Financial Performance - Record net income of $5.6 million for the third quarter of 2025, a significant turnaround from previous losses [1] - Total revenue for Q3 2025 was $4.36 million, showing consistency with prior quarters despite minor fluctuations [11] - Operations expenses increased to $3.54 million in Q3 2025, up from $2.85 million in Q2 2025 [11] - Shareholder equity increased by $22.7 million, driven by the retirement of preferred shares and gains from funding transactions [1][17] Debt and Equity Management - The company retired all $41 million of senior and seller debt, significantly improving its balance sheet [1][17] - A one-time gain of $13.4 million was recorded from asset sales as part of the funding and farmout agreements [16] Drilling and Production Plans - The company expects to drill up to 90 horizontal wells at a cost of $3.5 million to $4.0 million per well, with initial production rates projected at 300 to 500 barrels of oil per day [7] - Cumulative capital investment by Virtus and LHO is expected to exceed $300 million over the life of the horizontal drilling project [7] - The company anticipates gross oil production to exceed 20,000 barrels of oil per day from the horizontal drilling program [7] Reserves Information - The Grayburg-Jackson Field has proven reserves estimated at approximately 14.0 million barrels of oil and 2.8 billion cubic feet of natural gas [18]

[EON Resources Inc. Form 8-K Filing](index=1&type=section&id=EON%20Resources%20Inc.%20Form%208-K%20Filing) This Form 8-K details significant events and financial disclosures for EON Resources Inc [Report and Company Information](index=1&type=section&id=Report%20and%20Company%20Information) This Form 8-K was filed by EON Resources Inc. on July 24, 2025, identifying the company as a Delaware corporation listed on the NYSE American exchange and an emerging growth company - The report, dated July 24, 2025, was filed by EON Resources Inc., a Delaware corporation headquartered in Houston, Texas[1](index=1&type=chunk) - The company is identified as an emerging growth company[4](index=4&type=chunk) Securities Registered | Title of each class | Trading symbol | Name of each exchange on which registered | | :--- | :--- | :--- | | Class A Common Stock, par value $0.0001 per share | EONR | NYSE American | | Redeemable warrants | EONR WS | NYSE American | [Item 2.02 Results of Operations and Financial Conditions](index=2&type=section&id=Item%202.02%20Results%20of%20Operations%20and%20Financial%20Conditions) On July 24, 2025, EON Resources Inc. issued a press release (Exhibit 99.1) providing preliminary financial results for the second quarter of 2025, which is furnished and not considered "filed" under the Exchange Act - The company announced its preliminary second quarter 2025 financial results via a press release[5](index=5&type=chunk) - The information in the press release is legally considered "furnished" and not "filed," which limits its liability under the Exchange Act[6](index=6&type=chunk) [Item 9.01. Financial Statements and Exhibits](index=2&type=section&id=Item%209.01.%20Financial%20Statements%20and%20Exhibits) This section lists the exhibits filed with the Current Report, primarily the press release detailing the company's preliminary Q2 2025 financial results Exhibits Filed | Exhibit Number | Description | | :--- | :--- | | 99.1 | Press Release of EON Resources, Inc. issued on July 24, 2025 | | 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | [Signature](index=3&type=section&id=SIGNATURE) The report was officially signed and authorized on July 24, 2025, by Mitchell B. Trotter, the Chief Financial Officer of EON Resources Inc - The report is signed by Mitchell B. Trotter, Chief Financial Officer, on behalf of EON Resources Inc[10](index=10&type=chunk)

Part I. Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, financial instruments, debt, equity, and related party transactions [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :------------------ | | Total Assets | $105,963,996 | $102,705,017 | | Total Liabilities | $67,747,584 | $74,985,546 | | Total Stockholders' Equity | $38,216,412 | $27,719,471 | | Cash and cash equivalents | $3,060,971 | $2,971,558 | | Total current assets | $5,875,645 | $5,159,105 | | Total current liabilities | $27,607,625 | $36,390,779 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(2,873,155) | $(5,331,297) | | Total revenues | $9,147,746 | $8,343,894 | | Operating loss | $(299,487) | $(2,592,703) | | Net income (loss) per share – basic and diluted | $(0.15) | $(1.00) | | Gain (loss) on derivative instruments, net | $804,408 | $(2,080,725) | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :------------------ | | Total Stockholders' Equity | $38,216,412 | $27,719,471 | - Key Equity Changes (Six Months Ended June 30, 2025): * Shares issued under equity line of credit: **$7,024,332** * Shares issued for conversion of note payables: **$4,550,428** * Shares issued for acquisition of oil and gas leases: **$547,600** * Shares issued for acquisition of oil and gas equipment: **$547,600** * Net loss: **$(2,873,155)**[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net change in cash and cash equivalents | $89,413 | $(441,706) | | Net cash provided by (used in) operating activities | $(1,796,949) | $2,250,267 | | Net cash used in investing activities | $(2,638,532) | $(1,212,769) | | Net cash provided by (used in) financing activities | $4,524,894 | $(1,479,204) | | Proceeds from sale of common stock (H1 2025) | $7,024,332 | - | [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS](index=11&type=section&id=NOTE%201%20%E2%80%94%20DESCRIPTION%20OF%20ORGANIZATION%20AND%20BUSINESS%20OPERATIONS) - EON Resources, Inc. is an independent oil and natural gas company focused on the Permian Basin (Grayburg-Jackson Field in Eddy County, New Mexico)[21](index=21&type=chunk) - The company faces substantial doubt about its ability to continue as a going concern due to a working capital deficit of **$21,731,980** and negative cash flow from operations of **$1,796,949** for the six months ended June 30, 2025[22](index=22&type=chunk) - Management plans to alleviate going concern issues by improving profitability through cost