EON Resources Inc.
For the period ended Dec 31, 2024. Filed Apr 16, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Apr 16, 2025
EONR$0.27+3.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-05-03.
0001213900-24-039259
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-04-16.
0001213900-25-032248
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 97 previous paragraphs and 92 current paragraphs.
59 unchanged; 28 reworded; 4 added; 9 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 16 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
Gain on extinguishment of liabilities
Current report
The Company recognized a gain on extinguishment of liabilities of $1,638,138 during the year ended December 31, 2024. In November 2024, the Company entered into a settlement agreement with the FPA Seller to fully release the Company from the terms of the FPA. We agreed to issue to the FPA Seller 450,000 restricted Class A Common shares which had a fair value of $450,000 based on the closing price of the Company’s common stock at the agreement date. The Company recognized a gain on settlement of the FPA liability of $82,998, which is included in Gain on Extinguishment of Liabilities on the Company’s consolidated statement of operations for the year ended December 31, 2024.
Current report
The Company also recognized a gain of $1,720,000 related to the settlement of royalties payable and other claims with the Sellers. The Company recognized a loss on extinguishment of accounts payable of $76,200, and recognized a loss of $88,660 related to the exchange of certain notes payable and warrant liabilities for convertible note agreements.
Current report
Change in fair value of warrant and convertible note liabilities
Removed paragraphs (9)
Previous report
Overview
Previous report
Pogo is a limited liability company and is not subject to federal and state income taxes. However, it must file informational tax returns and all taxable income or loss flows through to the owners in their individual tax returns.
Previous report
Impact of Coronavirus (“COVID-19”)
Previous report
The COVID-19 pandemic resulted in a severe worldwide economic downturn, significantly disrupting the demand for oil throughout the world, and created significant volatility, uncertainty and turmoil in the oil and gas industry. The decrease in demand for oil, combined with pressures on the global supply-demand balance for oil and related products, resulted in oil prices declining significantly in late February 2020. Since mid-2020, oil prices have improved, with demand steadily increasing despite the uncertainties surrounding the COVID-19 variants, which have continued to inhibit a full global demand recovery. In addition, worldwide oil inventories are, from a historical perspective, very low and supply increases from the Organization of the Petroleum Exporting Countries (“OPEC”), Russia and other oil producing nations are not expected to be sufficient to meet forecasted oil demand growth in 2023, with many OPEC countries not able to produce at their OPEC agreed upon quota levels due to their lack of capital investments over the past few years in developing incremental oil supplies.
Previous report
Global oil price levels will ultimately depend on various factors and consequences beyond the Company’s control, such as: (i) the effectiveness of responses to combat the COVID-19 virus and their impact on domestic and worldwide demand, (ii) the ability of OPEC, Russia and other oil producing nations to manage the global oil supply, (iii) the timing and supply impact of any Iranian sanction relief on Iran’s ability to export oil, (iv) additional actions by businesses and governments in response to the pandemic, (v) the global supply chain constraints associated with manufacturing delays, and (vi) political stability of oil consuming countries.
Previous report
We continue to assess the impact of the COVID-19 pandemic on our company and may modify our response as the impact of COVID-19 continues to evolve.
Previous report
Certain prior year financial statements are not comparable to our current year financial statements due to the adoption of fresh start accounting as a result of the Acquisition. References to “Successor” relate to the financial position and results of operations of HNR Acquisition Corp subsequent to November 15, 2023. References to “Predecessor” relate to the financial position and results of operations of HNR Acquisition Corp prior to, and including, November 14, 2023.
Previous report
Successful Efforts Method of Accounting
Previous report
We utilize the successful efforts method of accounting for crude oil and gas producing activities as opposed to the alternate acceptable full cost method. In general, we believe that net assets and net income are more conservatively measured under the successful efforts method of accounting for crude oil and gas producing activities than under the full cost method, particularly during periods of active exploration. The critical difference between the successful efforts method of accounting and the full cost method is that under the successful efforts method, exploratory dry holes and geological and geophysical exploration costs are charged against earnings during the periods in which they occur; whereas, under the full cost method of accounting, such costs and expenses are capitalized as assets, pooled with the costs of successful wells and charged against the earnings of future periods as a component of depletion expense.
