AleAnna, Inc.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and the related notes appearing elsewhere in this Form 10-K. The discussion and analysis should also be read together with the section entitled “Business”. This discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs that involve risks and uncertainties that may be outside our control. As a result of many factors, such as those set forth under the headings “Risk Factors” and elsewhere in this Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements. Unless the context otherwise requires, all references in this section to “we,” “us,” “our,” “AleAnna,” or the “Company” refer to AleAnna, Inc.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and the related notes appearing elsewhere in this Form 10-K. The discussion and analysis should also be read together with the section entitled “Business”. This discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs that involve risks and uncertainties that may be outside our control. See the section titled “Cautionary Note Regarding Forward-Looking Statements”. As a result of many factors, such as those set forth in Part 1, Item 1A.“Risk Factors” and elsewhere in this Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements. Unless the context otherwise requires, all references in this section to “we,” “us,” “our,” “AleAnna,” or the “Company” refer to AleAnna, Inc.

Previous wording

AleAnna is a natural gas resource company focused on delivering critical natural gas supplies to Europe through both onshore conventional natural gas exploration and renewable natural gas development in Italy. We have several conventional natural gas discoveries including the Longanesi field, located in the Po Valley in Northern Italy, which is one of Italy’s largest modern gas discoveries. We retain a 33.5% working interest in the Longanesi field with our working interest partner, and operator, Padana. We acquired our working interest in the Longanesi field through a 2016 transaction with Enel. We also retain wholly owned concessions, permits, and pending applications on other exploration and development prospects across Italy which are supported by proprietary modern 3D seismic reservoir imaging. In 2021, we launched a renewable natural gas development business focused on bringing to market carbon-negative renewable natural gas derived from animal and agricultural waste.

Current wording

AleAnna is a natural gas resource developer focused on delivering critical natural gas supplies to Europe through both onshore conventional natural gas exploration and renewable natural gas development in Italy. We have several conventional natural gas discoveries including the Longanesi field, located in the Po Valley in Northern Italy, which is one of Italy’s largest modern gas discoveries. We retain a 33.5% working interest in the Longanesi field with our working interest partner, and operator, Padana. We acquired our working interest in the Longanesi field through a 2016 transaction with Enel. We also retain wholly owned concessions, permits, and pending applications on other exploration and development prospects across Italy which are supported by proprietary modern 3D seismic imaging.

Previous wording

Planned principal operations have not yet commenced. As of December 31, 2024, although we had generated revenue from electricity sales from two renewable natural gas assets, we had not generated any revenues from our principal business activities to date. Our recent activities involve the drilling and testing of three Longanesi development wells (2022 and 2023) as well as the completion of two original discovery wells. We had no drilling activity during the year ended December 31, 2024, and drilled and completed one gross Longanesi development well and worked over and completed one additional Longanesi development well (0.335 net to our interest) during the year ended December 31, 2023. We had no other exploratory or development drilling during years ended December 31, 2024 or 2023. Our Longanesi, Trava and Gradizza wells were classified by DeGolyer as proved undeveloped reserves as such wells had not yet started production as of December 31, 2024 and require future investments to install production pipelines and production facilities prior to being fully completed and producible. Following tie-in of these wells and the installation of a temporary processing facility, we and Padana achieved first production of the five wells in the Longanesi field in March 2025. The permanent processing facility is expected to be constructed over the remainder of 2025 and early 2026 and commissioned in mid-2026.

Current wording

Our recent drilling and exploration activities involve the drilling and testing of three Longanesi development wells (during 2022 and 2023) as well as the re-completion of two original discovery wells. We had no drilling activity during the years ended December 31, 2025 or 2024. We had no other exploratory or development drilling during years ended December 31, 2025 or 2024. Our Trava and Gradizza wells were classified by DeGolyer as proved undeveloped reserves as such wells had not yet started production as of December 31, 2025 and require future investments to install production facilities prior to being fully completed and producible. However, as noted in the “Recent Developments” section below, we achieved first production from the Longanesi field in March 2025.

Previous wording

The Business Combination was accounted for as a common control transaction with respect to AleAnna Energy which is akin to a reverse recapitalization. This conclusion was based on the fact that Nautilus Resources LLC (“Nautilus”) had a controlling financial interest in AleAnna Energy prior to the Business Combination and has a controlling financial interest in AleAnna, which includes AleAnna Energy as a wholly owned subsidiary. The net assets of SPAC are stated at their historical carrying amounts with no goodwill or intangible assets recognized in accordance with the accounting principles generally accepted in the United States of America (“GAAP”). The Business Combination with respect to AleAnna Energy was not treated as a change in control primarily due to Nautilus receiving the controlling voting stake in AleAnna and the ability of Nautilus to nominate the full board of directors and management of AleAnna.

