EON Resources Inc.

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. 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.

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, and South Justice Field in Lea County, New Mexico which are both in the sub-area of the Permian Basin. Pogo focuses primarily on production through waterflooding recovery methods.

Previous wording

Our assets as mentioned above consist of contiguous leasehold positions of approximately 13,700 gross (13,700 net) acres with an average working interest of 100%. We operate 100% of the net acreage across the Company’s assets, all of which is net operated acreage of vertical wells with average depths of approximately 3,810 feet.

Current wording

Our assets as mentioned above consist of contiguous leasehold positions in the Grayburg-Jackson Field of approximately 13,700 gross (13,700 net) acres with an average working interest of 100%. We operate 100% of the net acreage across the Grayburg-Jackson Field assets, all of which is net operated acreage of vertical wells with average depths of approximately 3,810 feet. In addition our South Justice Field has contiguous leasehold positions of approximately 5,400 gross (5,400) acres with an average working interest of 94%. We operate 100% of the net acreage across the Grayburg-Jackson field assets, all of which is net operated acreage of vertical wells with average depths of approximately 6,000 feet.

Previous wording

Our average daily production for the three months ended March 31, 2025 was 749 barrel of oil equivalent (“BOE”) per day. Our average daily production for the year ended December 31, 2024, was 798 BOE per day. The decrease in production is due to an increase in well downtime, water injection flowlines that needed repair or replacement, and the conveyance of the 10% Override royalty interest to Pogo Royalty.

Current wording

Our average daily production for the six months ended June 30, 2025 was 708 barrel of oil equivalent (“BOE”) per day. Our average daily production for the year ended December 31, 2024, was 798 BOE per day. The decrease in production is due to an increase in well downtime, water injection flowlines that needed repair or replacement, 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 three months ended March 31, 2025 and 2024, was $(1.98) and $(5.51) per barrel, respectively. Our natural gas price differential during the three months ended March 31, 2025 and 2024, was $0.79 and $0.54 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 six months ended June 30, 2025 and 2024, was $0.84 and $(4.57) per barrel, respectively. Our natural gas price differential during the six months ended June 30, 2025 and 2024, was $(0.05) and $0.34 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

Prices for various quantities of natural gas and oil that we produce significantly impact our revenues and cash flows. The following table lists average NYMEX prices for oil and natural gas for the three months ended March 31, 2025 and 2024.

Current wording

Prices for various quantities of natural gas and oil that we produce significantly impact our revenues and cash flows. The following table lists average NYMEX prices for oil and natural gas for the three and six months ended June 30, 2025 and 2024.

Previous wording

For the three months ended March 31, 2025, the average NYMEX oil pricing was $71.84 per barrel of oil or 7% lower than the average NYMEX price per barrel for the three months ended March 31, 2024. Our settled derivatives decreased our realized oil price per barrel by $2.28 and $2.05 in the three months ended March 31, 2025, and 2024, respectively. Our average realized oil price per barrel after reflecting settled derivatives and location differentials was $67.78 and $72.15 for the three months ended March 31, 2025 and 2024, respectively.

Current wording

For the six months ended June 30, 2025, the average NYMEX oil pricing was $68.23 per barrel of oil or 14% lower than the average NYMEX price per barrel for the six months ended June 30, 2024. Our settled derivatives increased our realized oil price per barrel by $2.00 in the six months ended June 30, 2025, and decreased our realized oil price per barrel by $3.16 in the six months ended June 30, 2024. Our average realized oil price per barrel after reflecting settled derivatives and location differentials was $69.07 and $75.07 for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

The average NYMEX natural gas pricing for the three months ended March 31, 2025, was $4.94 per Mcf, or 95% higher than the average NYMEX price of $2.13 per Mcf for the three months ended March 31, 2024.

Current wording

The average NYMEX natural gas pricing for the six months ended June 30, 2025, was $3.67 per Mcf, or 74% higher than the average NYMEX price of $2.11 per Mcf for the six months ended June 30, 2024.