Reworded paragraphs (28)
Previous wording
We are an independent oil and natural gas company based in Texas and formed in 2017 that is focused on the acquisition, development, exploration, production and divestiture of oil and natural gas properties in the Permian Basin. The Permian Basin is located in west Texas and southeastern New Mexico and is characterized by high oil and liquids-rich natural gas content, multiple vertical and horizontal target horizons, extensive production histories, long-lived reserves and historically high drilling success rates. Pogo’s properties are in the Grayburg-Jackson Field in Eddy County, New Mexico, which is a sub-area of the Permian Basin. Pogo focuses primarily on production through waterflooding recovery methods.
Current wording
We are an independent oil and natural gas company based in Texas and formed in 2017 that is focused on the acquisition, development, exploration, production and divestiture of oil and natural gas properties in the Permian Basin. The Permian Basin is located in west Texas and southeastern New Mexico and is characterized by high oil and liquids-rich natural gas content, multiple vertical and horizontal target horizons, extensive production histories, long-lived reserves and historically high drilling success rates. our properties are in the Grayburg-Jackson Field in Eddy County, New Mexico, which is a sub-area of the Permian Basin. Pogo focuses primarily on production through waterflooding recovery methods.
Previous wording
Our average daily production for the year ended December 31, 2023, was 1,022 barrel of oil equivalent (“BOE”) per day, and for the year ended December 31, 2022, was 1,296 BOE per day. The decrease in production is due to an increase in well downtime and the conveyance of the 10% Override royalty interest to Pogo Royalty.
Current wording
Our average daily production for the year ended December 31, 2024, was 798 barrel of oil equivalent (“BOE”) per day, and for the year ended December 31, 2023, was 1,022 BOE per day. The decrease in production is due to an increase in well downtime, field conditions requiring certain enhancements, and the conveyance of the 10% Override royalty interest to Pogo Royalty.
Previous wording
The price at which our oil and natural gas production are sold typically reflects either a premium or discount to the New York Mercantile Exchange (“NYMEX”) benchmark price. Thus, our operating results are also affected by changes in the oil price differentials between the applicable benchmark and the sales prices we receive for our oil production. Our oil price differential to the NYMEX benchmark price during the years ended December 31, 2023 and 2022, was $(4.95) and $0.88 per barrel, respectively. Our natural gas price differential during the years ended December 31, 2023 and 2022, was $(0.06) and $(2.13) per one thousand cubic feet (“Mcf”), respectively. Fluctuations in our price differentials and realizations are due to several factors such as gathering and transportation costs, takeaway capacity relative to production levels, regional storage capacity, gain/loss on derivative contracts and seasonal refinery maintenance temporarily depressing demand.
Current wording
The price at which our oil and natural gas production are sold typically reflects either a premium or discount to the New York Mercantile Exchange (“NYMEX”) benchmark price. Thus, our operating results are also affected by changes in the oil price differentials between the applicable benchmark and the sales prices we receive for our oil production. Our oil price differential to the NYMEX benchmark price during the years ended December 31, 2024 and 2023, was $(1.03) and $(4.95) per barrel, respectively. Our natural gas price differential during the years ended December 31, 2024 and 2023, was $0.08 and $(0.06) per one thousand cubic feet (“Mcf”), respectively. Fluctuations in our price differentials and realizations are due to several factors such as gathering and transportation costs, takeaway capacity relative to production levels, regional storage capacity, gain/loss on derivative contracts and seasonal refinery maintenance temporarily depressing demand.
Previous wording
For the year ended December 31, 2023, the average NYMEX oil pricing was $77.64 per barrel of oil or 18% lower than the average NYMEX price per barrel for the year ended December 31, 2022. Our settled derivatives decreased our realized oil price per barrel by $3.63 and $17.58 in the years ended December 31, 2023, and 2022, respectively. Our average realized oil price per barrel after reflecting settled derivatives and location differentials was $69.06 for the year ended December 31, 2023 compared to $78.09 for the year ended December 31, 2022.