Current wording

The Business Combination was accounted for as a common control transaction with respect to AleAnna Energy which is akin to a reverse recapitalization. This conclusion was based on the fact that Nautilus Resources LLC (“Nautilus”) had a controlling financial interest in AleAnna Energy prior to the Business Combination and has a controlling financial interest in AleAnna, which includes AleAnna Energy as a wholly owned subsidiary. The net assets of SPAC are stated at their historical carrying amounts with no goodwill or intangible assets recognized in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP” or “GAAP”). The Business Combination with respect to AleAnna Energy was not treated as a change in control primarily due to Nautilus receiving the controlling voting stake in AleAnna and the ability of Nautilus to nominate the full board of directors and management of AleAnna.

Previous wording

We incurred $9.5 million in transaction costs related to the Business Combination. Approximately $0.6 million of these costs were recorded as a reduction to additional paid-in capital, up to the amount of cash proceeds received in the transaction. Of the remaining $8.9 million, approximately $0.5 million represented prepaid directors and officers insurance premiums that were recorded to other assets in the consolidated balance sheet, and $8.4 million represented legal, accounting, consulting and advisory fees which were recorded as Business Combination transaction expenses in the consolidated statement of operations and comprehensive loss.

Current wording

We incurred $9.5 million in transaction costs related to the Business Combination. Approximately $0.6 million of these costs were recorded as a reduction to additional paid-in capital, up to the amount of cash proceeds received in the transaction. Of the remaining $8.9 million, approximately $0.5 million represented prepaid directors and officers insurance premiums that were recorded to other assets in the consolidated balance sheet, and $8.4 million represented legal, accounting, consulting and advisory fees which were recorded as Business Combination transaction expenses in the consolidated statement of operations and comprehensive income (loss).

Previous wording

On March 13, 2025, AleAnna achieved a key milestone with the first production from its five wells in the Longanesi field.

Current wording

On March 13, 2025, we achieved a key milestone with the first production from our working interest in five wells in the Longanesi field, and the field reached sustained maximum production during the first half of 2025. The Company began recognizing revenue and related expenses, including depreciation and depletion, associated with Longanesi production in the second quarter of 2025.

Previous wording

On October 29, 2024, we entered into a gas sale agreement (“GSA”) with Shell Energy Europe Limited (“SEEL”), whereby SEEL became the exclusive buyer of our share of the natural gas produced from the Longanesi field net of (i) any consumption and/or losses incurred in the transport, treatment and compression of gas before delivery; (ii) any volume to be allocated for regulated royalties auctions, if applicable; and (iii) any other volume contractually allocated to other parties before August 31, 2022. Future sales under the GSA are contingent upon the commencement of gas production.

Current wording

On October 29, 2024, we entered into a gas sale agreement with Shell Energy Europe Limited, under which SEEL became the exclusive buyer of our share of the natural gas produced from the Longanesi field net of (i) any consumption and/or losses incurred in the transport, treatment and compression of gas before delivery; (ii) any volume to be allocated for regulated royalties auctions, if applicable; and (iii) any other volume contractually allocated to other parties before August 31, 2022.

Previous wording

We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including competition from other carbon-based and non-carbon-based fuel producers, regulatory hurdles posed by the Italian government, and other factors discussed under the section titled “Risk Factors.” We believe the factors described below are key to our success.

Current wording

We believe that our performance and future success depends on a number of factors that present significant opportunities for us but also pose risks and challenges, including competition from other carbon-based and non-carbon-based fuel producers, regulatory hurdles posed by the Italian government, and other factors discussed under the section titled “Risk Factors.” We believe the factors described below are key to our success.

Previous wording

As previously discussed, we and Padana achieved first production of the five wells in the Longanesi field in March 2025 through use of a temporary processing facility. The permanent processing facility is expected to be constructed over the remainder of 2025 and early 2026 and commissioned mid 2026.

Current wording

As previously discussed, we and Padana achieved first production of the five wells in the Longanesi field in March 2025 through use of a temporary processing facility. The permanent processing facility is expected to be constructed over the remainder of 2026.

Previous wording

We believe our achieving first production of the Longanesi field is a key milestone that will fuel our potential growth. We also have potentially viable discoveries in our Gradizza and Trava fields that are expected to achieve first production in the future.

Current wording

We believe achieving first production of the Longanesi field was a key milestone that will fuel our potential growth. We also believe that we have potentially viable discoveries in our Gradizza and Trava fields, which are expected to achieve first production in the future.

