CONVERTIBLE NOTES PAYABLE	6 Months Ended
Jun. 30, 2021
Debt Disclosure [Abstract]
CONVERTIBLE NOTES PAYABLE	11.     CONVERTIBLE NOTES PAYABLE On May 14, 2021 Empire New Mexico entered into a Senior Secured Convertible Note Agreement (the “Secured Note”) in the amount of $16,250,000 with Energy Evolution Master Fund, Ltd., a related party (“Energy Evolution”) (See Note 14). The Secured Note is collateralized by all assets of Empire New Mexico, matures on December 31, 2021 and bears an interest rate of 3.8%. The Secured Note provides that up to 40% of the balance, together with accrued interest, can be converted into the Company’s common stock at the lesser of $1.25 per share or the offering price if the Company has a subsequent capital raise or an aggregate of 5,200,000 shares of common stock (without giving effect to any interest that may be converted). Additionally, the conversion price is reduced by $0.25 per share if any amount is due on the Secured Note as of October 1, 2021 or the Company has not filed a registration statement with the United States Securities and Exchange Commission within 120 days of the Secured Note. If the registration statement described above is not filed within 120 days of the date of the Secured Note, Energy Evolution has the option to convert 50% of the Secured Note amount into common stock of the Company at a rate of $1.00 per share. In such event, the maximum number of shares into which the Secured Note may be converted increases to 8,125,000 shares of the Company’s common stock (without giving effect to any interest that may be converted). In addition, if any principal amount of the Secured Note remains outstanding on October 1, 2021, the conversion price shall be reduced by $0.25, provided the conversion price cannot be reduced by more than $0.25. The Company agreed to use commercially reasonable best efforts to (i) cause the number of members serving on the Company’s Board of Directors to be increased to six, (ii) cause an additional designee of Energy Evolution or its affiliate to be appointed to the Company’s Board of Directors, and (c) cause one of the designated directors of Energy Evolution or its affiliate to be appointed the Chairman of Empire Petroleum’s Board of Directors with the power to cast the deciding vote in case of a deadlocked board vote. The Secured Note may be prepaid without penalty, but Empire New Mexico must provide at least 30 days’ prior written notice so the holders thereof may exercise their conversion rights. As of June 30, 2021, there were no conversions of the Secured Note to shares of the Company’s common stock. The Company made prepayments of $2,800,000 on the Secured Note through June 30, 2021. The embedded conversion option has been bifurcated and accounted for separately as a derivative financial instrument. The separated derivative was initially recorded at fair value at the inception date and revalued as of June 30, 2021 resulting in a fair value of $5,530,677 and $6,126,961, respectively. The change in fair value for the three months ended June 30, 2021 of $596,284 and recorded in Other Income. As partial consideration for the issuance of the Secured Note, Energy Evolution received a closing fee of 1,500,000 shares of the Company’s common stock and warrants to purchase 3,000,000 shares of common stock for $1.00 per share which expire on May 14, 2022. The Company determined these were equity-classified financing instruments and the proceeds are allocated on a relative fair value basis between the debt, warrants, and common shares at issuance. At issuance, the discount associated with the Secured Note was $10,125,177; consisting of $5,530,677 relating to the embedded derivative liability, $1,500 and $2,773,500 in common stock and paid in capital, respectively, relating to the issuance of shares of the Company's common stock, and $1,819,500 in paid in capital relating to the issuance of warrants to purchase common stock. The fair value of the warrants was determined using a Black-Scholes model. The warrants were exercised during the three months ended June 30, 2021 and the Company received cash proceeds of $3,000,000. The discount associated with the Secured Note related to the embedded conversion liability and the issuance of the equity-classified financing instruments is amortized under the interest method and resulted in interest expense of $2,289,966 for the three months ended June 30, 2021. In May, 2021 the Empire New Mexico entered into $3,243,000 of Unsecured Convertible Notes (the “Unsecured Notes”) with a group of accredited investors, including the Company's related party Energy Evolution, constituting $1,500,000 of the total Unsecured Convertible Notes. The Unsecured Notes mature on May 9, 2022 with a single payment and bear interest at 5%. The Unsecured Note holders may convert their notes to common stock of the Company at the lesser of $1.25 per share or the price per share offered by the Company if the Company has a future capital raise for an aggregate 2,594,400 shares of common stock (without giving effect to any interest that may be converted). Pursuant to the Unsecured Notes, the Company agreed to use commercially reasonable best efforts to cause a registration statement on Form S-3 to be filed with Securities Exchange Commission within 90 days for all Common Stock underlying the Unsecured Notes. Empire New Mexico has the right to force conversion in the event that (a) the 20-day weighted average price of the Common Stock trades above $3.50 per share on the OTCQB or any exchange and (b) the Registration Statement has become effective. The Unsecured Notes may be prepaid without penalty, but Empire New Mexico must provide at least 30 days’ prior written notice so the holders thereof may exercise their conversion rights. As of June 30, 2021 Energy Evolution had converted their $1,500,000 Unsecured Note to 1,200,000 shares of the Company’s common stock (See Note 13). The Company determined the embedded conversion features of the Unsecured Notes were equity-classified financing instrument. The fair value of the conversion feature was determined using a beneficial conversion model based on the a 60-day weighted average stock price and the maximum number of shares to be received if converted. As issuance, the amount recorded to additional paid in capital was $544,824. The discount associated with these transactions is amortized under the interest method and resulted in interest expense of $289,949 for the three months ended June 30, 2021. As an inducement for investors to enter into the Unsecured Convertible Notes, the Company’s Chief Executive Officer and President collectively offered to each investor the right to purchase a number of shares of common stock equal to 40% of such investor’s principal balance under its Unsecured Convertible Note at $0.75 per share (the “right to buy”). Energy Evolution exercised its right to buy 600,000 shares of the Company’s common stock. In conjunction with this transaction, each of the Company’s Chief Executive Officer and President partially exercised a warrant to purchase 300,000 shares at an exercise price of $0.25. The Company determined that offering the “right to buy” shares resulted in an expense of $989,155 of the Company based on the fair value of contributions made by the Company’s Chief Executive Officer and President on its behalf. The fair value of the “right to buy” shares was determined using a Black-Scholes model. The expense is including in General and Administrative in the Condensed Consolidated Statement of Operations.