Current wording
For the year ended December 31, 2024, the average NYMEX oil pricing was $76.55 per barrel of oil or 1% lower than the average NYMEX price per barrel for the year ended December 31, 2023. Our settled derivatives decreased our realized oil price per barrel by $1.91 and $3.63 in the years ended December 31, 2024, and 2023, respectively. Our average realized oil price per barrel after reflecting settled derivatives and location differentials was $73.61 for the year ended December 31, 2024 compared to $69.06 for the year ended December 31, 2023.
Previous wording
The average NYMEX natural gas pricing for the year ended December 31, 2023, was $2.54 per Mcf, or 60% lower than the average NYMEX price per Mcf for the year ended December 31, 2022.
Current wording
The average NYMEX natural gas pricing for the year ended December 31, 2024, was $2.19 per Mcf, or 14% lower than the average NYMEX price per Mcf for the year ended December 31, 2023.
Previous wording
For the year ended December 31, 2023, 97% and 3% of sales volumes from the assets were attributable to crude and natural gas, respectively. As of December 31, 2023, the company was continuing development of the Seven River waterflood interval. Further, as of December 31, 2023, the Company owned an interest in approximately 341 gross (341 net) producing wells.
Current wording
For the year ended December 31, 2024, 86% and 14% of sales volumes from the assets were attributable to crude and natural gas, respectively. As of December 31, 2024, the company was continuing development of the Seven River waterflood interval. Further, as of December 31, 2024, the Company owned an interest in approximately 342 gross (342 net) producing wells.
Previous wording
Our revenues vary from year to year primarily as a result of changes in realized commodity prices and production volumes. On a combined Successor and Predecessor basis, for the year ended December 31, 2023, our oil and natural gas sales decreased 34% from the year ended December 31, 2022, driven by a 24% decrease in realized prices, excluding the effect of settled commodity derivatives, and an 21% decrease in production volumes. The lower average price in the combined year ended December 31, 2023 compared to 2022, was driven by lower average NYMEX oil and natural gas prices. Realized production from oil and gas properties decreased due to an increase in well downtime and due to the July 1, 2023 conveyance of the 10% overriding royalty interest to Pogo Royalty.
Current wording
Our revenues vary from year to year primarily as a result of changes in realized commodity prices and production volumes. For the year ended December 31, 2024, our oil and natural gas sales decreased 15% from the year ended December 31, 2023 on a combined Successor and Predecessor basis, driven by a 28% decrease in production volumes offset by a 6% increase in realized prices, excluding the effect of settled commodity derivatives. The higher average price in the year ended December 31, 2024 compared to the combined year 2023, was driven by higher average NYMEX oil and natural gas prices during the first nine months of the year. Realized production from oil and gas properties decreased due to an increase in well downtime.
Previous wording
We recorded a gain on derivative contracts of $392,675 on a combined Successor and Predecessor basis for the year ended December 31, 2023 compared to a loss of $4,793,790 for the year ended December 31, 2022 (Predecessor). Lower commodity prices in 2023, resulted in realized losses of $1,266,277 on a combined Successor and Predecessor basis for the year ended December 31, 2023 compared to realized losses of $6,978,790 for the year ended December 31, 2022. On a combined Successor and Predecessor basis for the year ended December 31, 2023, our average realized oil price per barrel after reflecting settled derivatives was $73.82, compared to $78.09 the year ended December 31, 2022 (Predecessor).
Current wording
We recorded a loss on derivative contracts of $850,374 for the year ended December 31, 2024 compared to a gain of $392,765 on a combined Successor and Predecessor basis for the year ended December 31, 2023. Lower commodity prices in 2024, resulted in realized losses of $489,084 for the year ended December 31, 2024 compared to realized losses of $1,266,277 on a combined Successor and Predecessor basis for the year ended December 31, 2023. For the year ended December 31, 2024, our average realized oil price per barrel after reflecting settled derivatives was $73.61, compared to $73.82 on a combined Successor and Predecessor basis for the year ended December 31, 2023.
Previous wording
As of December 31, 2023, we ended the period with a $467,687 net derivative asset compared to $1,191,354 as of December 31, 2022.
Current wording
As of December 31, 2024, we ended the period with a $106,397 net derivative asset compared to $467,687 as of December 31, 2023.
Previous wording
Other revenue was $571,189 on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $255,952 for the year ended December 31, 2022 (Predecessor). The increase is due to a full period related to a new contract that the Predecessor entered into to provide water services to a third-party effective September 1, 2022.
