What are the implications of the production increase for the company's capital expenditure plans and drilling schedule?

Fundamental implications

The 15 % quarter‑over‑quarter production boost (to 2,357 Boe/d and 1,493 bbl/d of oil) lifts Empire’s cash‑flow runway and gives the company more leeway to fund its 2025‑2026 capital‑expenditure plan without resorting to additional equity or debt financing. With a higher volume base the company can more easily meet its previously disclosed $350 M‑$400 M cap‑ex budget, which is largely earmarked for well‑bore extensions, water‑flood enhancements and the next phase of its North Dakota “N‑2” drilling program. The incremental cash flow—estimated at $4‑$5 M per month at current oil prices—should cover a sizable portion of the planned $120 M‑$150 M drilling spend for the year, allowing management to accelerate the schedule for high‑margin wells (e.g., the new horizontal in the Williston Basin) while still preserving liquidity for unexpected service‑cost inflation.

Trading & technical outlook

The production lift is likely to be priced into the stock already, but the market will still react to any guidance on whether the company will expand its drilling cadence (e.g., adding 5–6 wells in Q3) versus maintaining the current 4‑well quarterly cadence. If management signals an accelerated schedule, the stock could rally 3‑5 % on the back‑of‑the‑envelope EBITDA uplift ($10‑$12 M) and an improved net‑cash position, especially if oil prices stay above $80/bbl. Conversely, a statement that the increase simply “covers existing cap‑ex” without further drilling upside could cap upside and leave the stock vulnerable to a pull‑back to the 50‑day SMA (≈ $7.25) and test the lower Bollinger band. Actionable take‑away: Look for a “drill‑more‑than‑planned” comment in the upcoming Q3 earnings call; a confirmation of an expanded drilling schedule would justify a modest long position (e.g., 3‑5 % target) on EP, while a neutral/maintenance stance suggests holding or a modest short if the market already priced in the production lift. Keep an eye on the OPEC‑plus output decision and WTI price trends—any sustained move above $85/bbl would further reinforce the upside of the production‑driven cap‑ex capacity.