Previous wording

Commencing and Expanding Renewable Natural Gas Operations

Current wording

Expanding Renewable Natural Gas Operations

Previous wording

During the year ended December 31, 2024, we generated approximately $1.4 million of revenue from electricity sales at two renewable natural gas assets acquired in July 2024 (the “Casalino” and “Campopiano” plants). The plant assets are fully permitted for production of electricity through conversion of crop and animal waste bio feedstocks. The plant assets are currently biomethane to electricity conversion assets. It is our intention to begin upgrading the sites to refine biomethane into renewable natural gas through upgrading units. Following the upgrade process to transition the assets to biomethane to renewable natural gas conversion, we expect to sell renewable natural gas to customer(s) by trucking or piping the renewable natural gas to the interstate pipeline system (SNAM). Until the plant assets are upgraded, we will actively source bio feedstocks for the assets in order to produce biomethane which will be processed through reciprocating generators in order to generate electricity which is then sold onto the grid through a metered interconnection. Casalino and Campopiano derive revenues from the sale of such electricity to the local state-owned electrical utility (Gestore dei Servizi Energetici SpA or “GSE”). Energy generation revenue is recognized as the electricity generated by the Casalino and Campopiano assets is delivered to GSE. Revenues are based on actual output and “on-the-spot” predetermined prices for small renewable energy producers.

Current wording

During the year ended December 31, 2025, revenue from our Conventional segment was comprised of sales of our share of natural gas from the Longanesi field. During the year ended December 31, 2025, results from the Longanesi field have outperformed expectations, with a stabilized total production rate of approximately 25 to 30 million cubic feet per day (“MMcf/d”), which was achieved ahead of the anticipated 3-month ramp up timeline for this milestone. During the year ended December 31, 2025, revenue from our Renewable segment was comprised of electricity sales at two renewable natural gas assets acquired in July 2024 (the “Casalino” and “Campopiano” plants). The plant assets are fully permitted for production of electricity through conversion of crop and animal waste bio feedstocks. The plant assets are currently biomethane to electricity conversion assets. It is our intention to begin upgrading the sites to refine biomethane into renewable natural gas through upgrading units. Following the upgrade process to transition the assets to biomethane to renewable natural gas conversion, we expect to sell renewable natural gas to customer(s) by trucking or piping the renewable natural gas to the interstate pipeline system. Until the plant assets are upgraded, we will actively source bio feedstocks for the assets in order to produce biomethane which will be processed through reciprocating generators in order to generate electricity which is then sold onto the grid through a metered interconnection. Casalino and Campopiano derive revenues from the sale of such electricity to the local state-owned electrical utility (Gestore dei Servizi Energetici SpA or “GSE”). Energy generation revenue is recognized as the electricity generated by the Casalino and Campopiano assets is delivered to GSE. Revenues are based on actual output and “on-the-spot” predetermined prices for small renewable energy producers.

Previous wording

Business Combination transaction expenses represent legal, consulting, advisory, accounting and other transaction fees and expenses related to the Business Combination, accounted for as a common control reverse recapitalization, that were expensed in connection with the Business Combination. A portion of the total costs incurred were recorded as a reduction in additional paid-in capital, up to the $0.6 million of proceeds received from the Trust, with costs in excess of funds raised from the Business Combination required to be expensed under GAAP. Management separated these expenses on its audited consolidated statement of operations for the year ended December 31, 2024 due to the significant and discrete nature of the expenses.

Current wording

Business Combination transaction expenses represent legal, consulting, advisory, accounting and other transaction fees and expenses related to the Business Combination, accounted for as a common control reverse recapitalization, that were expensed in connection with the Business Combination. A portion of the total costs incurred were recorded as a reduction in additional paid-in capital, up to the $0.6 million of proceeds received from the Trust, with costs in excess of funds raised from the Business Combination required to be expensed under U.S. GAAP. Management separated these expenses on its audited consolidated statement of operations for the year ended December 31, 2024 due to the significant and discrete nature of the expenses.

Previous wording

Interest and other income (expenses) primarily includes interest earned on cash and cash equivalents. Interest and other income increased by $2.1 million during the year ended December 31, 2024 compared to the same period in 2023, primarily due to interest earned on larger average cash balances during the 2024 period compared to the 2023 period presented. The larger cash balances were a result of the previously mentioned capital contributions in January and May of 2024. In 2023, the activity primarily related to lease operating expenses with minimal interest earned on lower cash and cash equivalents balances.

Current wording

Interest and other income (expenses) primarily includes interest earned on cash and cash equivalents.

Previous wording

We are also subject to a Valued-Added Tax (“VAT”) which is a broadly-based consumption tax that is assessed to the value that is added to goods and services. The VAT applies to nearly all goods and services that are bought and sold within the EU. Italian law allows for certain VAT payments to be recovered through ongoing applications for refunds. We have incurred higher VAT input paid (i.e., VAT paid on purchases) than the VAT output collected (i.e., VAT collected on sales), resulting in a net VAT refund receivable. As of December 31, 2024 and 2023, we had VAT receivables of $6.6 million, and $4.4 million, respectively.