CONVERTIBLE NOTES PAYABLE

6 Months Ended

Jun. 30, 2021

11.     CONVERTIBLE NOTES PAYABLE

On May 14, 2021 Empire New Mexico entered into a Senior Secured Convertible Note Agreement (the “Secured Note”) in the amount of $16,250,000 with Energy Evolution Master Fund, Ltd., a related party (“Energy Evolution”) (See Note 14). The Secured Note is collateralized by all assets of Empire New Mexico, matures on December 31, 2021 and bears an interest rate of 3.8%. The Secured Note provides that up to 40% of the balance, together with accrued interest, can be converted into the Company’s common stock at the lesser of $1.25 per share or the offering price if the Company has a subsequent capital raise or an aggregate of 5,200,000 shares of common stock (without giving effect to any interest that may be converted). Additionally, the conversion price is reduced by $0.25 per share if any amount is due on the Secured Note as of October 1, 2021 or the Company has not filed a registration statement with the United States Securities and Exchange Commission within 120 days of the Secured Note. If the registration statement described above is not filed within 120 days of the date of the Secured Note, Energy Evolution has the option to convert 50% of the Secured Note amount into common stock of the Company at a rate of $1.00 per share. In such event, the maximum number of shares into which the Secured Note may be converted increases to 8,125,000 shares of the Company’s common stock (without giving effect to any interest that may be converted). In addition, if any principal amount of the Secured Note remains outstanding on October 1, 2021, the conversion price shall be reduced by $0.25, provided the conversion price cannot be reduced by more than $0.25. The Company agreed to use commercially reasonable best efforts to (i) cause the number of members serving on the Company’s Board of Directors to be increased to six, (ii) cause an additional designee of Energy Evolution or its affiliate to be appointed to the Company’s Board of Directors, and (c) cause one of the designated directors of Energy Evolution or its affiliate to be appointed the Chairman of Empire Petroleum’s Board of Directors with the power to cast the deciding vote in case of a deadlocked board vote. The Secured Note may be prepaid without penalty, but Empire New Mexico must provide at least 30 days’ prior written notice so the holders thereof may exercise their conversion rights. As of June 30, 2021, there were no conversions of the Secured Note to shares of the Company’s common stock. The Company made prepayments of $2,800,000 on the Secured Note through June 30, 2021.