streamlining, maintaining active hedge positions, and issuing additional Class A Common Stock under a **$150,000,000** Common Stock Purchase Agreement[22](index=22&type=chunk) | Metric | June 30, 2025 | | :--------------------------------- | :------------ | | Cash | $3,060,971 | | Working Capital Deficit | $21,731,980 | | Negative Cash Flow from Operations (H1 2025) | $1,796,949 | | Cash Proceeds from Common Stock Purchase Agreement (through June 30, 2025) | $9,652,666 (from 13,000,000 shares) | [NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=11&type=section&id=NOTE%202%20%E2%80%94%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - The company's unaudited consolidated financial statements are prepared in accordance with GAAP for interim financial information and SEC rules[24](index=24&type=chunk) - The company revised its previously issued financial statements for the three months ended March 31, 2025, due to an overstated asset retirement obligation liability and related accretion expense, which was deemed immaterial[26](index=26&type=chunk)[28](index=28&type=chunk) - Key accounting methods include the successful efforts method for crude oil and natural gas properties, fair value accounting for derivative instruments (without hedge accounting), and ASC 606 for revenue recognition[42](index=42&type=chunk)[52](index=52&type=chunk)[55](index=55&type=chunk) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Effective Income Tax Rate | 29% | 23% | [NOTE 3 — DERIVATIVES](index=20&type=section&id=NOTE%203%20%E2%80%94%20DERIVATIVES) - The company uses crude price differential swaps to manage commodity price risk for oil and natural gas, without applying hedge accounting[74](index=74&type=chunk)[78](index=78&type=chunk)[52](index=52&type=chunk) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net gain (loss) on derivatives | $804,408 | $(2,080,725) | | Net derivative asset (June 30, 2025 / Dec 31, 2024) | $674,314 | $106,397 | [NOTE 4 — LONG-TERM DEBT AND NOTES PAYABLE](index=22&type=section&id=NOTE%204%20%E2%80%94%20LONG-TERM%20DEBT%20AND%20NOTES%20PAYABLE) | Debt Instrument | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :------------------ | | Total Debt | $43,405,137 | $44,093,512 | | Senior Secured Term Loan | $21,386,735 | $23,696,417 | | Seller Promissory Note | $15,000,000 | $15,000,000 | | Convertible Notes Payable | $5,650,000 | $891,363 | | Merchant Cash Advances | $1,368,402 | $948,982 | | Current portion of long term debt | $6,121,756 | $9,080,910 | - The company recognized a gain on extinguishment of liabilities of **$299,601** during the six months ended June 30, 2025, primarily from exchanging notes payable and warrant liabilities for convertible note agreements[209](index=209&type=chunk) - During H1 2025, the company issued **$9,166,500** in new convertible notes and converted **$3,516,500** principal and **$396** accrued interest into **8,956,383** Class A Common Stock shares[100](index=100&type=chunk)[101](index=101&type=chunk) | Maturity Period | Principal Amount | | :--------------------------------- | :--------------- | | 12 months ended June 30, 2026 | $6,537,788 | | 12 months ended June 30, 2027 | $31,217,349 | | 12 months ended June 30, 2028 | $5,650,000 | | Total | $43,405,137 | [NOTE 5 — STOCKHOLDERS' EQUITY](index=26&type=section&id=NOTE%205%20%E2%80%94%20STOCKHOLDERS'%20EQUITY) | Stock Class | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :------------------ | | Class A Common Stock Outstanding | 34,345,107 shares | 10,323,205 shares | | Class B Common Stock Outstanding | 0 shares | 500,000 shares | - Significant share issuances during H1 2025 include **10,770,000** shares under the Common Stock Purchase Agreement for **$7,024,332** cash, **9,953,980** shares for convertible note conversions, and **2,000,000** shares for oil and gas asset acquisitions[140](index=140&type=chunk)[118](index=118&type=chunk)[127](index=127&type=chunk)[129](index=129&type=chunk) - The Purchase, Sale, Termination and Exchange Agreement (PSTE) was amended, extending the Outside Date to September 15, 2025, and adjusting the ORRI purchase price, Seller Note principal, and share consideration[117](index=117&type=chunk) [NOTE 6 — FAIR VALUE OF FINANCIAL INSTRUMENTS](index=30&type=section&id=NOTE%206%20%E2%80%94%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) - Derivative instruments are measured at fair value using Level 2 inputs, resulting in a net derivative asset of **$674,314** as of June 30, 2025 (vs. **$106,397** at Dec 31, 2024)[147](index=147&type=chunk) - Warrant liabilities, due to redemption rights, are accounted for as liabilities and measured at fair value using Level 3 inputs. The estimated fair value was **$0** as of June 30, 2025, as all such warrants were exchanged into convertible notes (vs. **$5,681,849** at Dec 31, 2024)[149](index=149&type=chunk) [NOTE 7 — RELATED PARTY TRANSACTIONS](index=31&type=section&id=NOTE%207%20%E2%80%94%20RELATED%20PARTY%20TRANSACTIONS) | Related Party | Transaction Type | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :----------------- | :------------ | :------------------ | | Alexandria VMA Capital, LLC (CEO-controlled) | Referral Fee Payable | $233,000 | $403,000 | | Mr. Caravaggio (CEO) | Private Notes Payable exchanged for Convertible Note | $268,500 (principal of new note) | - | | Donald Orr (Former President) | Settlement Agreement (cash & Class A shares) | $75,000 cash, 200,000 shares | - | [NOTE 8 — COMMITMENTS AND CONTINGENCIES](index=32&type=section&id=NOTE%208%20%E2%80%94%20COMMITMENTS%20AND%20CONTINGENCIES) - The company accrues reserves for probable and estimable loss contingencies related to legal actions, but is not currently involved in litigation expected to have a material adverse effect[155](index=155&type=chunk)[241](index=241&type=chunk) | Liability Type | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :------------------ | | Environmental Remediation Liability | $675,000 | $675,000 | [NOTE 9 — SUBSEQUENT EVENTS](index=32&type=section&id=NOTE%209%20%E2%80%94%20SUBSEQUENT%20EVENTS) - Subsequent to June 30, 2025, the company issued **2,800,000** shares under the Common Stock Purchase Agreement for **$973,440** cash and **156,250** shares from