Previous wording

We enter into commodity derivatives instruments to manage the price risk attributable to future oil production. We recorded a loss on derivative contracts of $85,071 for the three months ended March 31, 2025, compared to a loss of $1,997,247 for the three months ended March 31, 2024. Higher commodity prices in the three months ended March 31, 2025, resulted in realized losses of $142,859 compared to realized losses of $137,154 for the three months ended March 31, 2024. For the three months ended March 31, 2025, unrealized gains were $57,788 compared to unrealized losses of $1,860,093 for the three months ended March 31, 2024.

Current wording

We enter into commodity derivatives instruments to manage the price risk attributable to future oil production. We recorded a gain on derivative contracts of $889,479 for the three months ended June 30, 2025, compared to a loss of $83,478 for the three months ended June 30, 2024. lower commodity prices in the three months ended June 30, 2025, resulted in realized gains of $379,350 compared to realized losses of $261,448 for the three months ended June 30, 2024. For the three months ended June 30, 2025, unrealized gains were $510,129 compared to unrealized gains of $177,970 for the three months ended June 30, 2024.

Previous wording

For the three months ended March 31, 2025, our average realized oil price per barrel after reflecting settled derivatives was $65.12 compared to $62.53 for the three months ended March 31, 2024. For the three months ended March 31, 2025, our settled derivatives decreased our realized oil price per barrel by $2.12 compared to decreasing the price per barrel by $1.79 for the three months ended March 31, 2024. As of March 31, 2025, we ended the period with a $164,185 net derivative asset compared to a net asset of $106,397 as of December 31, 2024.

Current wording

For the three months ended June 30, 2025, our average realized oil price per barrel after reflecting settled derivatives was $70.53 compared to $75.81 for the three months ended June 30, 2024. For the three months ended June 30, 2025, our settled derivatives increased our realized oil price per barrel by $6.86 compared to decreasing the price per barrel by $3.16 for the three months ended June 30, 2024. As of June 30, 2025, we ended the period with a $674,314 net derivative asset compared to a net asset of $106,397 as of December 31, 2024.

Previous wording

Other revenue was $117,532 for the three months ended March 31, 2025, compared to $130,588 for the three months ended March 31, 2024. The revenue is related to providing water services to a third party. The contract is for one year starting on September 1, 2022, and has been renewed by mutual agreement.

Current wording

Other revenue was $105,089 for the three months ended June 30, 2025, compared to $130,230 for the three months ended June 30, 2024. The revenue is related to providing water services to a third party. The contract is for one year starting on September 1, 2022, and has been renewed by mutual agreement.

Previous wording

Lease operating expenses were $1,921,321 for the three months ended March 31, 2025, compared to $2,299,518 for the three months ended March 31, 2024. On a per unit basis, production expenses decreased 0.6% from $29.93 per BOE for the three months ended March 31, 2024, to $28.50 per BOE for the three months ended March 31, 2025.

Current wording

Lease operating expenses were $1,993,454 for the three months ended June 30, 2025, compared to $2,094,181 for the three months ended June 30, 2024. On a per unit basis, production expenses increased 5% from $29.50 per BOE for the three months ended June 30, 2024, to $33.15 per BOE for the three months ended June 30, 2025.

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 $397,216 for the three months ended March 31, 2025, compared to $428,280 for the three months ended March 31, 2024. As a percentage of oil and natural gas sales, these costs were 9% in the three months ended March 31, 2025 and 2024. 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 $302,850 for the three months ended June 30, 2025, compared to $408,985 for the three months ended June 30, 2024. As a percentage of oil and natural gas sales, these costs were 8.4% and 8.6% in the three months ended June 30, 2025 and 2024 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 $97,075 for the three months ended March 31, 2025 compared to $476,074 for the three months ended March 31, 2024. DD&A was $1.44 per BOE for the three months ended March 31, 2025, compared to $6.20 per BOE for the three months ended March 31, 2024. The aggregate decrease in DD&A expense for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, was driven by the decrease in oil and gas production.

