Some statements contained in this Report may constitute “forward-looking statements” for purposes of United States federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this report may include, for example, statements about:
| ● | our expectations around the performance of our business; |
| ● | our potential ability to obtain additional financing; |
| ● | the level of production on our properties; |
| ● | overall and regional supply and demand factors, delays, or interruptions of production; |
| ● | our public securities’ potential liquidity and trading; |
| ● | future operating results. |
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SUMMARY OF SIGNIFICANT RISKS AFFECTING OUR COMPANY
Our business is subject to multiple risks and uncertainties, as more fully described in “Risk Factors” and elsewhere in this Annual Report on Form 10-K. We urge you to read the disclosures under the caption “Risk Factors” and this Annual Report in full. Our significant risks may be summarized as follows:
| ● | The Company’s producing properties are located in the Permian Basin, making it vulnerable to risks associated with operating in a single geographic area. |
| ● | Title to the properties in which EON is acquiring an interest may be impaired by title defects. |
| ● | EON depends on various services for the development and production activities on the properties it operates. Substantially all EON’s revenue is derived from these producing properties. A reduction in the expected number of wells to be developed on EON’s acreage by or the failure of EON to develop and operate the wells on its acreage could have an adverse effect on its results of operations and cash flows adequately and efficiently. |
| ● | EON’s identified development activities are susceptible to uncertainties that could materially alter the occurrence or timing of their development activities. |
| ● | Acquisitions and EON’s development of EON’s leases will require substantial capital, and our company may be unable to obtain needed capital or financing on satisfactory terms or at all. |
| ● | EON currently plans to enter hedging arrangements with respect to the production of crude oil, and possibly natural gas which is a smaller portion of the reserves. EON will mitigate the exposure to the impact of decreases in the prices by establishing a hedging plan and structure that protects the earnings to a reasonable level, and the debt service requirements. |
| ● | EON’s estimated reserves are based on many assumptions that may turn out to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of its reserves. |
| ● | We believe EON currently has ineffective internal control over its financial reporting. |
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| ● | A substantial majority of EON’s revenues from crude oil and gas producing activities are derived from its operating properties that are based on the price at which crude oil and natural gas produced from the acreage underlying its interests are sold. Prices of crude oil and natural gas are volatile due to factors beyond EON’s control. A substantial or extended decline in commodity prices may adversely affect EON’s business, financial condition, results of operations and cash flows. |
| ● | If commodity prices decrease to a level such that EON’s future undiscounted cash flows from its properties are less than their carrying value, EON may be required to take write-downs of the carrying values of its properties. |
| ● | The unavailability, high cost or shortages of rigs, equipment, raw materials, supplies or personnel may restrict or result in increased costs to develop and operate EON’s properties. |
| ● | The marketability of crude oil and natural gas production is dependent upon transportation and processing and refining facilities, which EON cannot control. Any limitation in the availability of those facilities could interfere with EON’s ability to market its production and could harm EON’s business. |
| ● | Drilling for and producing crude oil and natural gas are high-risk activities with many uncertainties that may materially adversely affect EON’s business, financial condition, results of operations and cash flows. |
| ● | Crude oil and natural gas operations are subject to various governmental laws and regulations. Compliance with these laws and regulations can be burdensome and expensive for EON, and failure to comply could result in EON incurring significant liabilities, either of which may impact its willingness to develop EON’s interests. |
| ● | Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could cause EON to incur increased costs, additional operating restrictions or delays and have fewer potential development locations. |
| ● | The unaudited pro forma condensed consolidated combined financial information and EON’s respective unaudited forecasted financial information included in this report may not be indicative of what the actual financial position or results of operations would have been or will be. Our future results following the Purchase may differ, possibly materially, from the unaudited pro forma condensed consolidated combined financial information and EON’s respective unaudited forecasted financial information presented in this report. |
| ● | The historical financial results of EON and the unaudited pro forma condensed consolidated combined financial information included elsewhere in this report may not be indicative of what EON’s actual financial position or results of operations would have been if it were a public company. |
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