the conversion of **$50,000** in convertible notes[158](index=158&type=chunk) - On July 11, 2025, the company entered into a Note Purchase Agreement with White Lion for up to **$1,200,000** in convertible promissory notes, with an initial closing of **$600,000** for **$564,000** cash[159](index=159&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes financial condition, operational results, liquidity, and critical accounting estimates, addressing the company's going concern uncertainty [Overview](index=33&type=section&id=Overview) - EON Resources, Inc. is an independent oil and natural gas company focused on the Permian Basin (Grayburg-Jackson Field and South Justice Field), primarily using waterflooding recovery methods[162](index=162&type=chunk) | Metric | Six Months Ended June 30, 2025 | Year Ended December 31, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Average Daily Production (BOE/day) | 708 | 798 | | Change (YoY) | -11.3% | - | - The decrease in production is attributed to increased well downtime, water injection flowline repairs/replacements, and the conveyance of a **10%** Override royalty interest[164](index=164&type=chunk) [Selected Factors That Affect Our Operating Results](index=34&type=section&id=Selected%20Factors%20That%20Affect%20Our%20Operating%20Results) - Operating results are substantially dependent on commodity prices, production volumes, success of development activities, fair value changes in derivative instruments, and operating expenses[165](index=165&type=chunk) - Regional factors in the Permian Basin, such as weather, infrastructure limitations, transportation capacity, and regulatory matters, also affect operations[165](index=165&type=chunk) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Oil Price Differential (per Bbl) | $0.84 (premium) | $(4.57) (discount) | | Natural Gas Price Differential (per Mcf) | $(0.05) (discount) | $0.34 (premium) | [Market Conditions](index=34&type=section&id=Market%20Conditions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Average NYMEX Oil Price (per Bbl) | $68.23 | $79.64 | | Average NYMEX Natural Gas Price (per Mcf) | $3.67 | $2.11 | | Effect of Settled Derivatives on Realized Oil Price (per Bbl) | +$2.00 | -$3.16 | | Average Realized Oil Price (after derivatives & differentials, per Bbl) | $69.07 | $75.07 | - Average NYMEX oil prices decreased by **14%** YoY, while natural gas prices increased by **74%** YoY for the six months ended June 30, 2025[171](index=171&type=chunk)[172](index=172&type=chunk) [Results of Operations (Three months ended June 30, 2025 Compared to Three months ended June 30, 2024)](index=35&type=section&id=Results%20of%20Operations%20(Three%20months%20ended%20June%2030,%202025%20Compared%20to%20Three%20months%20ended%20June%2030,%202024)) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | | Total Revenues | $4,583,148 | $5,060,795 | | Oil and Natural Gas Sales (excluding derivatives) | $3,588,580 | $5,014,043 | | Production Volumes (MBOE) | 60 | 71 | | Net Gain (Loss) on Derivatives | $889,479 | $(83,478) | | Total Expenses | $4,790,860 | $5,389,896 | | General and Administrative Expenses | $1,941,044 | $2,323,662 | | Interest Expense | $1,678,538 | $2,030,317 | - Total revenues decreased by **9.4%** due to a **28%** decrease in oil and natural gas sales and a **15%** decrease in production volumes, partially offset by a significant gain on derivative contracts[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk) - Total expenses decreased by **11.1%**, driven by lower general and administrative expenses (down **16.5%**) and reduced DD&A[174](index=174&type=chunk)[184](index=184&type=chunk)[182](index=182&type=chunk) [Results of Operations (Six months ended June 30, 2025 Compared to Six months ended June 30, 2024)](index=39&type=section&id=Results%20of%20Operations%20(Six%20months%20ended%20June%2030,%202025%20Compared%20to%20Six%20months%20ended%20June%2030,%202024)) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Total Revenues | $9,147,746 | $8,343,894 | | Oil and Natural Gas Sales (excluding derivatives) | $8,120,717 | $10,163,801 | | Production Volumes (MBOE) | 128 | 147 | | Net Gain (Loss) on Derivatives | $804,408 | $(2,080,725) | | Total Expenses | $9,447,233 | $10,936,597 | | Lease Operating Expenses | $3,914,775 | $4,393,699 | | Depletion, Depreciation and Amortization | $555,265 | $998,616 | | General and Administrative Expenses | $4,025,589 | $4,633,486 | | Interest Expense | $3,422,784 | $3,890,899 | - Total revenues increased by **9.6%** despite a **20%** decrease in oil and natural gas sales and a **13%** decrease in production volumes, primarily due to a significant shift from a derivative loss to a gain[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - Total expenses decreased by **13.6%**, driven by lower lease operating expenses (down **10.9%**), DD&A (down **44.4%**), and general and administrative expenses (down **13.1%**)[193](index=193&type=chunk)[199](index=199&type=chunk)[201](index=201&type=chunk)[203](index=203&type=chunk) [Liquidity, Capital Resources and Going Concern](index=43&type=section&id=Liquidity,%20Capital%20Resources%20and%20Going%20Concern) - As of June 30, 2025, the company had **$3,060,971** in cash (including **$2,600,000** restricted) and a working capital deficit of **$21,731,979**, raising substantial doubt about its ability to continue as a going concern[211](index=211&type=chunk) | Metric | Six Months Ended June 30, 2025 | Year Ended December 31, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Cash Flow from Operations | $(1,796,949) | $3,700,686 | - Management plans to address the going concern by streamlining costs, maintaining active hedge positions, and utilizing its **$150 million** Common Stock Purchase Agreement, which has provided **$10,435,066** in cash proceeds to date[212](index=212&type=chunk) [Cash Flows](index=44&type=section&id=Cash%20Flows) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash (used in) provided by operating activities | $(1,796,949) | $3,435,257 | | Net cash used in investing activities | $(2,638,532) | $(3,430,552) | | Net cash (used in) provided by financing activities | $4,524,894 | $(670,924) | | Net change in cash and cash equivalents | $89,413 | $(666,219) | - Net cash provided by financing activities (**$4,524,894**) primarily from common stock sales (**$7,024,332**) offset negative cash flows from operating and investing activities, resulting in a net increase in cash[217](index=217&type=chunk) [Off-Balance Sheet Arrangements](index=44&type=section&id=Off-Balance%20Sheet%20Arrangements) - The company did not have any off-balance sheet arrangements as of June 30, 2025[218](index=218&type=chunk) [Contractual obligations](index=44&type=section&id=Contractual%20obligations) - The company has contractual commitments under its Senior Secured Term Loan, Seller Note, Private Notes Payable, and commodity derivative contracts[219](index=219&type=chunk) - Other liabilities include environmental contingencies and asset retirement obligations, for which settlement amounts and timings are not precisely determinable[220](index=220&type=chunk) [Critical Accounting Estimates](index=44&type=section&id=Critical%20Accounting%20Estimates) - Key critical accounting estimates include proved reserve estimates (impacting depletion and impairment), impairment of proved oil and gas properties, and asset retirement obligations[222](index=222&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk) - These estimates involve significant judgment and assumptions, and are subject to revision based on new data, changing economic conditions, and evolving regulations[222](index=222&type=chunk)[227](index=227&type=chunk) [New Accounting Pronouncements](index=46&type=section&id=New%20Accounting%20Pronouncements) - The effects of new accounting pronouncements are discussed in Note 2 to the consolidated financial statements[231](index=231&type=chunk) [Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20Regarding%20Market%20Risk) As a smaller reporting company, EON Resources, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[232](index=232&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were ineffective due to material weaknesses in internal control over financial reporting, with management planning remediation [Evaluation of Disclosure Controls and Procedures](index=46&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - The CEO and CFO concluded that disclosure controls and procedures were not effective as of June 30, 2025[234](index=234&type=chunk) - A material weakness was identified in internal control over financial reporting, related to insufficient accounting personnel, lack of segregation of duties, proper accounting for complex financial instruments, and inadequate controls for oil and gas activities[234](index=234&type=chunk)[235](index=235&type=chunk) [Changes in Internal Control over Financial Reporting](index=47&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - Management determined that the company did not maintain effective internal control over financial reporting as of June 30, 2025, due to the identified material weakness[237](index=237&type=chunk) - Remediation plans include hiring additional accounting staff, providing enhanced access to accounting literature and research materials, and increasing communication among personnel and third-party professionals[238](index=238&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings that are expected to have a materially adverse effect on its financial condition or results of operations - The company is not currently involved in litigation that is expected to have a materially adverse effect on its financial condition or results of operations[241](index=241&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) As of the date of this Quarterly Report, there have been no material changes to the risk factors previously disclosed in the company's annual report on Form 10-K filed on April 16, 2025 - No material changes to risk factors have occurred since the annual report on Form 10-K filed April 16, 2025[242](index=242&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report during the period - None[243](index=243&type=chunk) [Item 3. Defaults Upon Senior Securities](index=48&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities to report during the period - None[244](index=244&type=chunk) [Item 4. Mine Safety Disclosures](index=48&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not Applicable[245](index=245&type=chunk) [Item 5. Other Information](index=48&type=section&id=Item%205.%20Other%20Information) During the three months ended June 30, 2025, no directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - None of the company's directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[246](index=246&type=chunk) [Item 6. Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q, including amendments to agreements, organizational documents, and certifications - The section lists various exhibits, including amendments to the Purchase, Sale, Termination and Exchange Agreement, organizational documents, and certifications[249](index=249&type=chunk) Part III. Signatures [Signatures](index=50&type=section&id=Signatures) This section contains the required signatures of the company's authorized officers, including the Chief Executive Officer and Chief Financial Officer, certifying the report - The report was signed by Dante Caravaggio (Chief Executive Officer) and Mitchell B. Trotter (Chief Financial Officer) on August 14, 2025[255](index=255&type=chunk)