Current wording
Other revenue was $487,109 for the year ended December 31, 2024, compared to $571,189 on a combined Successor and Predecessor basis for the year ended December 31, 2023. The revenue is related to providing water services to a third party and the slight decrease is due to lower volumes in 2024 from supply line disruptions during the third quarter of 2024
Previous wording
Lease operating expenses were $10,146,119 on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $8,418,739 for the year ended December 31, 2022. On a per unit basis, production expenses increased 53% from $17.79 per BOE for the combined Successor and Predecessor year ended December 31, 2023, to $27.20 per BOE for the combined Successor and Predecessor year ended December 31, 2023, due to increases in proactive maintenance activities, higher labor costs, and increased oil field service and supplies costs. Additionally, because of the conveyance of the 10% ORRI in July 2023, the net production volumes decreased, which increases the “per BOE” amounts.
Current wording
Lease operating expenses were $8,614,080 for the year ended December 31,2024, compared to $10,146,119 on a combined Successor and Predecessor basis for the year ended December 31, 2023. On a per unit basis, production expenses increased 19% from $27.20 per BOE for the combined Successor and Predecessor year ended December 31, 2023, to $29.59 per BOE for the year ended December 31, 2024, due to increases in proactive maintenance activities, higher labor costs, and increased oil field service and supplies costs. Additionally, because of the conveyance of the 10% ORRI in July 2023, the net production volumes decreased, which increases the “per BOE” amounts.
Previous wording
We pay production taxes, transportation and processing costs based on realized oil and natural gas sales. Production taxes, transportation and processing costs were $2,343,862 on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $3,484,477 for the year ended December 31, 2022. As a percentage of oil and natural gas sales, these costs were 9% in both periods. Production taxes, transportation, and processing as a percent of total oil and natural gas sales are consistent with historical trends.
Current wording
We pay production taxes, transportation and processing costs based on realized oil and natural gas sales. Production taxes, transportation and processing costs were $1,715,792 for the year ended December 31, 2024 compared to $2,343,862 on a combined Successor and Predecessor basis for the year ended December 31, 2023. As a percentage of oil and natural gas sales, these costs were 8.7% and 8.9% for the years ended December 31, 2024 and 2023 respectively. Production taxes, transportation, and processing as a percent of total oil and natural gas sales are consistent with historical trends.
Previous wording
Depletion, depreciation and amortization (“DD&A”) was $1,849,876 on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $1,613,402 for the year ended December 31, 2022. DD&A was $4.53 per BOE on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $3.41 per BOE for the year ended December 31, 2022. The aggregate increase in DD&A expense for the year ended December 31, 2023 compared to 2022 was driven by a 33% increase in the DD&A rate per BOE, partially offset by a 21% decrease in production levels. The increase in the DD&A rate per BOE was driven by the increase in the oil and gas properties balance due to the development of the Seven Rivers waterflood interval and the decrease in the reserves balance due to the conveyance of the 10% overriding royalty interest to Pogo Royalty.
Current wording
Depletion, depreciation and amortization (“DD&A”) was $2,407,098 as of December 31, 2024, compared to $1,849,876 on a combined Successor and Predecessor basis for the year ended December 31, 2023. DD&A was $8.27 per BOE for the year ended December 31, 2024, compared to $4.53 per BOE on a combined Successor and Predecessor basis for the year ended December 31, 2023. The aggregate increase in DD&A expense for the year ended December 31, 2024 compared to 2023 was driven by a 48% increase in the DD&A rate per BOE, partially offset by a 28% decrease in production levels. The increase in the DD&A rate per BOE was driven by the increase in the oil and gas properties balance due to the development of the Seven Rivers waterflood interval and the decrease in the reserves balance due to the conveyance of the 10% overriding royalty interest to Royalty.
Previous wording
Accretion expense was $859,102 on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $1,575,296 for the year ended December 31, 2022. Accretion expense was $2.32 per BOE for the on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $3.33 per BOE for the year ended December 31, 2022. The aggregate decrease in accretion expense for the fiscal year ended December 31, 2023 compared to 2022 was driven by changes in certain assumptions, specifically the inflation factor and discount rate as a result of the acquisition date where we revised our estimates as part of its fair value estimates for the acquired business.