Current wording

Depletion, depreciation and amortization (“DD&A”) was $458,190 for the three months ended June 30, 2025 compared to $522,542 for the three months ended June 30, 2024. DD&A was $7.62 per BOE for the three months ended June 30, 2025, compared to $7.36 per BOE for the three months ended June 30, 2024. The aggregate decrease in DD&A expense for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, was driven by the decrease in oil and gas production.

Previous wording

Accretion expense was $335,771 for the three months ended March 31, 2025, compared to $33,005 for the three months ended March 31, 2024. Accretion expense was $4.98 per BOE for the three months ended March 31, 2025, compared to $0.43 per BOE for the three months ended March 31, 2024. The aggregate increase in accretion expense for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, was driven by changes in certain assumptions, specifically the inflation factor.

Current wording

Accretion expense was $95,322 for the three months ended June 30, 2025, compared to $40,526 for the three months ended June 30, 2024. Accretion expense was $1.59 per BOE for the three months ended June 30, 2025, compared to $0.57 per BOE for the three months ended June 30, 2024. The aggregate increase in accretion expense for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, was driven by changes in certain assumptions, specifically the inflation factor.

Previous wording

General and administrative expenses were $2,084,545 for the three months ended March 31, 2025, compared to $2,309,824 for the three months ended March 31, 2024. The decrease in general and administrative expenses is primarily due to decreased stock-based compensation in the current period of $368,093 compared to $699,248 in the comparative period.

Current wording

General and administrative expenses were $1,941,044 for the three months ended June 30, 2025, compared to $2,323,662 for the three months ended June 30, 2024. The decrease in general and administrative expenses is primarily due to decreased stock-based compensation in the current period of $237,685 compared to $370,720 in the comparative period, and our focus on reducing overhead and overall levels of general and administrative costs.

Previous wording

Interest expense was $1,744,246 for the three months ended March 31, 2025, compared to $1,860,582 for the three months ended March 31, 2024. The decrease in interest expense is driven by the decreases in the Senior Secured term loan and the Private Notes Payable.

Current wording

Interest expense was $1,678,538 for the three months ended June 30, 2025, compared to $2,030,317 for the three months ended June 30, 2024. The decrease in interest expense is driven by the decreases in the Senior Secured term loan and the Private Notes Payable.

Previous wording

During the three months ended March 31, 2025, the Company recorded $337,370 related to the amortization of financing costs compared to $813,181 for the three months ended March 31, 2024. These costs are attributable to deferred finance costs paid on the Senior Secured Term Loan, and discounts associated with the Private Notes Payable during 2023.

Current wording

During the three months ended June 30, 2025, the Company recorded $332,447 related to the amortization of financing costs compared to $662,076 for the three months ended June 30, 2024. These costs are 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 loss of $349,189 for the three months ended March 31, 2024 related to the inputs used in our fair value estimate of the FPA Put Option, primarily the decline in our stock price during the three months ended March 31, 2024. The key inputs to the fair value estimate include our stock price, which declined during the Successor period, and the likelihood, timing and price of a potential dilutive offering. The FPA put option was settled during the year ended December 31, 2024 and therefore no change in fair value was recorded in the three months ended March 31, 2025.

Current wording

The change in fair value of forward purchase agreement consisted of a loss of $23,717 for the three months ended June 30, 2024 related to the inputs used in our fair value estimate of the FPA Put Option, primarily the decline in our stock price during the three months ended June 30, 2024. The key inputs to the fair value estimate include our stock price, which declined during the Successor period, and the likelihood, timing and price of a potential dilutive offering. The FPA put option was settled during the year ended December 31, 2024 and therefore no change in fair value was recorded in the three months ended June 30, 2025.

Previous wording

The change in fair value of warrant liabilities consisted of a loss of $162,520 for the three months ended March 31, 2025, compared to a loss of $624,055 for the three months ended March 31, 2024, related to fluctuations in the trading price of our 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 gain of $10,030 for the three months ended June 30, 2025, compared to a loss of $277,167 for the three months ended June 30, 2024, related to fluctuations in the trading price of our warrants, a portion of which were accounted for as liabilities due to the redemption provisions in those issued to Private Note holders. All warrants previously accounted for as liabilities were exchanged into convertible notes during the six months ended June 30, 2025.