Production and Reserves - EON Resources has 956 million barrels of Original Oil in Place (OOIP) and expects to triple proven reserves in the next 3-4 years[9]. - Production is projected to increase by 1,000 barrels per day within the next 24 months, with a target of 2.5 times increase in BOEPD by the end of 2028[18]. - The company has stabilized production at 900 BOEPD after acquisition and is now seeing an upward trend in production levels[18]. - The company operates 550 producing wells, tapping 40% of the reserves, with 85% of production being crude oil[50]. Cost Management - The company aims to reduce workover costs per well to approximately $150,000 from initial estimates of $250,000 through scientific and analytical approaches[19]. - The management team is focused on reducing general and administrative costs in 2025, with expected reductions in insurance costs by $500,000 and professional fees to a lower annualized run rate of $2 million[19]. - Lease operating expenses averaged $765,000 per month in Q1 and decreased to $700,000 for the remainder of 2024[52]. - General and administrative costs included $2.8 million in equity-based costs, primarily related to employee equity instruments and acquisition-related fees[57]. Strategic Initiatives - EON plans to utilize 550 existing wells in the Grayburg-Jackson oil field to recover proven reserves without new drilling, minimizing upfront capital expenditures[20]. - The company is actively exploring acquisition opportunities in the Permian Basin, which has seen over $100 billion in recent M&A activity[14]. - EON's operational strategy includes a horizontal drilling program in the San Andres expected to commence in Q1 of 2026[18]. - EON is implementing AI automation to enhance operational efficiencies and reduce costs as new wells are brought into production[19]. Financial Performance - The average oil price per barrel fluctuated, with Q3 reaching $83.80 and Q4 dropping to $67.05, resulting in total revenues of $19,418,919 for the year[52][53]. - Cash-based revenues averaged approximately $5 million per quarter, with total cash revenues of $19,863,367 for the year[53]. - The company has a Reserve Based Loan (RBL) of $28 million with a balance of $23 million, maturing in three years at an interest rate of 15%[61]. - The company has a hedging position of over 70% at $70 for 2024, which is considered responsible[54]. Share Structure - The company has 10 million shares of Class A common stock and 500,000 shares of Class B common stock outstanding, with 16.2 million warrants convertible to 12.5 million Class A shares at an exercise price of $11.50[63]. Market Insights - The Northwest Shelf of the Permian Basin is noted for having the largest recoverable reserves among all unconventional basins in the U.S.[32].

Part I. Financial Information This section details EON Resources, Inc.'s unaudited financial statements and management's analysis for Q1 2025 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents EON Resources, Inc.'s unaudited consolidated financial statements and notes for Q1 2025 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and equity ASSETS (Unaudited) | ASSETS (Unaudited) | March 31, 2025 (USD) | December 31, 2024 (USD) | | :----------------------------------------- | :------------------- | :-------------------- | | Cash and cash equivalents | $3,074,094 | $2,971,558 | | Total current assets | $5,770,255 | $5,159,105 | | Total oil and natural gas properties, net | $98,069,791 | $97,525,912 | | TOTAL ASSETS | $103,860,046 | $102,705,017 | | Total current liabilities | $33,707,812 | $36,390,779 | | Total liabilities | $71,351,890 | $74,985,546 | | Total stockholders' equity | $32,508,156 | $27,719,471 | - Total assets increased by approximately **$1.15 million** from December 31, 2024, to March 31, 2025, primarily driven by an increase in net oil and natural gas properties and current assets[11](index=11&type=chunk) - Total liabilities decreased by approximately **$3.63 million**, mainly due to a reduction in current liabilities, while total stockholders' equity increased by approximately **$4.79 million**[11](index=11&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement outlines the company's financial performance, including revenues, expenses, and net loss (Unaudited) | (Unaudited) | Three months Ended March 31, 2025 (USD) | Three months Ended March 31, 2024 (USD) | | :--------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Total revenues | $4,564,598 | $3,283,099 | | Total expenses | $4,835,928 | $5,546,701 | | Operating loss | $(271,330) | $(2,263,602) | | Loss before income taxes | $(2,522,616) | $(5,894,781) | | Net loss | $(1,752,231) | $(4,693,502) | | Net loss per share – basic and diluted | $(0.11) | $(0.90) | - Total revenues increased by **39.0% to $4,564,598** for the three months ended March 31, 2025, compared to $3,283,099 in the prior year, primarily driven by a significant reduction in loss on derivative instruments[14](index=14&type=chunk) - Net loss decreased substantially from **$(4,693,502)** in Q1 2024 to **$(1,752,231)** in Q1 2025, and net loss per share improved from **$(0.90)** to **$(0.11)**[14](index=14&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This statement details changes in stockholders' equity, including common stock issuances and accumulated deficit (Unaudited) | (Unaudited) | Balance – December 31, 2024 | Balance – March 31, 2025 | | :--------------------------------------- | :-------------------------- | :----------------------- | | Class A Common Stock (Shares) | 10,323,205 | 17,918,226 | | Class A Common Stock (Amount) | $1,032 | $1,792 | | Class B Common Stock (Shares) | 500,000 | 0 | | Class B Common Stock (Amount) | $50 | $0 | | Additional Paid-In Capital | $31,312,003 | $41,237,209 | | Accumulated Deficit | $(28,199,028) | $(29,951,259) | | Total Stockholders' Equity | $27,719,471 | $32,508,156 | - Total stockholders' equity increased by **$4,788,685** from December 31, 2024, to March 31, 2025, primarily due to significant increases in Class A Common Stock and Additional Paid-In Capital from share issuances[15](index=15&type=chunk) - The Company issued **4,770,000 shares** under an equity line of credit for **$4,341,532** and **1,954,514 shares** for conversion of notes payable for **$1,786,241**[15](index=15&type=chunk) - All **500,000 Class B Common Stock shares** were exchanged for Class A Common Stock, resulting in no Class B shares outstanding as of March 31, 2025[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes cash inflows and outflows from operating, investing, and financing activities (Unaudited) | (Unaudited) | Three Months Ended March 31, 2025 (USD) | Three Months Ended March 31, 2024 (USD) | | :--------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net cash provided by (used in) operating activities | $(1,827,355) | $1,119,845 | | Net cash used in investing activities | $(1,117,540) | $(591,003) | | Net cash provided by (used in) financing activities | $3,047,431 | $(670,924) | | Net change in cash and cash equivalents | $102,536 | $(142,082) | | Cash and