Current wording
Accretion expense was $144,988 as of December 31, 2024, compared to $859,102 on a combined Successor and Predecessor basis for the year ended December 31, 2023. Accretion expense was $0.50 per BOE for the year ended December 31, 2024, compared to $2.32 per BOE on a combined Successor and Predecessor basis for the year ended December 31, 2023. The aggregate decrease in accretion expense for the fiscal year ended December 31, 2024 compared to 2023 was driven by changes in certain assumptions, specifically the inflation factor and discount rate as a result of the acquisition date where we revised our estimates as part of its fair value estimates for the acquired business.
Previous wording
General and administrative expenses were $7,253,384 on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $2,953,202 for the year ended December 31, 2022. The increase for general and administrative expenses is primarily due to increased cost of outsourced legal, professional, and accounting services as a result of the transaction disclosed in Note 1 in the notes to the consolidated financial statements and the costs of being a public company. The general and administrative expense total of $3,553,117 for the period from November 15, 2023 to December 31, 2023 for the Successor includes $1,500,000 from the 138,122 shares of Class A common stock issued to White Lion for the commitment fee on the Common Stock Purchase Agreement, $910,565 in stock-based compensation to certain Founders under the Founder Pledge Agreement, and $135,400 in other stock-based compensation.
Current wording
General and administrative expenses were $10,381,095 as of December 31, 2024 compared to $7,253,384 on a combined Successor and Predecessor basis for the year ended December 31, 2023. The increase for general and administrative expenses is primarily due to increased cost of outsourced legal, professional, and accounting services as a result of the transaction disclosed in Note 1 in the notes to the consolidated financial statements and the costs of being a public company, and includes stock-based compensation expense of $2,778,991 for the year ended December 31, 2024. The general and administrative expense total of $3,553,117 for the period from November 15, 2023 to December 31, 2023 for the Successor includes $1,500,000 from the 138,122 shares of Class A common stock issued to White Lion for the commitment fee on the Common Stock Purchase Agreement, $910,565 in stock-based compensation to certain Founders under the Founder Pledge Agreement, and $135,400 in other stock-based compensation.
Previous wording
Acquisition costs were $9,999,860 during the Successor period from November 15, 2023 to December 31, 2023, and included an aggregate of $7,854,660 in costs related to the Forward Purchase Agreement and the Non-Redemption Agreements, due diligence and broker fees related to closing the Purchase.
Current wording
There were no acquisition costs as of December 31, 2024, compared to $9,999,860 during the Successor period from November 15, 2023 to December 31, 2023, and included an aggregate of $7,854,660 in costs related to the Forward Purchase Agreement and the Non-Redemption Agreements, due diligence and broker fees related to closing the Purchase.
Previous wording
Interest expense was $1,043,312 for the period from November 15, 2023 to December 31, 2023 (Successor), $1,834,208 for the period from January 1, 2023 to November 14, 2023 (Predecessor), compared to $1,076,060 for the year ended December 31, 2022. The Successor period interest expense is driven by the Senior Secured Term loan entered into as part of the Closing, and the Private Notes Payable. The increase in the Predecessor period from January 1, 2023 to November 15, 2023 compared to the year ended December 31, 2022 was primarily due to an increase in the average amount of the Predecessor’ revolving credit facility outstanding and an increase in the weighted average interest rate. The revolving credit facility was not assumed in the Acquisition.
Current wording
Interest expense was $7,643,200 as of December 31, 2024, compared to $1,043,312 for the period from November 15, 2023 to December 31, 2023 (Successor), $1,834,208 for the period from January 1, 2023 to November 14, 2023 (Predecessor), The Successor period interest expense is driven by the Senior Secured Term loan entered into as part of the Closing, and the Private Notes Payable. The interest expense during the Predecessor period from January 1, 2023 to November 15, 2023 was primarily due to an increase in the average amount of the Predecessor’ revolving credit facility outstanding and an increase in the weighted average interest rate. The revolving credit facility was not assumed in the Acquisition.