Previous wording

The change in fair value of convertible note liabilities consisted of a loss of $129,746 for the three months ended March 31, 2025.

Current wording

The change in fair value of convertible note liabilities consisted of a loss of $1,931 for the three months ended June 30, 2025.

Previous wording

The Company recognized a gain on extinguishment of liabilities of $92,294 during the three months ended March 31, 2025 related to the exchange of certain notes payable and warrant liabilities for convertible note agreements.

Current wording

The Company recognized a gain on extinguishment of liabilities of $207,307 during the three months ended June 30, 2025, primarily related to the exchange of certain notes payable and warrant liabilities for convertible note agreements.

Previous wording

Our revenues vary from year to year primarily as a result of changes in realized commodity prices and production volumes. For the three months ended March 31, 2025, our oil and natural gas sales decreased 12% from the three months ended March 31, 2024, excluding the effect of settled commodity derivatives, and a 12% decrease in production volumes. Production volumes decreased for the three months ended March 31, 2025 from the three months ended March 31, 2024 as a result of increased flaring of natural gas during the current period.

Current wording

Our revenues vary from year to year primarily as a result of changes in realized commodity prices and production volumes. For the six months ended June 30, 2025, our oil and natural gas sales decreased 20% from the six months ended June 30, 2024, excluding the effect of settled commodity derivatives, and a 13% decrease in production volumes. Production volumes decreased for the six months ended June 30, 2025 from the six months ended June 30, 2024 as a result of increased flaring of natural gas during the current period.

Previous wording

As of March 31, 2025, we had outstanding debt of $22,563,093 under our Senior Secured Term Loan, $15,000,000 under the Seller Promissory Note, and $2,900,000 of outstanding private notes payable, $1,548,500 of convertible notes payable and $1,047,028 from merchant cash advances. A total of $8,654,397 of this is due within one year. As of March 31, 2025, we had $3,074,094 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, and had a working capital deficit of $27,937,557. 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 June 30, 2025, we had outstanding debt of $21,386,735 under our Senior Secured Term Loan, $15,000,000 under the Seller Note, and $5,650,000 of convertible notes payable and $1,368,402 from merchant cash advances. A total of $6,121,756 of this is due within one year. As of June 30, 2025, we had $3,060,971 of cash and cash equivalents on hand, of which $2,600,000 is restricted cash in an escrow account pursuant to the requirements of the Senior Secured Term Loan, and had a working capital deficit of $21,731,979. 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

We had negative cash flow from operations of $1,827,355 for the three months ended March 31, 2025 and 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. 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. Through the date of this filing, we have received $6,969,866 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 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.

Current wording

We had negative cash flow from operations of $1,796,949 for the six months ended June 30, 2025 and 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. 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. Through the date of this filing, we have received $[10,435,066] in cash proceeds related to the sale of 15,100,000 shares of common stock under this agreement and expect to continue to utilize it to fund 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

Sources and uses of cash for the three months ended March 31, 2025 and 2024, are as follows:

Current wording

Sources and uses of cash for the six months ended June, 2025 and 2024, are as follows:

Previous wording

The change in net cash flow used operating activities for the three months ended March 31, 2025, as compared to 2024 is primarily due to decreased production volumes and a reduction in payable balances during the current period.

Current wording

The change in net cash flow used operating activities for the six months ended June 30, 2025, as compared to 2024 is primarily due to decreased production volumes and a reduction in payable balances during the current period.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2025 was primarily related to $1,117,540 in development costs for our reserves. Cash flows used in investing activities for the three months ended March 31, 2024 consisted primarily of $571,003 of cash paid for development costs of our reserves.

Current wording

Net cash used in investing activities for the six months ended June 30, 2025 was primarily related to $2,638,532 in development costs for our reserves. Cash flows used in investing activities for the six months ended June 30, 2024 consisted primarily of $3,410,552 of cash paid for development costs of our reserves.

