EON Resources Inc.(EONR) - 2024 Q1 - Quarterly Report

Production and Sales - Average daily production for Q1 2024 was 880 BOE per day, down from 1,022 BOE per day in 2023, attributed to increased well downtime and a 10% royalty interest conveyance[167]. - Oil and natural gas sales decreased by 58% to approximately $1,997,247 for the three months ended March 31, 2024, compared to the same period in 2023, driven by a 5% decrease in realized prices and a 24% decrease in production volumes[187]. - Average daily production of oil decreased from 1,021 Bbl in Q1 2023 to 766 Bbl in Q1 2024, while natural gas production decreased from 965 Mcf to 739 Mcf[188]. Financial Performance - Total revenues for Q1 2024 were$ 3,283,099, a significant decrease from $7,759,190 in Q1 2023[185]. - Average realized oil price per barrel in Q1 2024 was$ 70.06, down from $73.45 in Q1 2023, reflecting a decrease of approximately 5%[181]. - Average NYMEX oil price for Q1 2024 was$ 77.56 per barrel, a 2% increase compared to $76.08 in Q1 2023[181]. - Average NYMEX natural gas price for Q1 2024 was$ 2.13 per Mcf, representing a 20% decrease from $2.65 per Mcf in Q1 2023[182]. - Total expenses for Q1 2024 were$ 6,370,708, compared to $5,534,684 in Q1 2023, indicating an increase of approximately 15%[185]. - The company recorded a loss on derivative contracts of$ 1,997,247 for Q1 2024, compared to a gain of $417,034 in Q1 2023, with unrealized losses of$ 1,860,093 in Q1 2024[189]. - Positive cash flow from operations was $1,526,558 for Q1 2024, down from$ 3,207,922 in Q1 2023, primarily due to decreased production volumes[202]. Expenses and Liabilities - General and administrative expenses rose to $2,309,824 in Q1 2024, up from$ 1,271,416 in Q1 2023, reflecting a significant increase of approximately 81%[185]. - Lease operating expenses increased by 42% per BOE, from $27.50 in Q1 2023 to$ 38.96 in Q1 2024, totaling $3,123,525[192]. - Interest expense surged to$ 1,860,582 in Q1 2024 from $315,092 in Q1 2023, driven by the Senior Secured Term Loan and Private Notes Payable[195]. - The company had a working capital deficit of$ 24,263,954 as of March 31, 2024, raising substantial doubt about its ability to continue as a going concern[199]. Asset Management and Obligations - The company operates 100% of its net acreage, which consists of approximately 13,700 gross acres[166]. - The conveyance of a 10% overriding royalty interest resulted in a loss of $816,011 and decreased the company's reserve balance and current net production volumes[183]. - The company has significant asset retirement obligations primarily related to plugging and abandoning wells, with future costs being difficult to estimate due to changing technologies and regulations[214]. - The present value calculation of asset retirement obligations involves numerous assumptions, including credit-adjusted discount rates and timing of settlement, which can impact the financial statements[215]. - The company records liabilities for ongoing litigation and environmental remediation, with actual costs potentially varying from estimates due to legal interpretations and regulatory changes[217]. Financial Instruments and Agreements - The company uses derivative financial instruments to mitigate commodity price risk, with changes in fair value recognized in the consolidated statements of operations[219]. - The fair value of the Forward Purchase Agreement liability was estimated using a Monte-Carlo Simulation, considering future stock price simulations and contractual terms[218]. - The company has a three-year Common Stock Purchase Agreement with a maximum funding limit of$ 150,000,000 to support operations and production growth[200]. - The company received a notice from NYSE American regarding non-compliance with listing standards due to a delayed Form 10-K filing, which was resolved on May 2, 2024[168].