cash equivalents at end of period | $3,074,094 | $3,363,372 | - Net cash used in operating activities was **$(1,827,355)** for Q1 2025, a significant decrease from **$1,119,845** provided in Q1 2024, primarily due to decreased production volumes and a reduction in payable balances[17](index=17&type=chunk)[177](index=177&type=chunk) - Net cash provided by financing activities increased to **$3,047,431** in Q1 2025, driven by **$4,341,532** from common stock sales and **$617,500** from short-term notes, offsetting debt repayments[17](index=17&type=chunk)[179](index=179&type=chunk) - Cash and cash equivalents increased by **$102,536** in Q1 2025, ending the period at **$3,074,094**[17](index=17&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of significant accounting policies and financial statement items [NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS](index=9&type=section&id=NOTE%201%20%E2%80%94%20DESCRIPTION%20OF%20ORGANIZATION%20AND%20BUSINESS%20OPERATIONS) This note describes EON Resources, Inc.'s business, operations, and going concern considerations - EON Resources, Inc. (formerly HNR Acquisition Corp.) is an independent oil and natural gas company focused on acquisition, development, exploration, and production in the Permian Basin, specifically the Grayburg-Jackson Field in Eddy County, New Mexico[19](index=19&type=chunk) - The Company faces substantial doubt about its ability to continue as a going concern due to a working capital deficit of **$27,937,557** as of March 31, 2025, despite positive cash flow from operations in 2024[20](index=20&type=chunk) - Management plans to alleviate going concern doubt by improving profitability, maintaining active hedge positions, and utilizing a **$150,000,000** Common Stock Purchase Agreement, under which **$6,969,866** has been received through March 31, 2025[20](index=20&type=chunk) [NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=NOTE%202%20%E2%80%94%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the key accounting principles and methods used in preparing the financial statements - The financial statements are prepared in accordance with GAAP for interim information,

Production and Revenue - Average daily production for the year ended December 31, 2024, was 798 BOE per day, a decrease of 22% from 1,022 BOE per day in 2023[333]. - Total revenues for the year ended December 31, 2024, were $19,418,919, a decrease of 15% from $24,238,482 in 2023[345]. - Oil production decreased by 28% from 349 MBbl in 2023 to 256 MBbl in 2024, while natural gas production decreased from 355 MMcf to 213 MMcf[347]. Pricing and Costs - The average realized oil price per barrel for the year ended December 31, 2024, was $73.61, compared to $69.06 in 2023, reflecting a 6% increase[340]. - The average NYMEX oil price for the year ended December 31, 2024, was $76.55 per barrel, a 1% decrease from $77.64 in 2023[339]. - Lease operating expenses for the year ended December 31, 2024, were $8,614,080, down from $10,146,119 in 2023, but per BOE increased by 19% to $29.59[351]. - Production taxes, transportation, and processing costs were $1,715,792 for the year ended December 31, 2024, representing 8.7% of oil and natural gas sales[352]. Financial Performance - The company recorded a loss on derivative contracts of $850,374 for the year ended December 31, 2024, compared to a gain of $392,765 in 2023[349]. - Depletion, depreciation and amortization (DD&A) increased to $2,407,098 for the year ended December 31, 2024, from $1,849,876 in 2023, with a DD&A rate of $8.27 per BOE, up 48% from $4.53 per BOE in 2023[353]. - Accretion expense decreased to $144,988 in 2024 from $859,102 in 2023, with a per BOE rate of $0.50 compared to $2.32 in 2023, driven by changes in inflation and discount rate assumptions[354]. - General and administrative expenses rose to $10,381,095 in 2024 from $7,253,384 in 2023, including stock-based compensation of $2,778,991[355]. - Interest expense increased significantly to $7,643,200 in 2024 from $1,043,312 in the Successor period of 2023, primarily due to the Senior Secured Term Loan[357]. - The company reported a positive cash flow from operations of $3,700,686 for the year ended December 31, 2024, compared to $484,474 in the Successor period of 2023[368]. Debt and Liabilities - As of December 31, 2024, the company had outstanding debt of $23,641,517 under the Senior Secured Term Loan and a working capital deficit of $31,213,674[365]. - The company recognized a gain on extinguishment of liabilities of $1,638,138 in 2024, including a gain of $1,720,000 related to the settlement of royalties payable[360][361]. - The change in fair value of warrant liabilities resulted in a loss of $804,004 in 2024, compared to a gain of $187,704 in the Successor period of 2023[362]. Investments and Equity - Net cash used in investing activities for 2024 was primarily due to the development of crude oil and gas properties, with significant cash paid for oil and gas property costs in the Predecessor period[370]. - The company has a three-year equity line with a maximum funding limit of $150,000,000, having received $6,992,906 in cash proceeds from the sale of 7,000,000 shares of common stock under this agreement[367]. Risk Management - Derivative financial instruments are used to mitigate commodity price risk, recorded at fair value, with changes recognized in consolidated statements of operations[386]. - Realized and unrealized gains and losses from derivative instruments are reported as a component of revenues in the consolidated statements of operations[386]. - Cash flows from derivative contract settlements are reflected in operating activities in the consolidated statements of cash flows[386]. - The Company records liabilities for ongoing litigation and environmental remediation, with actual costs potentially varying from estimates due to legal interpretations and regulatory changes[384]. - The fair value of the Forward Purchase Agreement liability was estimated using a Monte-Carlo Simulation, considering future stock price simulations and contractual terms[385]. - The Company is classified as a smaller reporting company and is not required to provide additional market risk disclosures[388].