Previous wording

Net cash provided by financing activities during the three months ended March 31, 2025 were primarily related to the sale of common stock under the Common Stock Purchase agreement of $4,341,532 and proceeds of $617,500 from short term notes payable offset by repayments of the Senior Secured Term Loan of $1,133,324 and Private Notes Payable of $778,277. Cash flows used in financing activities for the three months ended March 31, 2024 were primarily related to repayments of the Senior Secured Term Loan of $887,174 and Private Notes Payable of $33,750, partially offset by an additional $250,000 in cash proceeds from the Private Notes Payable issued during the three months ended March 31, 2024.

Current wording

Net cash provided by financing activities during the six months ended June 30, 2025 were primarily related to the sale of common stock under the Common Stock Purchase agreement of $7,024,332 and proceeds of $1,098,048 from short term notes payable offset by repayments of the Senior Secured Term Loan of $2,309,681 and Private Notes Payable of $1,287,805. Cash flows used in financing activities for six months ended June 30, 2024 were primarily related to repayments of the Senior Secured Term Loan of $887,174 and Private Notes Payable of $33,750, partially offset by an additional $250,000 in cash proceeds from the Private Notes Payable issued during the six months ended June 30, 2024.

Previous wording

We have contractual commitments under our Senior Secured Term Loan, the Seller Promissory Note and the Private Notes Payable which include periodic interest payments. See Note 5 to our interim condensed consolidated unaudited financial statements. We have contractual commitments that may require us to make payments upon future settlement of our commodity derivative contracts. See Note 4 to our interim condensed consolidated unaudited financial statements.

Current wording

We have contractual commitments under our Senior Secured Term Loan, the Seller Note and the Private Notes Payable which include periodic interest payments. See Note 4 to our interim condensed consolidated unaudited financial statements. We have contractual commitments that may require us to make payments upon future settlement of our commodity derivative contracts. See Note 3 to our interim condensed consolidated unaudited financial statements.

Previous wording

We review our proved properties to be held and used whenever management determines that events or circumstances indicate that the recorded carrying value of the properties may not be recoverable. Management assesses whether or not an impairment provision is necessary based upon estimated future recoverable proved reserves, commodity price outlooks, production and capital costs expected to be incurred to recover the reserves, discount rates commensurate with the nature of the properties and net cash flows that may be generated by the properties. Proved oil and gas properties are reviewed for impairment at the level at which depletion of proved properties is calculated. See Note 2 of notes to the consolidated financial statements.

Current wording

We review our proved properties to be held and used whenever management determines that events or circumstances indicate that the recorded carrying value of the properties may not be recoverable. Management assesses whether or not an impairment provision is necessary based upon estimated future recoverable proved reserves, commodity price outlooks, production and capital costs expected to be incurred to recover the reserves, discount rates commensurate with the nature of the properties and net cash flows that may be generated by the properties. Proved oil and gas properties are reviewed for impairment at the level at which depletion of proved properties is calculated. See Note 2 of notes to the interim unaudited consolidated financial statements.

Previous wording

Inherent in the present value calculation are numerous assumptions and judgments including the ultimate settlement amounts, credit-adjusted discount rates, timing of settlement and changes in the legal, regulatory, environmental and political environments. To the extent future revisions to these assumptions impact the present value of the existing asset retirement obligations, a corresponding adjustment is generally made to the crude oil and natural gas property or other property and equipment balance. See Note 5 of notes to the consolidated financial statements.

Current wording

Inherent in the present value calculation are numerous assumptions and judgments including the ultimate settlement amounts, credit-adjusted discount rates, timing of settlement and changes in the legal, regulatory, environmental and political environments. To the extent future revisions to these assumptions impact the present value of the existing asset retirement obligations, a corresponding adjustment is generally made to the crude oil and natural gas property or other property and equipment balance. See Note 3 of notes to the interim unaudited consolidated financial statements.