Current wording

We are also subject to a Valued-Added Tax (“VAT”) which is a broadly-based consumption tax assessed on the value added to goods and services. VAT generally applies to most goods and services bought and sold within the EU. In certain cases, including cross-border sales to business customers and sales of biogas within Italy, we are not required to collect VAT on revenues. To date, we have incurred higher VAT on purchases (input VAT) than we have collected on sales (output VAT), resulting in a net VAT refund receivable. As of December 31, 2025 and 2024, we had VAT receivables of $9.6 million, and $6.8 million, respectively. Under Italian tax law, VAT receivables may be used to offset other tax liabilities, including payroll taxes, income taxes, and other taxes payable to the Italian government.

Previous wording

Our net losses were $12.4 million and $5.2 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024 and December 31, 2023, we had an accumulated deficit of $191.0 million and $146.4 million, respectively. The majority of these losses stem from costs associated with the Longanesi field drilling and development, including asset impairments from previous years, as well as seismic imaging, exploratory costs for other conventional natural gas prospects, and general and administrative expenses. The accumulated deficits also include historical deemed dividends to the redemption value of AleAnna Energy’s previous Class 1 Preferred Units (exchanged for Class A and Class C common stock in connection with the Business Combination) based on the redemption features of those units and the related accounting requirements.See“Note 10 — Equity” to the audited condensed consolidated financial statements for further details. We expect to continue to incur substantial expenses related to our operations, exploration, and development activities, including pre-commercialization efforts as we continue our development of, and seek regulatory approval for, our discoveries andexploration prospects. Since inception, we have incurred net losses annually and do not expect to achieve sustained profitability until 2025. These shares were all exchanged for Class A and Class C common stock in connection with the Business Combination.

Current wording

Our net income attributable to the common stockholder was $1.8 million for the year ended December 31, 2025, as compared to net loss attributable to the common stockholder of $167.8 million for the same period of 2024. As of December 31, 2025 and December 31, 2024, we had an accumulated deficit of $189.2 million and $191.0 million, respectively. The majority of these accumulated losses stem from costs associated with the Longanesi field drilling and development, including asset impairments from previous years, as well as seismic imaging, exploratory costs for other conventional natural gas prospects, and general and administrative expenses. The accumulated deficits also include historical deemed dividends to the redemption value of AleAnna Energy’s previous Class 1 Preferred Units (exchanged for Class A and Class C common stock in connection with the Business Combination) based on the redemption features of those units and the related accounting requirements.See“Note 9— Equity” to the audited consolidated financial statements for further details. We expect to continue to incur substantial expenses related to our operations, exploration, and development activities, including pre-commercialization efforts as we continue our development of, and seek regulatory approval for, our discoveries and exploration prospects. We achieved net income for the first time in 2025.

Previous wording

During the year ended December 31, 2024, all of our revenue was earned through electricity generation and sales at the Casalino and Campopiano renewable natural gas plants that were purchased in July 2024. Cost of revenues consists of feedstock costs, direct labor and overhead necessary to produce RNG and generate electricity. All cost of revenues was related to the RNG assets that were purchased in 2024. See Critical Accounting Policies and Estimates for further details of our revenue recognition accounting policies.

Current wording

During the year ended December 31, 2025, our revenue was earned primarily through sales of our share of natural gas production from the Longanesi field and, to a lesser extent, from electricity generation and sales at the Casalino and Campopiano renewable natural gas plants. Cost of revenues from sales of electricity consists of feedstock costs, direct labor and overhead necessary to produce RNG and generate electricity. Cost of revenues from sales of natural gas consists of gas tariffs and royalties, as well as rent expense. See Critical Accounting Policies and Estimates for further details of our revenue recognition accounting policies.

Previous wording

General and administrative expenses (exclusive of Business Combination transaction expenses) increased by $0.6 million, or 11%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase was primarily due to increases in legal, audit and consulting fees.

Current wording

General and administrative expenses (exclusive of Business Combination transaction expenses) increased by $3.4 million, or 54% to $9.7 million for the year ended December 31, 2025, compared to $6.3 million for the year ended December 31, 2024. The increase was primarily due to increases in legal, audit and consulting fees to support public company operations as well as delivering improved control over our operations.

Previous wording

See “Expenses” above for a description of the Business Combination transaction expenses. These expenses were specific to the Business Combination that closed on December 13, 2024, with no similar expenses incurred in 2023.

Current wording

See “Expenses” above for a description of the Business Combination transaction expenses. These expenses were specific to the Business Combination that closed in the prior year, with no similar expenses incurred in 2025.

Previous wording

As of December 31, 2024 and December 31, 2023, the contingent consideration liability was recorded at $25.0 million and $26.5 million, respectively. The estimate of the contingent consideration liability was determined based on inputs including the following as of December 31, 2024 and December 31, 2023: the intercontinental exchange futures prices for European natural gas, Euro to USD exchange rates of 1.04 and 1.11, respectively, and management’s future expected annual Longanesi production. We are required to make formulaic deferred consideration payments effectively equating to 20% to 50% of revenue above certain European natural gas threshold prices. The calculation and timing of such payments are primarily driven by future expected Longanesi production, as modeled by DeGolyer, as well as forward European natural gas prices. While the timing and quantities of expected Longanesi production were unchanged from December 31, 2023 to December 31, 2024, and we had fully accrued the total capped Euro amount of the liability, average annual European natural gas forward prices declined slightly.