Production and Reserves - EON Resources Inc. has 956 million barrels of Original Oil in Place (OOIP) and expects to triple proven reserves in the next 3-4 years[5]. - Production is projected to increase by 1,000 barrels per day (bbl/day) over the next 24 months[5]. - EON has identified an additional 34 million barrels of oil in unperforated legacy zones, with plans for infield drilling to optimize recovery[15]. - The Grayburg-Jackson oil field has 550 existing wells that can be utilized to recover proven reserves without significant new capital expenditures[17]. - The company plans to develop an additional 158 waterflood patterns, which includes 95 producing patterns and 63 planned for development (PDNP + PUD)[29]. - The total Original Oil in Place (OOIP) for the 158 patterns is estimated at 50 million barrels of oil (MMBO)[29]. - The company expects full waterflood development to raise gross plateau oil rates to approximately 3,700 BOPD[43]. - The EON field has proven reserves of approximately 20 million barrels of crude oil and 5 billion cubic feet of natural gas[41]. - The company operates 550 producing wells and has 95 active patterns, tapping into 40% of the reserves[41]. Financial Performance - The company reported revenues of $15,708,239 year-to-date, with Q3 revenues reaching $7,364,346, marking a significant increase from previous quarters[47]. - The financial results were impacted by non-cash expenses, with net income for Q3 reported at $(3,841,171)[47]. - Total revenues for the year-to-date (YTD) reached $15,708,239, with Q3 revenues at $7,364,346[56]. - Net loss for the year-to-date (YTD) was $9,172,468, with Q3 net loss at $3,841,171[56]. - Total expenses for YTD were $16,316,136, with Q3 expenses at $5,379,540[56]. - General and administrative expenses for YTD totaled $6,868,748, with Q3 at $2,235,263[56]. - The company reported a one-time gain of $1.7 million from extinguishment of liabilities in Q2[56]. Operational Strategy - The company aims to reduce workover costs per well from $250,000 to approximately $150,000 through scientific and analytical approaches[16]. - EON's operational strategy includes responsible hedging and leveraging existing wells to minimize capital expenditures[5]. - The company has implemented a chemical acid treatment program to clean wells and recover production, which had previously stabilized and dropped[14]. - The company is rolling out an AI application for operators to improve efficiencies and increase production[15]. Capital Structure - The company has a Reserve Based Loan (RBL) balance of $25.1 million with a 15% interest rate and a five-year amortization schedule[59]. - There are 14.9 million warrants outstanding convertible to 11.2 million Class A shares at an exercise price of $11.50[58]. - The company has $15 million of preferred units at a subsidiary level, which will convert to common stock after two years[58]. Market Context - The Permian Basin contributes 62% of the total oil output in the U.S. and is expected to remain resource-rich until approximately 2040[22]. - EON's first acquisition was a waterflood property in the Permian Basin, with ongoing exploration for further expansion opportunities[18].

Insider Transactions Summary - HNR Acquisition Corp's Director Joseph V Salvucci Sr purchased 10,000 shares at an average price of $1.56, totaling approximately $15,636, following a second-quarter loss of 12 cents per share reported on August 20 [2] - ThredUp Inc's Director Jack R Lazar acquired 20,000 shares at an average price of $0.94, costing around $18,844, after the company reported worse-than-expected second-quarter results and issued FY24 revenue guidance below estimates on August 5 [2] - System1, Inc's 10% owner Cee Holdings Trust bought 25,353 shares at an average price of $1.24, spending about $31,422, after the company posted upbeat quarterly earnings on August 8 [3]

Production and Sales - Average daily production for the six months ended June 30, 2024, was 814 BOE per day, down from 1,022 BOE per day for the year ended December 31, 2023, due to increased well downtime and repairs [165] - For the three months ended June 30, 2024, oil and natural gas sales decreased by 26% to $X, driven by a 34% decrease in production volumes and $83,478 in derivative instrument losses [180] - Average daily production for oil decreased from 1,002 Bbl in June 2023 to 674 Bbl in June 2024, while natural gas production decreased from 1,089 Mcf to 663 Mcf [181] Revenue - Total revenues for the three months ended June 30, 2024, were $5,060,795, a decrease from $7,284,959 for the same period in 2023 [178] - For the six months ended June 30, 2024, total revenues decreased by 44% to $8,343,894, primarily due to a 27% decrease in oil and natural gas sales [195] - Other revenue related to providing water services decreased to $260,818 for the six months ended June 30, 2024, from $317,721 in the same period of 2023 [199] Expenses - Total expenses for the three months ended June 30, 2024, were $5,389,896, compared to $4,139,346 for the same period in 2023 [178] - General and administrative expenses for the three months ended June 30, 2024, were $2,323,662, significantly higher than $857,963 for the same period in 2023 [178] - Lease operating expenses increased by 59% from $18.60 per BOE in June 2023 to $29.50 per BOE in June 2024, totaling $2,094,181 [185] - General and administrative expenses rose significantly to $2,323,662 for the three months ended June 30, 2024, compared to $857,963 in the same period of 2023 [189] - Lease operating expenses decreased to $4,393,699 for the six months ended June 30, 2024, from $4,905,164 in the same period of 2023, while production expenses per BOE increased by 16% to $29.92 [200] - Production taxes, transportation, and processing costs were $837,265 for the six months ended June 30, 2024, down from $1,171,861 in 2023, maintaining a consistent 8% of oil and natural gas sales [201] - Depletion, depreciation, and amortization (DD&A) increased to $998,616 for the six months ended June 30, 2024, compared to $858,992 in 2023, with DD&A per BOE rising from $4.04 to $6.80 [202] - General and administrative