The embedded conversion option has been bifurcated and accounted for separately as a derivative financial instrument. The separated derivative was initially recorded at fair value at the inception date and revalued as of June 30, 2021 resulting in a fair value of $5,530,677 and $6,126,961, respectively. The change in fair value for the three months ended June 30, 2021 of $596,284 and recorded in Other Income.

As partial consideration for the issuance of the Secured Note, Energy Evolution received a closing fee of 1,500,000 shares of the Company’s common stock and warrants to purchase 3,000,000 shares of common stock for $1.00 per share which expire on May 14, 2022. The Company determined these were equity-classified financing instruments and the proceeds are allocated on a relative fair value basis between the debt, warrants, and common shares at issuance. At issuance, the discount associated with the Secured Note was $10,125,177; consisting of $5,530,677 relating to the embedded derivative liability, $1,500 and $2,773,500 in common stock and paid in capital, respectively, relating to the issuance of shares of the Company's common stock, and $1,819,500 in paid in capital relating to the issuance of warrants to purchase common stock. The fair value of the warrants was determined using a Black-Scholes model. The warrants were exercised during the three months ended June 30, 2021 and the Company received cash proceeds of $3,000,000. The discount associated with the Secured Note related to the embedded conversion liability and the issuance of the equity-classified financing instruments is amortized under the interest method and resulted in interest expense of $2,289,966 for the three months ended June 30, 2021.

In May, 2021 the Empire New Mexico entered into $3,243,000 of Unsecured Convertible Notes (the “Unsecured Notes”) with a group of accredited investors, including the Company's related party Energy Evolution, constituting $1,500,000 of the total Unsecured Convertible Notes. The Unsecured Notes mature on May 9, 2022 with a single payment and bear interest at 5%. The Unsecured Note holders may convert their notes to common stock of the Company at the lesser of $1.25 per share or the price per share offered by the Company if the Company has a future capital raise for an aggregate 2,594,400 shares of common stock (without giving effect to any interest that may be converted). Pursuant to the Unsecured Notes, the Company agreed to use commercially reasonable best efforts to cause a registration statement on Form S-3 to be filed with Securities Exchange Commission within 90 days for all Common Stock underlying the Unsecured Notes. Empire New Mexico has the right to force conversion in the event that (a) the 20-day weighted average price of the Common Stock trades above $3.50 per share on the OTCQB or any exchange and (b) the Registration Statement has become effective. The Unsecured Notes may be prepaid without penalty, but Empire New Mexico must provide at least 30 days’ prior written notice so the holders thereof may exercise their conversion rights. As of June 30, 2021 Energy Evolution had converted their $1,500,000 Unsecured Note to 1,200,000 shares of the Company’s common stock (See Note 13).

The Company determined the embedded conversion features of the Unsecured Notes were equity-classified financing instrument. The fair value of the conversion feature was determined using a beneficial conversion model based on the a 60-day weighted average stock price and the maximum number of shares to be received if converted. As issuance, the amount recorded to additional paid in capital was $544,824. The discount associated with these transactions is amortized under the interest method and resulted in interest expense of $289,949 for the three months ended June 30, 2021.

As an inducement for investors to enter into the Unsecured Convertible Notes, the Company’s Chief Executive Officer and President collectively offered to each investor the right to purchase a number of shares of common stock equal to 40% of such investor’s principal balance under its Unsecured Convertible Note at $0.75 per share (the “right to buy”). Energy Evolution exercised its right to buy 600,000 shares of the Company’s common stock. In conjunction with this transaction, each of the Company’s Chief Executive Officer and President partially exercised a warrant to purchase 300,000 shares at an exercise price of $0.25. The Company determined that offering the “right to buy” shares resulted in an expense of $989,155 of the Company based on the fair value of contributions made by the Company’s Chief Executive Officer and President on its behalf. The fair value of the “right to buy” shares was determined using a Black-Scholes model. The expense is including in General and Administrative in the Condensed Consolidated Statement of Operations.