Previous wording
Amortization of debt discount was $1,191,553 period from November 15, 2023 to December 31, 2023 (Successor), and attributable to deferred finance costs paid on the Senior Secured Term Loan, and discounts associated with the Private Notes Payable during 2023.
Current wording
Amortization of debt discount was $2,361,627 as of December 31, 2024 compared to $1,191,553 period from November 15, 2023 to December 31, 2023 (Successor), and attributable to deferred finance costs paid on the Senior Secured Term Loan, and discounts associated with the Private Notes Payable during 2023.
Previous wording
The change in fair value of forward purchase agreement consisted of a gain of $3,268,581 for the period from November 15, 2023 to December 31, 2023 for the Successor related to the inputs used in the Company’s fair value estimate of the FPA Put Option. The key inputs to the fair value estimate include the Company’s stock price, which declined during the Successor period, and the likelihood, timing and price of a potential dilutive offering.
Current wording
The change in fair value of forward purchase agreement consisted of a gain of $561,099 for the year ended December 31, 2024, for the Successor related to the inputs used in the Company’s fair value estimate of the FPA Put Option. The key inputs to the fair value estimate include the Company’s stock price, which declined during the Successor period, and the likelihood, timing and price of a potential dilutive offering.
Previous wording
The change in fair value of warrant liabilities consisted of a gain of $187,704 for the period from November 15, 2023 to December 31, 2023 for the Successor related to fluctuations in the trading price of the Company’s warrants, a portion of which are accounted for as liabilities due to the redemption provisions in those issued to Private Note holders.
Current wording
The change in fair value of warrant liabilities consisted of a loss of $804,004 as of December 31, 2024, compared to a gain of $187,704 for the period from November 15, 2023 to December 31, 2023 for the Successor related to fluctuations in the trading price of the Company’s warrants, a portion of which are accounted for as liabilities due to the redemption provisions in those issued to Private Note holders. The Company also recognized a loss of $192,744 from the change in fair value of its convertible note liabilities during the year ended December 31, 2024.
Previous wording
Loss on asset sales was $816,011 on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $0 for the year ended December 31, 2022. The increase was due to the loss that was recognized as a result of the conveyance of the 10% overriding royalty interest to Pogo Royalty in July 2023.
Current wording
Loss on asset sales was $816,011 on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $0 for the year ended December 31, 2024. The decrease was due to the loss that was recognized as a result of the conveyance of the 10% overriding royalty interest to Pogo Royalty in July 2023.
Previous wording
Our main sources of liquidity have been internally generated cash flows from operations and credit facility borrowings. Our primary use of capital has been for the development of oil and gas properties and the return of initial invested capital to our owners. We continually monitor potential capital sources for opportunities to enhance liquidity or otherwise improve our financial position.
Current wording
Our main sources of liquidity have been internally generated cash flows from operations, credit facility borrowings and equity line financing sales and issuances. Our primary use of capital has been for the development of oil and gas properties, payment to vendors, payment of debt obligations [and the return of initial invested capital to our founders]. We continually monitor potential capital sources for opportunities to enhance liquidity or otherwise improve our financial position.
Previous wording
As of December 31, 2023, we had outstanding debt of $27,680,703 under our Senior Secured Term Loan, $15,000,000 under the Seller Promissory Note, and $3,469,500 of outstanding private notes payable. A total of $7,627,102 of this is due within one year. As of December 31, 2023, we had $3,505,454 of cash and cash equivalents on hand, of which $2,600,000 is in an escrow account pursuant to the requirements of the Senior Secured Term Loan. At December 31, 2023, we had $3,505,454 in cash and a working capital deficit of $13,300,601. These conditions raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued.
Current wording
As of December 31, 2024, we had outstanding debt of $23,641,517 under our Senior Secured Term Loan, $15,000,000 under the Seller Promissory Note, $3,556,750 of outstanding private notes payable, and $948,982 from short term merchant loans. A total of $9,080,910 of this is due within one year. As of December 31, 2024, we had $2,971,558 of cash and cash equivalents on hand, of which approximately $2,600,000 is in an escrow account pursuant to the requirements of the Senior Secured Term Loan. At December 31, 2024 we had a working capital deficit of $31,213674. These conditions raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued.
