DEBT

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

DEBT

10.     DEBT

The following table represents the Company’s outstanding debt.

	June 30, 2021			December 31, 2020
Senior Revolver Loan Agreement	$	7,669,500		$	8,124,000
2020 SBA Payroll Protection Plan loan		—			160,700
2021 SBA Payroll Protection Plan loan		106,850			—
Unsecured Promissory Note – Pardus		—			378,000
PIE Joint Development Agreement loan, related party		462,959			315,273
Various Vehicle and Equipment notes		242,379			57,935
Secured Convertible Note, related party (see Note 11)		13,450,000			—
Unsecured Convertible Notes (see Note 11)		1,743,000			—
Total Debt		23,674,688			9,035,908
Unamortized Debt Issue Costs		—			(14,587	)
Unamortized Discount		(8,090,088	)		—
Total Debt net of Debt Issue Costs and Discount		15,584,600			9,021,321
Less current maturities		7,141,193			1,301,618
Total Long-Term Debt	$	8,443,407		$	7,719,703

On March 10, 2021 the Company entered into the Third Amendment to its Senior Revolver Loan Agreement (“the Amended Agreement”) with CrossFirst Bank (“CrossFirst”). The Amended Agreement commitment amount is $8,520,000 which is reduced by $180,000 per calendar quarter beginning June 30, 2021 and the maximum amount that can be advanced under the Agreement is $20,000,000 and includes interest at Wall Street Journal Prime plus 150 basis points (4.75% as of June 30, 2021). The Amended Agreement matures on March 27, 2022. Collateral for the loan is a lien on all of the assets of the Company’s wholly owned subsidiaries, Empire Louisiana and Empire North Dakota, and a first priority mortgage lien, pledge of and security interest in not less than 80% of Empire Louisiana’s and Empire North Dakota’s producing oil, gas and other leasehold and mineral interests. The Amended Agreement requires the Company maintain commodity derivatives at certain thresholds based on projected production and, beginning March 31, 2021, to maintain certain covenants including an EBITDAX to interest expense of at least 3:1 and funded debt to EBITDAX of 6:1 on a trailing twelve-month basis and reducing quarterly to 4:1 as of March 31, 2022 and thereafter. As of June 30, 2021, the Company has an outstanding loan balance of $7,669,500 under the Amended Agreement. The Company was not in compliance with the commodity derivative requirement as of June 30, 2021. The Company was in compliance with the other covenants at June 30, 2021. On July 7, 2021 the Company entered into the Fourth Amendment to its Senior Revolver Loan Agreement, which among other things waived the Company's non-compliance with the commodity derivative requirement and extended the maturity to March 27, 2024. Accordingly, the Company's outstanding loan balance is presented as long-term as of June 30, 2021 (See Note 17).

During 2016 and 2017, the Company issued $260,000 of Senior Unsecured Promissory Notes which contained a conversion feature allowing the investors to convert the Notes into shares of the Company’s common stock. In 2019, all but three of the Note holders converted their notes with a balance of $157,500 into 1,575,000 shares of the Company’s common stock. In January 2020, three of the Senior Unsecured Promissory Note investors exercised the conversion feature and converted their $102,500 notes for 1,025,000 shares of the Company's common stock. All of the Senior Unsecured Promissory Notes have been converted to common stock of the Company as of June 30, 2020.

On April 1, 2020, in conjunction with the purchase of assets from Pardus Oil & Gas, LLC (see Note 5), the Company entered into a unsecured promissory note agreement with the seller in the amount of $378,000. The note was payable in one installment on April 1, 2021 and bears interest at the one-year LIBOR rate (1% as of June 30, 2021). The note was paid on April 1, 2021 (See Note 6).

On May 5, 2020, the Company received an SBA Payroll Protection Plan (“PPP”) loan for $160,700. The loan matured on May 5, 2022 and had an interest rate of 1%. In June, 2021 the Company was informed that the SBA had forgiven the entire loan balance.

In August 2020, concurrent with the Joint Development Agreement with Petroleum and Independent Exploration, LLC (“PIE”), a related party, the Company entered into a term loan agreement dated August 1, 2020, whereby PIE will loan up to $2,000,000, at an interest rate of 6% per annum, maturing August 7, 2024 unless terminated earlier by PIE. The loan proceeds will be used for recompletion or workover of certain designated wells. In addition, the Company assigned a 70% working and revenue interest to PIE in the designated wells which will be applied to repayment of the loan. As of June 30, 2021, $462,959 has been advanced from the loan (See Note 8).

On April 30,2021 the Company received a Second Draw SBA Payroll Protection Plan (“PPP”) loan for $106,850. The loan matures on April 30, 2026 and has an interest rate of 1%. There are no payments due until ten months after the covered period at which time the payment amount will be determined based on the portion of the loan which has not been forgiven under criteria established by the SBA, using an amortization of the remaining term of the loan. The Company expects that the loan amount will be forgiven based on currently published guidelines of the United States Small Business Administration.

The Company has an outstanding Letter of Credit in the amount of $3,750,000 which was issued in conjunction with the purchase of oil and natural gas properties from XTO (See Note 7). To effect the letter of credit, the Company entered into a Promissory Note Agreement with Bank of Oklahoma, NA in the amount of $3,750,000 which is due on demand with an interest rate established by the Bank, currently at 4 percent. The Promissory Note, and associated letter of credit, is collateralized with a bank certificate of deposit in a corresponding amount.