HNR Acquisition p(HNRA) - 2024 Q4 - Annual Report

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$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$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$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].