Previous wording
The Company had positive cash flow from operations of $8,675,037 for the year ended December 31, 2023 on a pro forma basis of the combined Successor and Predecessor periods. Additionally, management’s plans to alleviate this substantial doubt include improving profitability through streamlining costs, maintaining active hedge positions for its proven reserve production, and the issuance of additional shares of Class A common stock through. We have a three-year Common Stock Purchase Agreement with a maximum funding limit of $150,000,000 that can fund our operations and production growth, and be used to reduce liabilities, subject the Company’s Form S-1 Registration Statement, which is in the review process, being declared effective by the Securities and Exchange Commission (“SEC”). However, we may seek additional access to capital and liquidity. We cannot assure you, however, that any additional capital will be available to us on favorable terms or at all. Our capital expenditures could be curtailed if our cash flows decline from expected levels.
Current wording
We have a three-year equity line (ELOC) Common Stock Purchase Agreement with a maximum funding limit of $150,000,000 that can fund our operations and production growth, and be used to reduce liabilities. Through the date of this filing, we have received $6,992,906 in cash proceeds related to the sale of 7,000,000 shares of common stock under this agreement and expect to continue to utilize it to fund current operational needs. We cannot assure you, however, that any additional capital will be available to us on favorable terms or at all. Our capital expenditures could be curtailed if our cash flows decline from expected levels.
Previous wording
The decrease in net cash flow provided by operating activities on a combined Successor and Predecessor basis for the year ended December 31, 2023, as compared to 2022 is primarily due to decreased net income as a result of decreased prices and production volumes, and higher general and administrative and acquisition costs associated with public filings and the closing of the Acquisition.
Current wording
The decrease in net cash flow provided by operating activities for the year ended December 31, 2024, as compared to 2023 on a combined Successor and Predecessor basis is primarily due to increased net loss as a result of decreased prices and production volumes, and higher general and administrative costs associated with public filings.
Previous wording
Net cash provided by investing activities in the Successor period was primarily due to Trust Account withdrawals associated with the Closing in November 2023 of $49,362,479, partially offset by the cash paid to the Sellers of Pogo of $30,827,804 at the Closing, net of cash acquired. Cash flows used in investing activities in the Predecessor period ending November 14, 2023 consisted of $6,769,557 of cash paid for oil and gas property costs, which was a decrease from $16,891,856 in the year ended December 31, 2022, primarily due to significant expenditures in the previous year to upgrade certain wells and meet compliance requirements.
Current wording
Net cash used in investing activities for the year ended December 31, 2024 was primarily due to the development of crude oil and gas properties. Net cash provided by investing activities in the Successor period from November 15, 2023 to December 31, 2023 was primarily due to Trust Account withdrawals associated with the Closing in November 2023 of $49,362,479, partially offset by the cash paid to the Sellers of EON of $30,827,804 at the Closing, net of cash acquired. Cash flows used in investing activities in the Predecessor period ending November 14, 2023 consisted of $6,769,557 of cash paid for oil and gas property costs, primarily due to significant expenditures in the previous year to upgrade certain wells and meet compliance requirements.
Previous wording
Net cash used by financing activities during the Successor period were primarily related to the redemptions of common stock of Public Shares at Closing of $44,737,839, partially offset by the net proceeds from the Senior Secured Term Loan of $27,191,008.
Current wording
Net cash used in financing activities for the year ended December 31, 2024 was primarily due to repayments of long-term debt offset by the proceeds from the sale of common stock under the Common Stock Purchase Agreement. Net cash used by financing activities during the Successor period from November 15, 2023 to December 31, 2023 were primarily related to the redemptions of common stock of Public Shares at Closing of $44,737,839, partially offset by the net proceeds from the Senior Secured Term Loan of $27,191,008.
Previous wording
As of December 31, 2023 and 2022, the Company did not have any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission (“SEC”).
Current wording
As of December 31, 2024 and 202, the Company did not have any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission (SEC).
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The Company had positive cash flow from operations of $3,700,686 for the year ended December 31, 2024. Additionally, management’s plans to alleviate this substantial doubt include improving profitability through streamlining costs, maintaining active hedge positions for its proven reserve production, and the issuance of additional shares of Class A common stock.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Change in fair value of warrant liabilities