expenses surged to $4,633,486 for the six months ended June 30, 2024, from $2,129,379 in 2023, largely due to increased costs associated with being a public company and stock-based compensation of $1,189,968 [203] - Interest expense rose significantly to $3,890,899 for the six months ended June 30, 2024, compared to $874,938 in 2023, driven by the Senior Secured Term Loan and Private Notes Payable [204] Financial Performance - The company recorded a loss of $816,011 due to the conveyance of a 10% overriding royalty interest to Pogo Royalty, which also decreased reserve balance and current net production volumes [176] - The company recorded a loss on derivative contracts of $2,080,725 for the six months ended June 30, 2024, compared to a gain of $763,043 for the same period in 2023 [197] - The company reported a positive cash flow from operations of $2,250,267 for the six months ended June 30, 2024, down from $5,594,971 in the same period of 2023 [209] Debt and Liquidity - As of June 30, 2024, the company had outstanding debt totaling $44,671,000, with a working capital deficit of $32,552,654, raising substantial doubt about its ability to continue as a going concern [207] - The company plans to improve profitability through cost streamlining and maintaining active hedge positions, alongside a three-year Common Stock Purchase Agreement with a maximum funding limit of $150,000,000 [208] Market Conditions - The average NYMEX oil pricing for the six months ended June 30, 2024, was $79.64 per barrel, which is 6% higher than the average price of $74.92 for the same period in 2023 [175] - The average NYMEX natural gas pricing for the six months ended June 30, 2024, was $2.11 per Mcf, which is 13% lower than the average price of $2.41 for the same period in 2023 [175] - The oil price differential to the NYMEX benchmark price during the six months ended June 30, 2024, was $(1.41) per barrel, compared to $(0.76) per barrel for the same period in 2023 [172] Accounting and Reporting - The company has no off-balance sheet arrangements as of June 30, 2024 [212] - The company is classified as a smaller reporting company under Rule 12b-2 of the Exchange Act, thus not required to provide extensive market risk disclosures [227] - New accounting pronouncements are discussed in Note 2 of the consolidated financial statements, indicating potential impacts on financial reporting [227]

Production and Revenue - Average daily production for Q1 2024 was 880 BOE per day, down from 1,022 BOE per day in 2023, reflecting a 14% decrease [165]. - Total revenues for Q1 2024 were $3,283,099, a 58% decrease from $7,759,190 in Q1 2023 [180]. - Oil production decreased from 92 MBbl in Q1 2023 to 69 MBbl in Q1 2024, a 25% decline [182]. - Natural gas production fell from 87 MMcf in Q1 2023 to 67 MMcf in Q1 2024, a 23% decrease [182]. - The average realized price on a BOE basis including settled commodity derivatives was $62.53 in Q1 2024, down from $65.88 in Q1 2023 [180]. Pricing - Average realized oil price per barrel in Q1 2024 was $70.06, down from $73.45 in Q1 2023, representing a 5% decrease [176]. - The average realized oil price per barrel for the three months ended March 31, 2024, was $70.06, down from $73.45 in the same period of 2023, reflecting a decrease of approximately 3.26% [184]. - The average NYMEX oil price for Q1 2024 was $77.56 per barrel, a 2% increase from $76.08 in Q1 2023 [175]. Expenses - Lease operating expenses increased by 6.8% to $3,123,525 for the three months ended March 31, 2024, compared to $2,923,802 for the same period in 2023, with production expenses per BOE rising 42% from $27.50 to $38.96 [186]. - General and administrative expenses rose significantly to $2,309,824 for the three months ended March 31, 2024, compared to $1,271,416 in the same period of 2023, primarily due to increased costs associated with being a public company [190]. - Interest expense surged to $1,860,582 for the three months ended March 31, 2024, compared to $315,092 for the same period in 2023, driven by the Senior Secured Term Loan and Private Notes Payable [191]. Derivative Instruments - The company recorded a loss of $1,997,247 on derivative instruments in Q1 2024, compared to a gain of $417,034 in Q1 2023 [180]. - For the three months ended March 31, 2024, the company recorded a loss on derivative contracts of $1,997,247, compared to a gain of $417,034 for the same period in 2023, indicating a significant decline in performance [183]. - The Company uses derivative financial instruments to mitigate exposure to commodity price risk, with fair value determined using industry-standard models [213]. - Realized and unrealized gains and losses from derivative financial instruments are reported as a component of revenues in the consolidated statements of operations [213]. Financial Position - The company reported a working capital deficit of $24,263,954 as of March 31, 2024, raising substantial doubt about its ability to continue as a going concern within one year [195]. - Net cash provided by operating activities was $1,526,558 for the three months ended March 31, 2024, a decrease from $3,207,922 in the same period of 2023, primarily due to decreased production volumes [197]. - Net cash used in investing activities for the three months ended March 31, 2024, was $997,716, primarily related to development costs for the company's reserves [199]. - As of March 31, 2024, the company had outstanding debt totaling $45,388,029, with $13,098,952 due within one year, including a $5,000,000 estimated excess cash flow payment [195]. Other Information - The company operates 100% of its net acreage, totaling approximately 13,700 gross acres [164]. - The conveyance of a 10% Override royalty interest to Pogo Royalty resulted in a loss of $816,011 [178]. - The company has a three-year Common Stock Purchase Agreement with a maximum funding limit of $150,000,000 to support operations and production growth, pending SEC approval [196]. - The fair value of the Forward Purchase Agreement liability was estimated using a Monte-Carlo Simulation, considering future stock price simulations based on Geometric Brownian Motion [212].