Current wording

As of December 31, 2025 and 2024, the contingent consideration liability was recorded at $28.2 million and $25.0 million, respectively. The estimate of the contingent consideration liability was determined based on inputs including the following as of December 31, 2025 and 2024: the intercontinental exchange futures prices for European natural gas, Euro to USD exchange rates of 1.18 and 1.04, respectively, and management’s future expected annual Longanesi production. We are required to make formulaic deferred consideration payments effectively equating to 20% to 50% of revenue above certain European natural gas threshold prices. The calculation and timing of such payments are primarily driven by future expected Longanesi production, as modeled by DeGolyer, as well as forward European natural gas prices. While the timing and quantities of expected Longanesi production were unchanged from December 31, 2024 to December 31, 2025, and we had fully accrued the total capped Euro amount of the liability, average annual European natural gas forward prices declined slightly.

Previous wording

The change in the fair value of derivative liability related to the Class 1 Preferred Units was $0.2 million during the year ended December 31, 2024, compared to $0.7 million during the same period in 2023. The fair value gain recorded during the year ended December 31, 2024 (representing a decrease in the liability) was primarily due to a higher liquidation threshold which was driven by capital contributions made during the first quarter of 2024 through the Class 1 Preferred Units. Part of the change was also driven by a lower estimated business value as of September 30, 2024 compared to December 31, 2023 due to a decline in forward natural gas prices. The derivative liability was reduced from $0.2 million as of December 31, 2023 to zero as of September 30, 2024 and was ultimately derecognized in conjunction with the Business Combination.

Current wording

The change in the fair value of derivative liability related to the Class 1 Preferred Units was zero during the year ended December 31, 2025, compared to $0.2 million during the same period in 2024. The fair value gain recorded during the year ended December 31, 2024 (representing a decrease in the liability) was primarily due to a higher liquidation threshold which was driven by capital contributions made during the first quarter of 2024 through the Class 1 Preferred Units. The derivative liability was derecognized in conjunction with the Business Combination in the prior year.

Previous wording

For the purposes of presenting consolidated financial statements, the assets and liabilities of our Euro operations are translated to USD at the exchange rate on the reporting date. The income and expenses are translated using average exchange rates. Foreign currency differences that arise on translation for consolidated purposes are recognized as a currency translation adjustment in other comprehensive loss on the consolidated statements of operations and comprehensive loss.

Current wording

For the purpose of presenting consolidated financial statements, the assets and liabilities of our Euro operations are translated to USD at the exchange rate on the reporting date. The income and expenses are translated using average exchange rates. Foreign currency differences that arise on translation for consolidated purposes are recognized as a currency translation adjustment in other comprehensive income (loss) on the consolidated statements of operations and comprehensive income (loss).

Previous wording

The currency translation adjustment decreased by $1.8 million for the year ended December 31, 2024 compared to the same period in 2023. This decrease was due to the fluctuation of the exchange rates between the Euro and the U.S. Dollar as well as the level of our activities.

Current wording

The currency translation adjustment increased by $5.7 million for the year ended December 31, 2025 compared to the same period in 2024. This increase was primarily driven by fluctuation of the exchange rates between the Euro and the U.S. Dollar as well as the level of our Euro-denominated activities. The spot rate strengthened from December 31, 2024 to December 31, 2025, and the average exchange rate was higher during 2025, resulting in a larger positive currency translation adjustment relative to the prior period.

Previous wording

We have generated minimal revenues from our operations to date and we had an accumulated deficit of$191.0 million as of December 31, 2024. We had $28.3 million in cash and cash equivalents on December 31, 2024. The Company’s continuing operations, as intended, are dependent upon its ability to generate cash flows or obtain additional financing. Between January 2024 and May 2024, prior to the Business Combination, we received an aggregate of $62.1 million in capital contributions from AleAnna Energy members resulting in the issuance of 62,100 Class 1 Preferred Units, to fund operating costs, capital expenditures, Business Combination related transaction expenses, and to provide working capital to meet our liabilities and commitments as they become due. In addition, we are exploring Resource Backed Loan (“RBL”) financing and renewable natural gas project loan products with several financial institutions; however, there is no guarantee that such financing will be available to us. As a normal part of our business, depending on market conditions, we may from time to time consider opportunities to repay, redeem, repurchase or refinance the indebtedness of our subsidiaries or issue equity securities to raise additional capital. Changes in our operating plans, lower than anticipated revenues, increased expenses, acquisitions or other events may cause us to seek additional debt or equity financing in future periods. There can be no guarantee that financing will be available on acceptable terms or at all.

Current wording

We have begun generating revenues from our operations in both conventional gas and renewable gas businesses. We had an accumulated deficit of $189.2 million and $191.0 million as of December 31, 2025 and 2024, respectively. We had $31.8 million and $28.3 million in unrestricted cash and cash equivalents on December 31, 2025 and 2024, respectively. Our continuing operations, as intended, are dependent upon our ability to generate cash flows or obtain raise proceeds from equity or debt issuances. In 2025, we also received approximately $1.1 million from exercises of Public Warrants between January 2025 and May 2025. In addition, we are exploring Resource Backed Loan (“RBL”) financing and renewable natural gas project loan products and other financing arrangements with several financial institutions; however, there is no guarantee that such financing will be available to us. As a normal part of our business, depending on market conditions, we may from time to time consider opportunities to issue equity or debt securities to raise additional capital. Changes in our operating plans, lower than anticipated revenues, increased expenses, acquisitions or other events may cause us to seek additional debt or equity financing in future periods. There can be no guarantee that financing will be available on acceptable terms or at all.

Previous wording

Cash used in operating activities

Current wording

Cash provided by (used in) operating activities

Previous wording

In all periods presented, cash used in investing includes continued drilling, completion, and tie in of Longanesi-2D and Longanesi-3D wells. In year ended December 31, 2024, cash used in investing activities also reflects approximately $9.5 million of cash used to purchase three separate renewable natural gas assets, and approximately $5.1 million paid to Blugas as part of the Blugas Settlement (exclusive of VAT). These transactions are discussed in more detail in theRecent Developments section.

Current wording

In both periods presented, investing cash flows primarily reflected continued development of the Longanesi wells. The increase of cash used in investing activities during the year ended December 31, 2025 was driven by a lower level of completion, and tie-in activity relative to the same period in 2024. During the second quarter of 2025, the five Longanesi wells were brought online, resulting in only a partial year of capitalized costs. Capital expenditures during the year ended December 31, 2025 primarily reflected final tie-in work and capital calls from our operating partner, Padana, for the permanent Longanesi processing facility. In year ended December 31, 2024, cash used in investing activities also reflects approximately $9.5 million of cash used to purchase three separate renewable natural gas assets, and approximately $5.1 million paid to Blugas as part of the Blugas Settlement (exclusive of VAT).

Previous wording

Cash provided by financing activities in all periods presented reflects pre-Business Combination issuances of AleAnna Energy Class 1 Preferred Units used to fund our operations. Such Class 1 Preferred Units were exchanged for Class A and Class C commons stock as part of the Business Combination. The cash proceeds from the Business Combination, net of expenses allowed to be capitalized, had a negligible impact on financing cash flows as the majority of the Business Combination transaction expenses were required to be expensed and were included in net loss within operating cash flows.

Current wording

Cash provided by financing activities during the year ended December 31, 2025 reflects proceeds from cash exercises of Public Warrants. Cash provided by financing activities during the year ended December 31, 2024 reflects pre-Business Combination issuances of AleAnna Energy Class 1 Preferred Units used to fund our operations. Such Class 1 Preferred Units were exchanged for Class A and Class C commons stock as part of the Business Combination. The cash proceeds from the Business Combination, net of expenses allowed to be capitalized, had a negligible impact on financing cash flows as the majority of the Business Combination transaction expenses were required to be expensed and were included in net loss within operating cash flows.

Previous wording

In connection with our purchase of our 33.5% working interest in the Longanesi field, consideration paid included €7 million cash and up to €24 million of deferred consideration payable upon production of the Longanesi field. The deferred consideration is payable based on a formulaic calculation which is predominantly dependent on sales volumes and spot natural gas prices during the first 12 years of production (the “Earn-Out Period”). There will be no deferred consideration due if Longanesi is not developed and no deferred consideration due if average annual gas prices are less than €3.65/Mcf over the Earn-Out Period. Upon first production, AleAnna will also be required to reserve cash collateral of €3 million related to the contingent consideration liability which will be classified as restricted cash in future balance sheets and may be used to satisfy the contingent consideration liability as payments become due.

Current wording

In connection with our purchase of our 33.5% working interest in the Longanesi field, consideration paid included €7 million cash and up to €24 million of deferred consideration payable upon production of the Longanesi field. The deferred consideration is payable based on a formulaic calculation which is predominantly dependent on sales volumes and spot natural gas prices during the first 12 years of production (the “Earn-Out Period”). There will be no deferred consideration due if Longanesi is not developed and no deferred consideration due if average annual gas prices are less than €3.65/Mcf over the Earn-Out Period. Upon first production, we were also required to issue a bank guarantee of €3 million secured by cash collateral of €1 million related to the contingent consideration liability which is classified as restricted cash as of December 31, 2025. The cash collateral may be used to satisfy the contingent consideration liability as payments become due.

Previous wording

We recognized a liability for the contingent consideration in accounting for the asset acquisition in accordance with ASC 450,Contingencies(“contingent consideration liability”). As of December 31, 2024, and December 31, 2023, the total contingent consideration liability was recorded at $25.0 million and $26.5 million, respectively.

Current wording

We recognized a liability for the contingent consideration in accounting for the asset acquisition in accordance with ASC 450,Contingencies(“contingent consideration liability”). As of December 31, 2025, and December 31, 2024, the total contingent consideration liability was recorded at $28.2 million and $25.0 million, respectively, with $11.6 million and nil being classified as a short-term and $16.7 million and the entire balance being classified as a long-term liability for the respective periods.

Previous wording

In connection with the preparation of AleAnna’s financial statements as of and for the years ended December 31, 2024 and 2023, management of AleAnna identified material weaknesses in its internal control over financial reporting as follows:

Current wording

In connection with the preparation of AleAnna’s financial statements as of and for the year ended December 31, 2025, management of AleAnna identified material weaknesses in its internal control over financial reporting.

Previous wording

The Company cannot assure you that these measures will remediate the material weaknesses described above. The implementation of these remediation measures is in the early stages and will require validation and testing of the design and operating effectiveness of the Company’s internal controls over a sustained period of financial reporting cycles and, as a result, the timing of when the Company will be able to remediate the material weaknesses is uncertain and the Company may not remediate these material weaknesses during the year ended December 31, 2024. If the steps the Company takes do not remediate the material weaknesses in a timely manner, there could be a reasonable possibility that these control deficiencies or others may result in a material misstatement of its annual or interim financial statements that would not be prevented or detected on a timely basis. This, in turn, could jeopardize the Company’s ability to comply with its reporting obligations, limit its ability to access the capital markets and adversely impact its stock price.

Current wording

The Company believes that these measures described above will remediate the identified material weakness and strengthen the Company’s internal control over financial reporting. Management has begun to take these actions to remediate the Material Weaknesses and may take additional measures to address control deficiencies or determine to modify, or in the appropriate circumstances not to complete, certain of the remediation measures identified. The Material Weaknesses will not be considered remediated until the remediation plan has been implemented and there has been appropriate time to conclude through testing that the controls are operating effectively. If the steps the Company takes do not remediate the material weakness in a timely manner, there could be a reasonable possibility that these control deficiencies or others may result in a material misstatement of its annual or interim financial statements that would not be prevented or detected on a timely basis. This, in turn, could jeopardize the Company’s ability to comply with its reporting obligations, limit its ability to access the capital markets and adversely impact its stock price.

Previous wording

Our unaudited consolidated financial statements are based on the selection and application of significant accounting policies. The preparation of our management’s discussion and analysis of our financial condition and results of operations is based on our audited consolidated financial statements as of and for the years ended December 31, 2024 and 2023, which have been prepared in accordance with GAAP. In preparing these financial statements, we make estimates and assumptions impacting asset and liability amounts, disclosure of contingent liabilities, and expenses incurred.

Current wording

Our consolidated financial statements are based on the selection and application of significant accounting policies. The preparation of our management’s discussion and analysis of our financial condition and results of operations is based on our audited consolidated financial statements as of and for the years ended December 31, 2025 and 2024, which have been prepared in accordance with U.S. GAAP. In preparing these financial statements, we make estimates and assumptions impacting asset and liability amounts, disclosure of contingent liabilities, and expenses incurred.

Previous wording

We use the successful efforts method of accounting for conventional gas-producing activities. Under this method, the cost of productive wells and related equipment, development dry holes, and any permits related to productive acreage are capitalized, and depleted using the unit-of-production method. These costs include other internal costs directly attributable to production activities. We are not yet recognizing depletion as assets are not yet producing and therefore have not yet been placed in service. Costs for exploratory dry holes, exploratory geological and geophysical activities, and delay rentals as well as other property carrying costs are charged to exploration expense.

Current wording

We use the successful efforts method of accounting for conventional gas-producing activities. Under this method, the cost of productive wells and related equipment, development dry holes, and any permits related to productive acreage are capitalized, and depleted using the unit-of-production method. Depletion expense is calculated using the units-of-production method, which allocates the cost of natural resources based on the number of units extracted during a period. These costs include other internal costs directly attributable to production activities. Costs for exploratory dry holes, exploratory geological and geophysical activities, and delay rentals as well as other property carrying costs are charged to exploration expense.

Previous wording

Renewable Natural Gas— As of December 31, 2024, we primarily earn revenue through electricity generation revenue from the conversion of bio feedstocks to biomethane which is then converted to electricity through reciprocating generators. Such electricity is then delivered onto the grid through a metered interconnection and sold to the local state-owned electrical utility responsible for the purchase and marketing of energy produced by small-scale renewable energy assets. Upon delivery of the electricity to the grid, all performance obligations have been satisfied and energy generation revenue is recognized based on actual output and non-company specific predetermined prices for small renewable energy producers of €280/MWh, established under Ministerial Decree (D.M.) 18 December 2008, which sets tariff rates for small renewable energy producers in Italy.

Current wording

Renewable Natural Gas—We earn revenue through electricity generation sales from the conversion of bio feedstocks to biogas which is then converted to electricity through reciprocating generators. Such electricity is then delivered onto the grid through a metered interconnection and sold to the local state-owned electrical utility responsible for the purchase and marketing of energy produced by small-scale renewable energy assets. Upon delivery of the electricity to the grid, all performance obligations have been satisfied, and energy generation revenue is recognized based on actual output and non-company specific predetermined prices for small renewable energy producers of €280/MWh, established under Ministerial Decree (D.M.) 18 December 2008, which sets tariff rates for small renewable energy producers in Italy.

Previous wording

Revenue is recognized over time as we transfer the electricity to the grid at a metered interconnection. The customer obtains control of the product upon delivery onto the electrical grid. We generally have a single performance obligation in our arrangements with our customers. We have no long-term contracts containing quantity or electricity volume production requirements and there is no variable consideration present in our performance obligations. Per ASC 606-10-25-27(a), delivery of units of power that are simultaneously received and consumed by the customer would satisfy the criteria to be accounted for as a performance obligation satisfied over time and the same method would be used to measure the entity’s progress towards complete satisfaction of the performance obligation to transfer each distinct unit of power in the series to the customer. Our performance obligation related to the sales of electricity are satisfied over time upon delivery to the customer. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring our products. We apply a practical expedient in FASB ASC 606-10-55-18 applicable to our sales by assessing whether our right to consideration corresponds directly with the value to our customers (the “invoice practical expedient”). We concluded that pricing corresponds to the value provided to the customer. Consideration for each transaction is based upon non-company specific predetermined prices for small renewable energy producers of €280/MWh, established under Ministerial Decree (D.M.) 18 December 2008, which sets tarrif rates for small renewable energy producers in Italy. Payment terms are typically two months after the invoice date and there are no return or refund rights.

Current wording

Revenue is recognized over time as we transfer the electricity to the grid at a metered interconnection. The customer obtains control of the product upon delivery onto the electrical grid. We generally have a single performance obligation in our arrangements with our customers. We have no long-term contracts containing quantity or electricity volume production requirements and there is no variable consideration present in our performance obligations. Per ASC 606-10-25-27(a), delivery of units of power that are simultaneously received and consumed by the customer would satisfy the criteria to be accounted for as a performance obligation satisfied over time and the same method would be used to measure the entity’s progress towards complete satisfaction of the performance obligation to transfer each distinct unit of power in the series to the customer. Our performance obligation related to the sales of electricity are satisfied over time upon delivery to the customer. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring our products. We apply a practical expedient in FASB ASC 606-10-55-18 applicable to our sales by assessing whether our right to consideration corresponds directly with the value to our customers (the “invoice practical expedient”). We concluded that pricing corresponds to the value provided to the customer.

Previous wording

On July 13, 2016, AleAnna Europa S.r.l., a former subsidiary of AleAnna Resources LLC (which was subsequently merged into AleAnna Italia S.p.A. in December 2022), purchased a 33.5% working interest in the Longanesi field, which was accounted for as an asset acquisition. Consideration paid included €7 million cash and up to €24 million of deferred consideration payable upon production of the Longanesi field. The deferred consideration is payable based on a formulaic calculation which is predominantly dependent on sales volumes and spot natural gas prices during the first 12 years of the Earn-Out Period. There will be no deferred consideration due if Longanesi is not developed and no deferred consideration due if average annual gas prices are less than €3.65/Mcf over the Earn-Out Period.

Current wording

On July 13, 2016, AleAnna Europa S.r.l., a former subsidiary of AleAnna Resources LLC (which was subsequently merged into AleAnna Italia S.p.A. in December 2022), purchased a 33.5% working interest in the Longanesi field, which was accounted for as an asset acquisition. Consideration paid included €7 million cash and up to €24 million of deferred consideration payable upon production of the Longanesi field. The deferred consideration is payable based on a formulaic calculation which is predominantly dependent on sales volumes and spot natural gas prices during the first 12 years of the Earn-Out Period.

Previous wording

Our asset retirement obligations relate to the abandonment of gas production facilities including reclaiming well pads, reclaiming water impoundments, plugging wells and dismantling related structures. Estimates are based on historical experience of plugging and abandoning wells and reclaiming of disposing other assets and estimated remaining (productive) lives of the wells and assets.

Current wording

Our asset retirement obligations relate to the abandonment of gas production facilities including reclaiming well pads, reclaiming water impoundments, plugging wells and dismantling related structures. Estimates are based on historical experience of plugging and abandoning wells and reclaiming of disposing other assets and estimated remaining (productive) lives of the wells and assets. No incremental ARO liabilities were incurred during the years ended December 31, 2025 or 2024.