carried out an evaluation under the supervision and participation of the Company’s Principal

Executive Officer/Principal Financial Officer, along with our management, of the effectiveness of the design and operation of the Company’s

disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e).

Based on this evaluation, the Company’s Principal

Executive Officer/Principal Financial Officer concluded that the disclosure controls and procedures were effective, as of the end of

the period covered by this report, in ensuring the information required to be disclosed by the Company in the reports it files or submits

under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and

forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer

(Principal Executive Officer/Principal Financial Officer), to allow timely decisions regarding required disclosure.

Changes in Internal

Control Over Financial Reporting

While we continue to

implement design enhancements to our internal control procedures, we believe there were no changes to our internal control over financial

reporting during the three months ended March 31, 2025, which were identified in connection with the evaluation that have materially

affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Company’s disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance

of achieving their desired objectives.

Management recognizes that a control system, no matter how well designed and operated, can provide

only reasonable, not absolute, assurance that the objectives of the control system are met.

Further, the design of a control system must

reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

of their inherent limitations, disclosure controls and procedures and internal control over financial reporting may not prevent or detect

all errors or misstatements.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect

to financial statement preparation and presentation.

OTHER INFORMATION

Legal Proceedings

For information regarding legal proceedings,

see Note 14 of the unaudited interim condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Not applicable.

Unregistered Sales of Equity Securities and Use

Defaults Upon Senior Securities

Mine Safety Disclosures

Not applicable.

are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 (the “Exchange Act”) and

are not required to provide this information.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis