Q4 2024 EON Resources Inc Earnings Call

Yeah.

Okay.

Operator: Good day, everyone, and welcome to the Eon Resources, Inc.

Good day, everyone and welcome to the E on Resources, Inc. Announces fiscal year 2024 earnings call on April 23, 2025.

Operator: announces fiscal year 2024 earnings call on April 23rd, 2025. At this time, all participants have been placed on a listen-only mode. If you have any questions or comments during the presentation, you may press star one on your phone to enter the question queue at any time, and we will open the floor for your questions and comments after the presentation. If you're listening on webcast, you can submit a question by clicking on the Ask Question button on the left of your screen. Type your question into the box and hit the Send button to submit your question.

At this time, all participants have been placed on a listen only mode.

If you have any questions or comments during the presentation. You May press star one on your phone to enter the question queue at any time and we will open the floor for your questions and comments after the presentation.

If you were listening on webcast you can submit a question by clicking on the ask a question button on the left of your screen type your question into the box and hit the spin button to submit your question.

Michael Porter: It is now my pleasure to turn the floor over to your host, Michael Porter. Sir, the floor is yours. Thank you, Matt.

Speaker Change: It is now my pleasure to turn the floor over to your host Michael Porter, Sir the floor is yours.

Michael Porter: Thank you, Matt good morning, ladies and gentlemen, and welcome to the E. On resources Conference call I have to read the forward looking statements before we start and then I'll turn the meeting over to management and there will be a Q&A session at the end.

Michael Porter: Good morning, ladies and gentlemen, and welcome to the Eon Resources conference call.

Michael Porter: I have to read the forward-looking statements before we start.

Michael Porter: Then I'll turn the meeting over to management and there will be a Q&A session at the end. This conference call includes forward-looking statements within the meanings of the Private Securities Litigation Reform Act of 1995 that involves risks and uncertainties that could cause actual results to differ materially from what is expected. Words such as expect, believe, anticipate, intend, seek, may, might, plan, and any variations in similar words and expressions are intended to identify such forward-looking statements. Such forward looking statements relate to future events or future results based on the current available information and reflect the company's management and current belief.

Michael Porter: This conference call includes forward looking statements within the meanings of the private Securities Litigation Reform Act of 1995 that involves risks and uncertainties that could cause actual results to differ materially from what is expected words, such as expect believe anticipate intend seek may.

Michael Porter: My plan.

Michael Porter: And then he very variations and similar words and expressions are intended to identify such forward looking statements.

Michael Porter: Such forward looking statements relate to future events or future results based on the current available information and reflect the company's management and current beliefs.

Michael Porter: The company's expectations are disclosed in the company's documents filed from time to time on Edgar and with the Security Exchange Commission.

Michael Porter: The company's expectations are disclosed in the company's documents filed from time to time on Edgar and with the Security Exchange Commission.

Dante Caravaggio: With further ado, I would like to turn the call over to the President. Dante, the floor is yours. Thank you, Mike. Welcome, everybody. Thanks for dialing in. Thanks for buying our stock. Thanks for your keen interest. We really do appreciate that. And I'd like to just state that this management team believes in our company. We're all purchasers of the stock. We're all owners of the stock. And we all believe we work for each of our shareholders.

Speaker Change: With further Ado I would like to turn the call over to the president.

Dante: Dante the floor is yours.

Dante: Thank you Mike welcome everybody, thanks for dialing in and thanks for buying our stock. Thanks for your keen interest where we really do appreciate that and I'd like to just state that this management team believes in our company. We're all purchasers of the stock we're all owners of the stock and we all.

Dante: We work for each of our shareholders. So I just wanted to start with that why invest in E on resources.

Dante Caravaggio: So I just want to start with that. Why invest in Eon Resources? You know, especially look at the world market right now. You've got volatility in the oil pricing. You've got tariffs that also impact oil prices.

Dante: Especially look at the look at the World market right now you've got volatility in the oil pricing you've got tariffs that that also impact oil prices. So so why look at our little company, especially when we lost money last year, and where we're priced at half the dollar so I.

Dante Caravaggio: So why look at our little company, especially when we lost money last year and we're priced at half a dollar? So I want to start with the asset itself. We purchased an asset, really, at originally a price of $120 million, then rejigged it to $90 million, and then made an agreement with the seller to readjust it to $60 million. And it's got a billion barrels in place. So it becomes our number one place to shop.

Dante: Wanted to start with the asset itself we purchased.

Dante: And the asset really at a originally a price of 120 million then rejected to 90 million and then and then made an agreement with the seller to readjust it to 60 million and it's got a billion barrels in place. So it becomes our number one place to shop.

Dante Caravaggio: And yesterday, we had a meeting internally to look at seven different acquisitions. At the top of the list is the repurchase of a 10% royalty from the seller for approximately $15 million. We have a binding agreement. We have a solid choice to fund this thing. It's going to easily be the most accretive transaction to this company. And it's already been released. So it's in the news. You can see it out there. So 100%. One of the home runs we're going to hit this year is the purchase of a 10% royalty back from the seller. And we've got the funding in place to make that happen on or before June 10.

Dante: And yesterday, we had a meeting internally to look at seven different acquisitions at the top of the list is the repurchase of a 10% royalty from the seller for approximately 15 million. We have a binding agreement we have a solid choice to fund. This thing, it's it's going to easily be the most accrete.

Dante: A transaction to this company and its already been released so it's in the news you can you can see it out there so 100% one of the home runs we're going to hit this year is the purchase of a 10% royalty are back from the seller and we've got the funding in place to make that happen.

Dante: And on or before June 10th.

Unknown Speaker: Unknown Speaker I'm The 24 was a story of urban renewal. We had to repair and upgrade most of the field surface facilities. We replaced 14 flow lines that impacted a bunch of wells. We had to replace 50 pumps. We had to improve electrical. We had to buy a hot oiler to cure plugging due to paraffin and upgrade our electrical system. So now today, we have a very reliable field producing nominally 950 barrels a day with the thought that by the end of the year, we should increase that by 50%.

Dante:

The 24 was a story of urban renewal, we had to repair and upgrade most of the field surface facilities. We replaced 14 flow lines. It impacted a bunch of wells, we had to replace 50 pumps, we had to improve electrical we had to buy a hot oilers to cure plugging due to pay.

Dante: Finn and upgrade our electrical system. So now today, we have a very reliable field producing nominally 950 barrels a day with the thought that by the end of the year, we should increase that by 50%.

Dante Caravaggio: We were working to restack our capital stack. And again, the acquisition of the 10% royalty and the elimination of $40 million in shareholder liability, 20 of that is a seller note. 20 of that is preferred shares that just go away. And the acquisition of that royalty costs us about $20 million. So we're going to have to pay that cash on June 10. And we've got in place multiple sources of funding to make that happen.

Dante: We are we're working to to re stack, our capital stack and again the acquisition of the 10% royalty and the elimination of 40 million and then shareholder liability 20 of that is a seller note 20 of that is our preferred shares or just go away.

Dante: Okay, and the and the acquisition of that royalty cost us about 20 million. So we're gonna have to pay that cash on June 10, and we've got in place multiple sources of funding to make that happen.

Dante Caravaggio: Also, we believe that that by the end of the next couple of years, we're going to add 150 patterns, water flood patterns in the Seven Rivers Formation. And these patterns are, they look like the the the top of a Las Vegas dice number five, where in the center, you have a producer, and on the four corners, you have injectors. So we've got 95 of those working today that produce roughly 700 barrels a day. And we've got another 150 of those to go. In the funding with OnStream includes the funding to add another 50 patterns. So we figure of those 150 patterns, we can add 50 a year.

Dante: Also we believe that by the end of the next couple of years, we're going to add 150 patterns waterflood patterns in the seven rivers formation and these patterns are they look like the the the top of our Las Vegas Dice number five we're in the center you have a producer and on the four key.

Dante: Corners, you have injectors. So we've got 95 of those working today that produced roughly 700 barrels a day and we've got another 150 of those to go in the funding with Onstream includes the funding to add another 50 patterns. So we figure of those 150 patterns we.

Dante: Can add 50, a year on top of that we've got another 200 workovers available to develop behind pipe potential it's taken us a while to figure out how to stimulate these wells. We we had frankly three failed frac jobs using fly ash and now were you.

Dante Caravaggio: On top of that, we've got another 200 workovers available to develop behind pipe potential.

Dante Caravaggio: It's taken us a while to figure out how to stimulate these wells. We had, frankly, three failed frack jobs using fly ash. And now we're using 2040 sand with low temperature resin. And we've had a success. And we've got another well that we think is going to be a success. So we've had to walk slowly before we spend the money. And what we're talking about here is taking workovers done by our predecessors that ran close to half a million and do those for $100,000, getting essentially the same results. So it's taken us time to really work this out.

Dante: Using 2040 sand with a low temperature resin and we've had a success and we've got another well that we think is gonna be a success. So we've had to walk slowly before we spend the money and what we're talking about here is taking workovers done by our predecessors that ran close.

Dante: The half a million and do those for 100000 $100000 getting essentially the same results. So it's taken us time to really work. This out. So now we think we can hit the gas with those Workovers. We also published on February 26, our press release regarding our.

Dante Caravaggio: So now we think we can hit the gas with those workovers.

Dante Caravaggio: We also published on February 26, a press release regarding our horizontal drilling potential in the San Andreas, where we identified 50 wells to develop another 20 million in recoverable reserves. Those wells will do 300, 400, maybe 500 barrels of oil per day. So they're humdingers, but we're going to be very cautious. We're looking at our offsets. We're learning from our competitors, and they've been very open about best practices. So we wanna say a big thank you to all those that operate nearest because they've really opened up their books to say this works, this doesn't work.

Dante: Donal drilling potential in the San Andres, where we identified 50 wells to develop another 20 million in recoverable reserves. Those wells, we'll do 300 400, maybe 500 barrels of oil per day, so they're harm dinger's, but we're gonna be very cautious we're looking at are offsets.

Dante: We're learning from our from our competitors and they've been very open about best practices. So we want to say a big thank you to all of those that operate near us because they've really they've really opened up their books to say this works. It doesn't work and we're taking full advantage of that with a drilling partner we're hoping.

Dante Caravaggio: And we're taking full advantage of that. With a drilling partner, we're hoping to go head to head, 50-50 on the drilling costs, get them to help us on the first few wells and then have at it.

Dante: Go head to head 50, 50 on the drilling costs get them to help us on the first few wells and then and then and then have at it we've got 12 wells in the Hopper right now the permit for drilling to commence in Q1 is 26 and we're planning on drilling we think.

Dante Caravaggio: We've got 12 wells in the hopper right now to permit for drilling to commence in Q1 of 26. And we're planning on drilling, we think, five or six wells a year for the next 10 years. We're not gonna just hit it and go and blow. And that's just so that we can be cautious and cost-effective about what we do.

Dante: Five or six wells a year for the next 10 years, we're not going to just hit it.

Dante: Go and blow in that just so that we can be cautious and cost effective about what we do.

Dante Caravaggio: So in summary, we expect a huge 26 and a much more improved 25. Developing the Seven Rivers Water Flood to get to an eventual 250 patterns at 20 barrels a day per pattern gives us a ton of oil. The San Andreas Horizontal Wells, 50 wells at three, four, 500 barrels a day per well also gives us a ton of oil. Results from the infrastructure repairs and upgrades we're seeing it now in the form of a reduced decline rate.

Dante: So in summary, we expect a huge 26 and a much more improved 25, developing the seven rivers waterflood to get to an eventual 250 patterns at 20 barrels a day per patron.

Dante: Gives us a ton of oil the San Andres horizontal wells 50 wells at three four or 500 barrels a day per well also gives us a tunnel tunnel oil results from the infrastructure repairs and upgrades, we're seeing it now in the form of a reduce decline rate. So if I'm.

Dante Caravaggio: So if I'm leaving you with a message of why to invest with us, in 24, it was a disappointment that we didn't make more money, but we did fix the field. We did negotiate with the seller, I think a marvelous outcome to restack the capital stack, which saved shareholders 40 million. And we did complete engineering that pointed the way to a profitable future, which includes workovers, water flood expansion, and drilling. In 25, we're gonna make more oil. We're gonna cut costs. You're gonna hear Jesse talk about cutting costs in our operating to where our lifting costs per barrel is roughly 23, $24 per barrel.

Dante: Leaving you with a message of why to invest with us in 'twenty four it was a disappointment that we didn't make more money, but we did fix the field. We did negotiate with the seller of I think a marvelous marvelous outcome to restock, the capital stack, which save shareholders.

Speaker Change: $40 million and we did complete engineering that that pointed the way to a profitable future, which includes workovers waterflood expansion and drilling in 25, we're gonna make more oil we're going to cut cost we cut youre going to hear Jesse you talk about cutting cost.

Speaker Change: And in our operating to where our lifting cost per barrel is roughly 23 $24 per barrel, we need to do the same kind of cuts to our G&A, so you're going to hear a little bit about that from from Mitch Trotter and then we're also going to make at least one acquisition in there.

Dante Caravaggio: We need to do the same kind of cuts to our GNA. So you're gonna hear a little bit about that from Mitch Trotter. And then we're also gonna make at least one acquisition in this year with frankly our own royalty of our own property. But we're looking at more Permian properties, we're looking at gas, and we think there's lots of opportunities out there for us. In 26, it's gonna be drilling, it's gonna be extension of water flood patterns, and it's gonna be workovers. Kind of more of the same, but just more of 25.

Speaker Change: This year with our frankly, our own royalty of our own property. What we're looking we're looking at more Permian properties. We're looking at gas and we think there's there's lots of opportunities out there for us in 26, it's gonna be drilling it's gonna be extension of of waterflood patterns.

Speaker Change: And it's gonna be workovers kind of more of the same but just more of 25.

Michael Porter: And with that, I'm gonna turn it over to Mitch, please. Thanks, Dante.

Mitch Trotter: And with that I'm going to turn it over to Mitch. Please.

Mitch Carter: Thanks, Dawn takes Hello, amidst Carter the CFO.

Mitchell Trotter: Hello, I'm Mitch Trotter, the CFO. I want to welcome those that have are the new to our call and those that have been on calls before. And I want to thank you for attending today.

Mitch Carter: I want to welcome those that have been or the new to our call and those that have been on calls before.

Mitch Carter: And I want to thank you for attending today they will go in.

Mitchell Trotter: In this call, I want to give you a little insight into the fiscal 24 results. The management team, the field team, as Dante has said, have made huge strides in 2024. So at the surface level, the numbers are not so obvious, as Dante stated, but the underlying numbers reflect solid progress in the positioning for a bright future. We stabilized the field, it was not developed as it should have been. Those numbers are in our steady capex efforts in our balance sheet. The production was stabilized, which is reflected in the revenue results, which I'll show you on a later slide.

Mitch Carter: In this call I don't want to give you a little insight into the fiscal 'twenty four results the management team and field team has done to you said have made huge strides in 2024.

Mitch Carter: So at the surface level the numbers are not so obvious is gone to yet.

Mitch Carter: Stated, but the underlying numbers reflect solid progress in positioning for a bright future.

Mitch Carter: We stabilized the field there was not developed as it should've been.

Mitch Carter: Those numbers are in our steady capex efforts.

And our balance sheet.

Mitch Carter: The production was stabilized which is reflected in the revenue results, which I'll show you on a later slide.

Mitchell Trotter: We've controlled lift or LOE costs. to LOE drop from a higher run rate in Q1 and before to our baseline now of about $700,000 a month, which has remained steady now for the last nine months. Now, G&A did take the brunt of what we had to do to de-SPAC, clean up many acquisition-related matters. In a few slides, we'll drill down into G&A. There's also the non-cash expenses slide that I've shown in the past. It does reflect our responsible hedging. It also certain aspects of what we've done to clean up the balance sheet that is underway.

Mitch Carter: We've controlled lift or low cost.

Mitch Carter: L O drop from a higher run rate in Q1 than before to our baseline now about 700000, a month, which has remained steady now for the last nine months.

Mitch Carter: Now G&A expense did take the brunt of what we had to do that piece back clean up many acquisition were later matters.

Mitch Carter: These slides will drill down into G&A.

Mitch Carter: There's also the noncash expenses.

Mitch Carter: <unk> did have shown in the past it does reflect our responsible hedging. It also certain aspects of what we've done to clean up the balance sheet there is underway.

Mitchell Trotter: Now, a key aspect of our 24 results is that the field has been making solid income. on the lookout.

Mitch Carter: A key aspect of our 24 results is that the field has been making solid income.

Mitch Carter: On the Alco.

Mitchell Trotter: The production growth and efforts to reduce GNA costs that will start to show up in 2025 puts Eon in a good position for the future.

Mitch Carter: The production growth and efforts to reduce G&A costs that will start to show up in 2025 puts be on in a good position for the future.

Mitchell Trotter: After we drill down into the P&L aspects of this, we'll go to the balance sheet debt and equity.

After we drill down into the P&L aspects of this will go to the balance sheet debt and equity. So let's talk about revenues. So next slide please.

Mitchell Trotter: So let's talk about revenues.

Mitchell Trotter: So next slide, please. Many of you have been on these calls before. I did add to the to the slide now, the production levels, the oil prices, the split of hedging of cash versus non-cash to help you understand the numbers better. The production was stable for the year. You can see that in there. The oil revenue fluctuations was mostly driven based on the market price of oil. Now, on the market price of oil, looking forward, we are hedged through 2025 at 70% or greater and $70 a barrel or greater. that do know also that in Q2, the non-cash portion, other than Q2, the non-cash portion of the hedging grow results up and down from our average of $5 million of cash revenues per quarter, which has been steady across the board.

Mitch Carter: Many of you have been on these calls before I did add to it.

Mitch Carter: The slide now the production levels the oil prices the split of hedging of cash versus noncash to help you understand the numbers better.

Mitch Carter: The production was stable for the year you can see that in there the oil revenue fluctuations was mostly driven based on the market price of oil.

Mitch Carter: Now on the market price of oil looking forward, we are hedged through 2025 at 70, 70% or greater and $70 a barrel or greater.

Mitch Carter: Do note also that in Q2, the noncash Porsche other than Q2, the noncash portion of the hedging drove results up and down from our average of $5 million of cash revenues per quarter, which has been steady.

Across the board.

Mitchell Trotter: Now let's take a look at the production impact on the P&L that Dante has been talking about. As again, as Dante's been discussing and Jesse will, we're now in the phase of developing the field now that most of the maintenance and infrastructure enhancements are coming to a conclusion. You may have heard us talk about developing the wells in the Seven Rivers Water Flood. What does that mean? Average production from a well from a frac is expected to be about 20 gross barrels of oil per day. A recent new frack has come in at that level, as Dante noted, and we're starting on some others.

Mitch Carter: Now, let's take a look at the production impact on the P&L that <unk> been talking about so next slide please.

Mitch Carter: Yeah.

Speaker Change: And it was again this dumping has been discussing and Jesse will we're now in the phase of developing the field now that most of the maintenance and infrastructure enhancements are coming to a conclusion.

Speaker Change: You may have heard us talk about developing the wells and the seven reverse waterflood, what does that mean.

Speaker Change: Yeah.

Speaker Change: Average production from a well from a frac is expected to be about 20 gross barrels of oil per day.

Speaker Change: Our recent new Frac has come in at that level, it's going to take notice and we're starting on some others. So that's good news.

Mitchell Trotter: So that's good news. The cost of a workover frac is in the $150, maybe up to $250, depending on variables. So you can see from the table that the payback period is quite good at today's oil price. We've also talked a lot about the 50 wells, like Dante was saying, or increasing 1000 barrels of oil per day. The table shows you the P&L range impact for that 1000 barrels of oil increment, plus or minus $10 from the current oil price, I'm saying $65. Do note that the incremental change in LOE at this level of increase of production of 1,000 barrels a day is expected to be minimal, because we're already running at our base level today, and it will support that extra 1,000 barrels.

Speaker Change: Cost of a workover frac is in the 150, maybe up to 250, depending on variables. So that you can see from the table that the payback period is quite good at today's oil prices.

Speaker Change: We've also talked a lot about the 50 wells hooked onto was saying or increasing a 1000 barrels of oil per day. The table shows U piano range impact for that 1000 M Park 1000 barrels of oil an increment.

Loss of minus $10 from the current oil price I'm, saying 65 Bucks.

Speaker Change: Do note that the incremental change in L. O way at this level or increase the production of a thousand barrels a linker.

Speaker Change: Des is expected to be minimal because we're already running at a base level today and it will support that extra thousand barrels.

Mitchell Trotter: Now, we've also released the study that Dante was talking about, the Horizontal Drilling Program. And if you look on the right table, it's What does that mean? Well, first, the wells cost about $3.7 million to complete. Accordingly, we're looking for a drilling partner, as Dante noted. and there to share in the cost and reward. This is quite common in our industry. Table does reflect our 30, our 50%. The study indicates 300 to 400 barrels of oil per day average. And I've also done analysis on plus or minus $10 of the oil price. And just like the seven river strikes, the payback period looks quite good.

Speaker Change: Now we've also released a study that onto was talking about the horizontal drilling program and if you look on the right table.

Speaker Change: It's.

Speaker Change: What does that mean, well first the wells cost about 3.7 million to complete accordingly, we're looking for a drilling partner is don't take noted.

Speaker Change: And they're just sharing the cost and reward this is quite common in our industry.

Speaker Change: Table does reflect our 30 or 50% or both.

Speaker Change: The study indicates.

Speaker Change: 300 to 400 barrels of oil per day average and I've also done analysis on plus or minus $10 of the oil price.

Speaker Change: Just like the southern reversed Fracs that payback period look quite good.

Mitchell Trotter: Next to the GNA slide, so please advance.

Speaker Change: Next to the G&A slides so.

Speaker Change: Please advance.

Mitchell Trotter: So here I want to discuss the two major drivers. that impacted 2024 non cash equity based costs and the professional fee.

Speaker Change: So.

Speaker Change: Here I wanted to discuss the two major drivers.

Speaker Change: That impacted 'twenty 'twenty, four non cash equity based costs and professional fees.

Mitchell Trotter: And this leads us into cost reductions for 2020. First, there's $2.8 million of non-cash equity-based costs included in our GNA results. $700K comes from RSU's options for employees, directors, which is quite normal for a public company. But as we've been discussing each quarter, there's $1.6 million of equity costs for fees, settlements, etc. that stem from agreements and instruments for the DSPAC and the acquisition closing.

Speaker Change: And this leaves us into cost reductions for 25 first there's 2.8 million of noncash equity based costs included in our G&A results seven.

Speaker Change: 700, K comes from our shoes options for employees directors, which is quite normal for a public company.

Speaker Change: But as we've been discussing each quarter, there's a million six of equity cost for fees settlements et cetera that stem from agreements and instruments for the dis back in the acquisition closing these.

Mitchell Trotter: These costs do not repeat in 2025. Also previously discussed, there's approximately 500,000 of of Equity Costs to Clearing Liabilities and Cleaning Up the Balance Sheet. Now moving on to the 2.8 million professional fees for legal and audit, about half, or a million-four of that stems also from the acquisition, profiling, complicated instruments on the balance sheet, settlements, agreements, and various other trailing legal matters.

Speaker Change: These costs do not repeat in 'twenty five.

Speaker Change: Also previously discussed Theres approximately 500000.

Speaker Change:

Speaker Change: Equity cost to clearing liabilities and cleaning up the balance sheet.

Speaker Change: Now moving on to the.

Speaker Change: $2 8 million of professional fees for legal and audit about half a million for that stems also from the acquisition for filing complicated instruments on the balance sheet settlement agreements and various other trailing legal matters well some of these costs to carry over into 'twenty five we expect it'll all dramatically reduce.

Mitchell Trotter: While some of these costs do carry over into 2025, we expect it will all dramatically reduce after Q2.

After Q2.

Mitchell Trotter: Now, I'm not going to drill down into the other areas, except I do want to note going into 2025, there are certain cost reductions that we've already made beginning in January. Namely, our We have lower insurance rates in the neighborhood of half a million dollars. We've also reduced certain salary related costs.

Speaker Change: And I'm not going to drill down into the other areas except for I do want to note going into 2025, there are certain cost reductions that we've already made beginning in January namely.

Speaker Change: Are we.

Speaker Change: We have lower insurance rates in the neighborhood of half a million dollars.

Speaker Change: We've also reduced certain salary related costs, so with that I do want to go forward to the noncash expenses next slide please.

Mitchell Trotter: So with that, I do want to go forward to the non-cash expenses.

Mitchell Trotter: So next slide, please. So I've discussed this one in the past, just like the past here, the financial table agrees to the file 10-K. and the reference numbers for you to follow. Hitting on them quickly. Hedging, we've discussed. G&A, we've already discussed. The warrant liability, like in the past, stock drives the price. at the end of each quarter. Derivative liability, that's a new one that is for certain convertible notes, that it all reverses in Q1 and goes away by the end of the quarter. So that's just a pop in and out. And then Number five, the Ford Purchase Agreement, the FBA, it was terminated in November, so it reversed out all the impact during the year is gone by the end of Q4, and the balance sheet goes to zero.

Speaker Change: So ill discuss with someone in the past is like pass here the financial table agrees to the filed 10-K.

Speaker Change: And their reference numbers for you to follow hitting.

Speaker Change: Hitting on them quickly hedging we've discussed G&A, we've already discussed the warrant liability look in the past stock drive surprise.

Speaker Change: The end of each quarter.

Speaker Change: Derivative liability that's a new one that is for certain convertible notes that it all reverses in Q1 and goes away by the end of the quarter. So.

Uh huh.

Speaker Change: That's just a pop in and out and then.

Speaker Change: Number five the forward purchase agreement the F. B a it was terminated in November so it reversed out all the impact during the year has gone by the end of Q4 and the balance sheet goes to zero, we've cleaned it up.

Mitchell Trotter: We've cleaned it up. financing costs, same as before, all the way since acquisition. And then number seven, the settlement of liabilities.

Speaker Change: Financing call a same as before it's all the way since acquisition and then number seven.

Speaker Change: The settlement of liabilities.

Mitchell Trotter: That was a Q2 event, we picked up a million seven and settling certain liabilities to clean up the balance.

Speaker Change: That was a Q2 event, we picked up a million seven in settling certain liabilities to clean up the balance sheet.

Mitchell Trotter: So with that, I do want to go forward to the balance sheets. And next slide, please. And I'm not going to spend a lot of time here, but we'll cover a little bit of debt and equity changes on the upcoming slide.

Speaker Change: So with that I do want to go forward to the balance sheet. So next slide please.

Speaker Change: Now Mike will spend a lot of time here, so we'll cover a little bit of debt and equity changes on upcoming slides.

Mitchell Trotter: But what I do want to mention is that the company has made and is continuing to make improvements to the balance sheet. The FBA contract, as I noted, liability was all cleared, Q4 gone at the end of December 24. Select payables and liabilities were settled during the year or cleared via equity issuers. We've also started the process to clean up our private loans and warrant liabilities that are current into long-term convertible notes starting in Q4.

But what I just wanted to mention that the company has made and is continuing to make improvements to the balance sheet.

Speaker Change: P. A contract as I noted in liability was all clear Q4 go on at the end of.

Speaker Change: December 24.

Speaker Change: Select payables and liabilities were settled.

Speaker Change: During the year or cleared.

Speaker Change: Equity issuance. We've also started the process to clean up.

Speaker Change: Our private loans and warrant liabilities that are current into long term convertible notes starting in Q4, we started that process because cleaning up the balance sheet has always been our goal since beginning and many of your shareholders have told us clean up the balance sheet, which we totally agree.

Mitchell Trotter: We started that process because cleaning up the balance sheet has always been our goal since the beginning, and many of you shareholders have told us to clean up the balance sheet, which we totally agree. And so we have press releases, shareholder letters, describing other actions in process.

Speaker Change: And so we have press releases shareholder letters, describing other actions in process.

Mitchell Trotter: With that, I want to touch on the debt slide. Next slide, please, real quickly. There's not a real lot of change from the past. I'm not going to spend a lot of time on it, but I do want to note that the RBL, our senior debt, it started at $28 million, it's now at $23 based on the amortization schedule in our.

Speaker Change: With that I want to touch on the slide.

Speaker Change: Next slide please real quickly.

Speaker Change: There's not a real lot of change from the past, so I'm not going to spend a lot of time on it but I do want to note that the army all our senior debt.

Speaker Change: <unk> is a 28 million is now at 23 based on the amortization schedule on our payments.

Mitchell Trotter: So go for the next slide for the equity. There's not a lot of changes from Q3, so I'm not going to spend a lot of time on this one either, but I do want you to note that at the end of the year, we had 10 million of Class A shares, and we still had 500,000 Class B shares, which are voting-only rights, but it has a one-to-one conversion to Class A, and after the end of the year, all the Class B was converted, so that balance sheet item has been cleaned up and goes away.

Speaker Change: So go for the next slide for the equity.

Speaker Change: And there's not a lot of changes from Q3, so I'm not going to spend a lot of time on this one either but I do want you to note that at the end of the year, we had $10 million of class a shares and we still had 500.

Speaker Change: Class B shares, which are voting only right, but it has a one to one conversion of the class a and after the end of the year all of the class B was converted so that balance sheet item.

Speaker Change: Item has been cleaned up and goes away.

Mitchell Trotter: But I do want to talk in the debt side, the financing side, the funding option. So next slide. Now here, there's been a lot of press releases, shareholder letters on what we're doing, our development plans, except everything takes some type of funding, whether it's internal cash flow, or other funding.

But I do want to talk in the debt side the financing side the funding options. So next slide please.

Speaker Change: Now here, there's been a lot of press releases shareholder letter or something but we're doing our development plans et cetera.

Speaker Change: Everything takes some type of funding, whether it's internal cash flow or other funding just to let you. All know we believe in a proper and balanced approach to our funding.

Mitchell Trotter: Just to let y'all know, we believe in a proper and balanced approach to our funding fundraise. We are opposed to excessive equity dilution, and excessive debt needs to be balanced. So our business and our business, the main sources are biometric funding. Debt Financing Equity Instrument. Most of you know a lot about different debt instruments and equity instruments that are out there. And I can sit there and go through all those options. We do listen to many proposals on some stuff that makes sense and some stuff that just doesn't make sense. We reject a lot of them up front because, you know, they're just not in the best interest of the company and not in the best interest of the shareholder.

Speaker Change: We are opposed to excessive equity dilution.

Speaker Change: And so that's something that needs to be balanced.

Speaker Change: Our business and our business. The main sources are volumetric funding.

Speaker Change: That financing equity instruments.

Speaker Change: Most of you know a lot about different debt instruments and equity instruments that are out there I'm not going to sit there and go through all of those options, we do listen to many proposals on some stuff that makes sense.

Speaker Change: Stuff that just doesn't make sense, we reject a lot of them upfront because.

Speaker Change: They're just not in the best interests of the company and not in the best interest of the shareholders.

Mitchell Trotter: So we don't entertain that.

Speaker Change: So we don't entertain those.

Mitchell Trotter: Now, instead, I want to spend a little bit of time talking about the biometric funding, which some of you may or may not know about. And it is described in further detail if you want to read our March 20th press release. But in short, it is a product production revenue sharing instrument that is neither debt nor equity. instead is essentially a portion of the production and related revenues carved out to pay the investor. Once the investor makes his agreed upon return, the production and revenues revert back to the company. The payments now will fluctuate up and down with production and oil prices.

Speaker Change: Now instead I want to spend a little bit of time talking about the volumetric funding, which some of you may have made.

Speaker Change: Do you not know about.

Speaker Change: And it is described in further detail if you want to read our March 20th press release.

Speaker Change: But in short it is a product production revenue sharing instrument that is near that.

Speaker Change: Nor equity.

Speaker Change: Instead.

Speaker Change: Is it essentially.

Speaker Change: A portion of the production and related revenues carved out to pay the investor once the Investor makes it was agreed upon return.

Speaker Change: The production and revenues revert back to the company.

Speaker Change: Yeah, the payments now will fluctuate up and down with production and oil prices that mitigates a lot of risk for the company.

Mitchell Trotter: That mitigates a lot of risk for the company, certainly our cash flow, it matches. So it also minimizes or reduces default risk to the company, because it's not a traditional And also, it does not dilute our common stock.

Speaker Change: Our cash flow it matches. So it also minimizes our reduces default risk to the company because it's not a traditional loan.

Speaker Change: And also it does not dilute our common stock.

Mitchell Trotter: Where are our plan uses? We have three of them for this year. One, field development. Dante talked about the on-stream, the 50 wells in that program, and That's a prime example of what we can use it for. But also the horizontal drilling partner that we've alluded to, that's a different version of a volumetric funding. What's the second one? The seller consideration agreement, which we've talked about. It's in the press releases. And then third, when there's refinancing where appropriate, we may use it.

Speaker Change: You know where our planned usage, we have three of them for this year one field development, that's Dante talked about the Onstream the fifth key wells in that program are and.

Speaker Change: That's a prime example of what we can use it for but also the horizontal drilling partner that we've alluded to that's a different version of a volumetric funding.

Speaker Change: What's the second one seller consideration agreement, which we've talked about it's in the press releases and then third when Theres refinancing where appropriate we might use that so at this point I do want to conclude my presentation. We will take questions at the end of the call and if you need a deeper.

Mitchell Trotter: So, at this point, I do want to conclude my presentation. We will take questions at the end of the call. And if you need a deeper dive, and time may permit, or it's more detail than is prudent for this larger group setting.

Speaker Change: And and time may permit or it's more.

More detailed and it's prudent for this larger group setting just reach out to Mike Porter and he'll schedule a one on one call. We've done several of these with that I'm going to hand, it off to Jesse for the operations review.

Michael Porter: Just reach out to Mike Porter and he'll schedule a one-on-one call.

Jesse Allen: We've done some of With that, I want to hand it off to Jesse for the operations review. Well, thank you, Mitch.

Jesse Will: Well, thank you Mitch.

Jesse Allen: Good morning, all. I'm Jesse Allen, the VP of operations. And today, I will discuss the highlights of our 2024 operations, what we did to stabilize production, and what we will do to increase production in the future, and what we've already initiated here in quarter one.

Jesse Will: Good morning, all non Jesse Alan the VP of operations and today I will discuss the highlights of our 2024 operations, what we did to stabilize our production.

Jesse Will: And what we will do to increase production in the future and what we've already initiated a here in quarter one.

Jesse Allen: First though, I'd like to start off with safety. In 2024, our field operations team did a wonderful job of staying safe. We had no reportable incidents in 2024. And as part of that program, we do have weekly safety meetings in which all our lease operators come in and discuss near misses and what we can do to actually improve operations and improve the safety. Although it's been very, very good thus far.

Jesse Will: First, though I'd like to start off with safety.

Jesse Will: In 2020 for our field operations team did a wonderful job.

Jesse Will: The thing to say, we had no reportable incidents in 2024.

Jesse Will: And as part of that program, we do have weekly.

Safety meetings and with all of these operators come in and discuss near misses in and what we can do to actually improve operations and improve the safety, although it's been very very good thus far.

Jesse Allen: So in 2024, 2024 highlights, when we took over the property, the daily production was basically in a free fall. And so our first order of business is what's going on? Why is that happening? And so we started initiating procedures and work that enable us to stabilize the production at about 950 barrels a whole day. And so what did we do? Well, first, we realized that we're going to have to do several infrastructure upgrades that would enable us to keep our wells on production, because that's the key. You got to keep everything producing to the tanks.

Jesse Will: In 'twenty 'twenty four 'twenty 'twenty four highlights when we took over the property. The daily production was basically in a freefall and so.

Jesse Will: Our first order of business is what's going on why is that happening and so we started initiating them.

Jesse Will: Procedures.

Jesse Will: And work that enable us to stabilize the production at about 950 barrels of oil a day.

And so what did we do well first please.

Jesse Will: We realize that we're gonna have to do a.

Jesse Will: Several infrastructure upgrades.

Jesse Will: That would enable us to keep our wells on production because that's the key you gotta keep everything produced into the tanks and so what we ended up starting with we realized that Oh water injection trunk line from one of our major water stations was in need of replacement, but we've initiated that we also discovered that we had.

Jesse Allen: And so what we ended up starting with, we realized that a water injection trunk line from one of our major water stations was in need of replacement. So we've initiated that. We also discovered that we had a lot of idle wells that were down due to flow lines that had holes in them and needed to be replaced. And so we did that type of work. And as Dante alluded, we've done over 20 now. And at last count, it was 25, 26 that we've done. And that enabled us to return about 60 barrels of oil a day to production.

Jesse Will: A lot of idle wells that were just that were down due to flow lines that had holes in them and needed to be replaced and so we did that type of work and as Don alluded to we've done over 20 now and at last count. It was 25 26.

Jesse Will: That we've done and that enabled us to return.

Jesse Will: We're talking about 60 barrels of all the day to production the water injection line isn't that projects not quite complete but I anticipate once we resume water injection in this part of the waterflood.

Jesse Allen: The water injection line, that project's not quite complete, but I anticipate once we resume water injection in this part of the water flood, that we'll regain about 50 to 75 barrels all the day. So what else did we do? Well, we actually had to do some electrical upgrades and that's replacing some conduit, electrical wire that had been compromised. But the really big project was the replacement of a large transformer that power went to one of our water injection, our water stations. We were not able to operate that particular water station at 100 percent capacity. And the only way we were going to be able to do that was to replace an outdated and ancient transformer that was there.

Jesse Will: That will regain about 50 to 75 barrels a day.

Jesse Will: What else did we do well, we also actually had to do some electrical upgrades.

Jesse Will: And that's.

Jesse Will: Placing some conduit electrical wire that had been compromised, but the really big project was the replacement of a of a large transformer that Oh power went to one of our water injection water stations, we were not able to operate that particular water station at 100% capacity.

Jesse Will: T.

And the only way we were going to be able to do that was to replace an outdated and ancient transformer that was there and we did that it was a big project now we're operating at 100% of that water injection station what else did we do well we ended up replacing several of our horizontal water pumps in several of the wall.

Jesse Allen: And we did that. It was a big project. Now we're operating at 100 percent of that water injection station. What else did we do? Well, we ended up replacing several of our horizontal water pumps in several of the water stations. We ended up swapping out a pump that was too small, used it in another water station to enable us to have a full time injection there. That is key to our water flood operations. We have to put water in the ground, know exactly where we're putting it and keep our rates up in order to continue to increase our production or at least maintain production.

Jesse Will: Our stations, we ended up swapping out a pump that was too small used it in another water station to enable us to have a full time injection there that is key.

Jesse Will: Two our waterflood operations, we have to put water in the ground.

No exactly where we're putting it and keep our rates up in order to continue to.

Jesse Will: <unk>.

Jesse Will: Increase up production or at least maintain production and so that's part of what we did to stabilize the production. In addition, we purchased a hollow unit.

Jesse Allen: And so that's part of what we did to stabilize the production. In addition, we purchased a hot oil unit. We use that every day. And Dante alluded to mainly that's to flush out flow lines, do pressure tests on flow lines, etc. And so on. And that reduced our LOE about 30k per month over third party use of a hot oil unit. And I'll talk a little bit more about that as I discuss the LOE. We also produced some, also purchased several portable well testers to enable us to test our wells and have a much better idea that the work we're doing has actually been fruitful and increasing production.

Speaker Change: We use that every day and Dante eluded to mainly that's too.

Speaker Change: Flush out flow lines do pressure tests on flow lines et cetera, and so on and that reduced R. L. O N E.

Speaker Change: <unk> 30, K per month over third party use of a huddle unit and I'll talk a little bit more about that as I discuss the yellow. We also produce some also purchased.

Speaker Change: Several portable well stay well testers and they've to enable us to test our wells in it and have a much better idea that.

Speaker Change: That the work, we're doing is actually been fruitful and increasing production.

Jesse Allen: So, with that, let me get into LOE. From the beginning of 2024, when we took over the operations, LOE was basically out of sight. It was greater than $800,000 a day or a month, $800,000 per month. We were able to reduce that to an average in 2024 of $765,000. And we're hopeful that as we come into 2025, we're going to be around $700,000 per month on our lease operating expense. And we anticipate even reducing that further.

Speaker Change: With that let me get into L. O N E.

Speaker Change: From the beginning of 2024, when we took over the operations Elouise was.

Speaker Change: Basically out of side it was greater than 800000, a day or a month $800000 per month, we were able to reduce that to an average in 2024th 765000, and we're hopeful that as we come into 2025, we're going to be around 700000.

Speaker Change: Dollars per month on our lease operating expense.

Speaker Change: And we anticipate even reducing that further.

Jesse Allen: Next slide, please. So what are our plans for stabilizing and increasing production? What have we done? As mentioned, we have been trying to figure out the formula to stimulate these wells. As Dante mentioned, we did three with fly ash, they didn't turn out as expected. And so we've moved on to pumping low temperature resin coated sand. And what's key about that is The past workovers and recompletions that were done, a lot of profit was pumped. We produce a lot of that profit back. It gets into our pumps and our flow lines. And so we had to do something different to eliminate that sand.

Speaker Change: Next slide please.

Speaker Change: So what are our plans for stabilizing and increasing production what are we done as mentioned we have been trying to figure out the formula to stimulate these wells.

Dante mentioned, we did three with fly ash, they didnt turn out as expected and so we moved on to something.

Speaker Change: Pumping.

Speaker Change: Low temperature resin coated sand and what's key about that is.

Speaker Change: Past Workovers and re completions that were done a lot of proppant pumped.

Speaker Change: We produce a lot of that pump went back it gets into our pumps and our flow lines and so we had to do something different to eliminate that sand.

Jesse Allen: It was causing the excessive well pulls as a result. And so last several jobs we've done, we've pumped low temperature resin coated sand and they've been successful. And the first one has come in at 20 barrels all the day. And that's what we expect on a go forward basis as an average. We also are bringing idle wells back on production that have some type of downhole failure. When we took over production, there was an excessive number of wells that were down for whatever reason. Some of them more severe than others. And we've started returning those wells to production.

Speaker Change: It was causing more excessive well pools as a result, and so last.

Speaker Change: Last several jobs, we've done we pumped a low temperature resin coated sand and they've been successful in the first one has come in at 20 barrels of oil a day and that's what we expect on a go forward basis as an average we also are bringing idle wells back on production that have some type of downhole failure, when we took over production.

Speaker Change: There was a an excess excessive.

Speaker Change: Excessive number of wells that were down for whatever reason some of them more severe than others and we've started returning those wells to production and that again helps stabilize and increase production a little bit in addition.

Jesse Allen: And that, again, helps stabilize and increase production a little bit. In addition, as we've stated, our water floods and the injection wells are very important. And we found that there were injection wells that were down for various reasons. And we've returned some of those back to injection. That is an ongoing program.

Speaker Change: As we stated our water floods and and the injection wells are very important and we found that there were injection wells that were down for various reasons and we've returned some of those back.

Speaker Change: Back to injection that is an ongoing program.

Jesse Allen: Finally. as What's been really a highlight is the what our technical team uncovered as far as the horizontal potential in the St. Andrews format. That is, we've done our technical presentation. It's on the website. You can view it there. And we're actively seeking a partner to come in and help with the cost. And then, and so the plan currently is we're in the process of permitting those 12 wells. And we hope to have those permitted here in 2025 with a kickoff of the first three wells toward the end of 2025 and into the first quarter of 2026.

Speaker Change: Finally.

Speaker Change: As as.

Speaker Change: What's been really a highlight is the what.

Speaker Change: Our technical team uncovered as far as the horizontal potential in the San Andres formation.

Speaker Change: That is we've done a technical presentation. It's on the website you can do it there and we're actively seeking a partner to come in and help.

Speaker Change: With the cost and then and and so the plan. Currently is we're in the process of permitting those 12 wells and we hope to have those permitted here in 2025 with a kick off of the first three wells.

Speaker Change: Towards the end of 2025 and into the first quarter of 2026.

Jesse Allen: So with that, of course, we do have a Q&A at the end.

Speaker Change: So with that.

Speaker Change: Of course, we do have a Q&A at the end I'm going to turn it back over to Dante for some concluding remarks downtown you'd take it away. Please yeah. Thank you. Thank you Jessie. Thank you Mitch so guys are to wrap up our our presentation here, we think we're going to hit some home run balls in 'twenty five.

Dante Caravaggio: I'm going to turn it back over to Dante for some concluding remarks.

Dante Caravaggio: Dante, take it away, please. Yeah, thank you. Thank you, Jesse. Thank you, Mitch. So guys, to wrap up our presentation here, we think we're going to hit some home run balls in 25. And we think that's going to put us in position to be the best performing micro-cap oil and gas company on the big board.

Dante: And we think that's going to put us in position to be the best performing Microcap oil and gas company.

Dante: On the Big Board. The first one up is going to be conclude the settlement with seller that adds $40 million in value to the shareholders. So that that works out to be a little more than $2 a share we're going to get that done mid year.

Dante Caravaggio: The first one up is going to be conclude the settlement with seller that adds $40 million in value to the shareholders. So that works out to be a little more than $2 a share. We're going to get that done mid-year.

Dante Caravaggio: The next one up is the drilling partner. I believe we'll select a drilling partner in the next three months. We've got meaningful dialogue going on with three. And we're going to cut the best deal that we can for our shareholders.

Dante: The next one up is the drilling partner I believe will select a drilling partner in the next three months, we've got meaningful dialogue going on with three and we're going to cut the best deal that we can for our shareholders. The next one up is part of the financing for the settlement with the seller is the financing to do 50.

Dante Caravaggio: The next one up is part of the financing for the settlement with the seller is the financing to do 50 workovers, all to be completed this year. That's going to be another home run ball.

Dante: He workovers all to be completed this year, that's going to be another home run ball, we're gonna make at least one acquisition. This year certainly we're going to acquire the 10% royalty on our own field and I believe we'll do at least one more than the last home run ball is to cut our G&A and our lease operating.

Dante Caravaggio: We're going to make at least one acquisition this year. Certainly, we're going to acquire the 10% royalty on our own field. And I believe we'll do at least one more.

Dante Caravaggio: And the last home run ball is to cut our GNAs and our lease operating expense as much as we possibly can to weather the storm of oil prices. So that's it, that's kind of a five home run inning and we think that's gonna be tough competition for our other public companies that we compete with.

Dante: That's as much as we possibly can to weather the storm of oil prices. So that's it that's that's kind of a a five homerun inning and and we think that's going to that's going to be tough competition.

Matt: For our other public companies that we compete with with that I'll turn it back over to Matt to do start the Q&A. Please.

Michael Porter: With that, I'll turn it back over to Matt to start the Q&A.

Operator: Uncertainly, everyone at this time will be conducting a question and answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. We do ask that participants please ask one question and one follow-up, then re-enter the queue. Once again, if you have any questions or comments, please press star one on your phone. Please hold while we poll for questions. Thank you. Once again, everyone, if you have any questions or comments, please press star, then one on your phone.

Matt: Certainly everyone. At this time, we'll be conducting a question and answer session. If you have any questions or comments. Please press star one on your phone at this time.

Speaker Change: We do ask that what posing your question. Please pick up your handset if you're listening on speaker phone to provide optimum sound quality.

Speaker Change: We do ask that participants. Please ask one question and one follow up then reenter the queue.

Speaker Change: Once again, if you have any questions or comments. Please press star one on your phone. Please hold while we poll for questions.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Thank you once again, everyone. If you have any questions or comments. Please press star then one on your phone. Please hold while we poll for questions.

Operator: Please hold while we poll for questions. Thank you.

Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Thank you that concludes our verbal Q&A for.

Operator: That concludes our verbal Q and A.

Operator: For those of you listening on webcast, you can submit a question at this time by clicking on the Ask Question button on the left of your screen. Type your question into the box and hit the Send button to submit your question.

Michael Porter: For those of you listening on webcast you can submit a question at this time by clicking on the ask a question button on the left of your screen type your question into the box and hit the send button to submit your question I'll now turn the call over to Michael Porter for remaining questions.

Michael Porter: I will now turn the call over to Michael Porter for remaining questions. Thank you, Matt. Gentlemen, the first question that comes up, it says, congratulations on your progress.

Speaker Change: Thank you Matt gentlemen, the first question that comes up and says congratulations on your progress what are your largest concerns that might negatively impact your plans and also what are your plans regarding future use of stock in lieu of cash for a P. <unk> <unk>.

Michael Porter: What are your largest concerns that might negatively impact your plans? And also, what are your plans regarding future use of stock in lieu of cash for AP and other liabilities? And the follow up question is, how is the stock valued and is it fully registered when issued? Gentlemen, would you please answer the questions?

Speaker Change: Other liabilities and the follow up question is how is the stock valued and is it fully registered when issued gentlemen would you. Please answer the questions.

Michael Porter: Let me start that one and then I'll turn a little bit over to Don. For our largest concern. is of course the market. Everybody's got Oil prices go up and down, stock prices, the market tariffs and all that. Everybody from Exxon and Apple down to companies like us, nobody knows.

Speaker Change: Let me start that one and then I'll turn a little bit onto the all over to Dante.

Speaker Change: For.

Speaker Change: Our largest concern.

Speaker Change: Is of course, the market everybody's got that.

Speaker Change: Oil prices go up and down stock prices the market tariffs and all that that's everybody from Exxon and Apple down to companies like us nobody knows what's going on.

Mitchell Trotter: Let me address the stock questions, and then I'll give Dante to talk about. How are we going to use the future stock for the cash for APs and other liabilities? Well, the 500k already talked about over half of that was settling. debts that related it back. The rest has been for ongoing people that are heavily invested in our company as in providing services to us in the field and through high-end consulting type arrangements. We will use it sparingly. You know, we're not going to use an excessive amount. We haven't in the past, and we don't plan to in the future.

Speaker Change: Let me.

Speaker Change: Dress the.

Speaker Change: Stock questions and then I'll give them to talk about other concerns that you may have.

Speaker Change: How are we going to use the future stock for cash for a piece in other liabilities well the 500 K already talked about over half of that was settling.

Speaker Change: So that related to the acquisition okay.

Speaker Change: The rest.

Speaker Change: It's Ben.

Speaker Change: Ongoing people that are heavily invested in our company is in providing services to us in the field and through high end consulting type of arrangements.

Speaker Change: So we will use it sparingly.

Speaker Change: We're not going to use an excessive amount we haven't in the past and we don't plan to in the future now how has the stock value. That's actually two different questions. One is what is the valuation from a GAAP standpoint, and that's just the base. That's a GAAP thing based on the date of the grant and the stock price.

Mitchell Trotter: Now, how's the stock value? That's actually two different questions. One is, what is the valuation from a gap standpoint? And that's just the base. That's a gap thing based on the date of So, what is the valuation from a gap standpoint? And that's just the base. That's a gap thing Grant and stock price. But how do we value it with respect to the issue price is the bigger question, I believe, in here. And we are we're not giving Discounts on that it is basically either at the trading value or a little bit above what it is right now and it it'll fluctuate So that's a game time decision each time as to what makes sense for all the parties involved, whether we just use cash, or is it worth it doing that?

Speaker Change: But how do we value with respect to the issue price is the bigger question I believe you've been here.

Speaker Change: And we are we're not giving.

Speaker Change: Discounts are all that it is basically either at the trading value or a little bit above what it is right now and it it'll fluctuate.

Speaker Change: So that's a game time decision each time as to what makes sense.

Speaker Change: Or all the parties involved whether we just use cash or is it worth doing that now these shares are not registered or.

Mitchell Trotter: Now, these shares are not registered, they are unregistered shares, they get issued. And then the next S1 will allow us to register. So, and you can look in the past at all the registered shares in our SQL. That's basically what it is with that.

Speaker Change: They are unregistered shares that get issued.

And then the next S. One will allow us to registered them. So and you can look in the past at all the registered shares in our S. One filing so that's basically what it is with that commentary that you want to hit on any of your larger concerns yeah, I'll just I'll put one.

Dante Caravaggio: Dante, did you want to hit on any of your larger concerns? Yeah, I'll just put one out there. I mean, we have a low lifting cost to $23 a barrel, and if we can cut our GNAs, and if we can restructure our RBL, we bring all those costs down so we can make money at $35, $40, $50 a barrel. But it also makes me want to look at gas. Gas is behaving better in the market than oil, so we may look at gas in the coming years. What we can do is a hedge against a weak oil price.

Speaker Change: Out there I mean, we we have a low lifting cost to $23 a barrel and if we can cut our G&A as and.

Speaker Change: And if we can restructure our army L. A we bring all of those costs down. So we can make money at 35 40 $50 a barrel, but it also makes me want to look at gas gas is behaving better than the market than oil. So we we may look at that and look at.

Speaker Change: Gas in the coming years that what what we can do as a hedge against a weak a weak oil price, but my own view and again as Mitch said nobody knows the future, but I I I see what the the social costs are to the Saudis and they need an oil price that's up there. So I think any any REIT.

Dante Caravaggio: But my own view, and again, as Mitch said, nobody knows the future, but I see what the social costs are to the Saudis, and they need an oil price that's up there. So I think any reduction in oil price is going to be short-lived, and we've got time on our side because we're almost fully hedged at $70. So I think we've got time to react and to study and to understand what the markets are going to give us.

Speaker Change: <unk> and oil price is going to be short lived and we've got time on our side, because where we're almost fully hedged at 70. So I think we've got time to react and to study and understand what the markets are going to give us. So that's my response.

Dante Caravaggio: So that's my response. Thank you, sir.

Speaker Change: Thank you Sir the next question are you still working on the Workovers wells or is this less of a priority list and seven rivers is a priority.

Dante Caravaggio: The next question, are you still working on the workovers wells or is this less of a priority list and the seven rivers is a priority? I might try to answer that. The workovers are tied in with the seven rivers. So some of the workovers are to add patterns. So some of the work we're doing right now is actually adding five spot patterns. Some of the workovers are to test the San Andreas with vertical wells in preparation of drilling them horizontally. So the workovers are going to be a forever top priority. I mean, we're going to be doing that for the next 10 years, which is developed behind pipe potential.

Speaker Change: Hum.

Speaker Change: Try to answer that.

The workovers are tied in with.

Speaker Change: With the seven rivers. So some of the work overs are to add patterns. So some of the work. We're doing right now is actually adding adding five spot patterns. Some of the work overs or the test the San Andreas with with vertical wells in preparation of drilling them horizontally. So the the workover.

Speaker Change: Or is there going to be a forever top priority I mean, we're gonna be doing that for the next 10 years, which is developed behind pipe potential we've got something like 10 different stacked pay horizons with names like oceanic and and and and.

Dante Caravaggio: We've got something like 10 different stacked pay horizons with names like Oceanic and San Andreas and seven rivers and so on. So as we learn about these pay sections through workovers, which generally include shooting holes in the pipe and doing some kind of stimulation, whether it be acid or frack, we just have no end of fun there.

Speaker Change: <unk>, San Andreas and seven rivers and so on so as we learn about these pay sections through Workovers, which generally include shooting holes in the pipe and doing some kind of stimulation, whether it would be asset or or or frac. We we just uh huh.

Jesse Will: No and to fund their now I'll go to to Jesse did I say that about right.

Jesse Allen: Now I'll go to Jesse. Did I say that about right? Yes, sir. Yeah, most of our workovers will be in the Seven Rivers, plugging back and then adding Seven River perforations, both in producers and injection wells. And as you've mentioned, the vertical workovers that we have are to test intervals within San Andres. Our geophysicists have been able to identify three or four benches that we could potentially do horizontal wells. Our main bench is what is known as the Jackson Slaughter, which is an interval, local interval name within the San Andres section. So yes, we say 50 horizontal wells currently.

Jesse Will: Yes, Sir Yeah, there's yeah most of our work overs would be in the seven rivers are plugging back and then adding seven river perforations both in.

Jesse Will: Producers and injection wells and as you've mentioned the vertical.

Speaker Change: Oh Workovers that we have our two test.

Speaker Change: <unk> within San Andrus, our Geophysicist has been able to identify three or four benches that we could potentially do.

Speaker Change: Do horizontal wells our main benches, what is known as the Jackson to water, which is and.

Speaker Change: An interval local interval name within the San Andres section so yes.

Speaker Change: We saved 50 horizontal wells currently that could that could double or triple with the identification of these additional benches that we could go horizontal so yeah. The future looks very very bright from for us from a workover and or drilling horizontal completion standpoint.

Jesse Allen: That could double or triple with the identification of these additional benches that we could go horizontal. So yeah, the future looks very, very bright for us from a workover and or drilling horizontal completion standpoint.

Operator: So back to you. Another question.

Speaker Change: So bad thank you.

Speaker Change: And now the question good morning, Ann team curious what are you guys doing to negotiate and benchmark parts pumps and other goods necessary in order to optimize optimize productivity savings.

Jesse Allen: Good morning, EON team. Curious, what are you guys doing to negotiate and benchmark parts, pumps and other goods necessary in order to optimize productivity savings? Dante, I think I can take that one there. Yeah, please. Yeah, obviously, the Permian Basin, and even where we're at in the Northwest Basin there in New Mexico, prices are quite competitive. And we do take typically two to three bids from vendors, and not necessarily go with the cheapest, but whichever service affords us the best value. And that includes parts, services, rigs, downhole pumps, surface pumps, you name it. We do a very thorough job of bidding those costs, and then taking the vendor and or parts that provide the most value.

Speaker Change: The only thing I think I can take that one there yeah. Please.

Speaker Change: Yeah, obviously, the Permian basin, and even where we're at in the northwest basin. There in new Mexico, our prices are quite competitive and we do take a typically a two to three bids from vendors and I'm not.

Speaker Change: Not necessarily go with the cheapest, but which whichever service affords us the best value and that includes parts services rigs down.

Speaker Change: Downhole pump surface pumps you name it we.

Speaker Change: Do a very thorough job of bidding those comps and then.

Speaker Change: Taking the vendor Andover parts that provide the most value.

Dante Caravaggio: So we're very, very cost conscious. You have to be in this environment, especially if we end up in a period of lower oil prices less than $60 or $50 per barrel.

Speaker Change: And so we're very very cost conscious you have to be in this environment, especially if we ended up in a period of lower oil prices less than 60 or $50 per barrel.

Dante Caravaggio: Thank you. Next. Next is your question. Next question, if we get a nice recovery with WTI oil at $85 to $90 a barrel this summer, would you try to increase production faster, reworking horizontal wells, etc.? Yeah, I'll answer that. Yeah, we would. You know, we're limited by the funds we can raise. And as the oil prices go up, our access to funds greatly increases, as does our access to funds with the stock price. So if we have more money, we'll accelerate workovers, we'll accelerate drilling, horizontal wells, but not ridiculously so. You know, you're almost a little bit limited by, you know, what can our current staff do?

Speaker Change: Thank you probably on our next was your question yeah.

Speaker Change: Our next question, if we get a nice recovery with W. T. I oil at 85 to $90 a barrel. This summer would you try to increase production faster reworking horizontal wells et cetera.

Speaker Change: Yeah, I'll I'll I'll answer that yeah, we would yeah, where we're limited by the funds we can raise and it is as the oil prices go up our access to the funds are greatly increases as does our access to funds with the stock price. So.

Speaker Change: If if we have more money will accelerate workovers will accelerate drilling horizontal wells, but not ridiculously. So you know you're you're almost a little bit limited by what can our current staff do what what lessons learned can we digest and apply to the next wells, we've we've learned from.

Dante Caravaggio: What lessons learned can we digest and apply to the next wells? We've learned from some mistakes of the past. We thought we had a winner with acid stimulations. And frankly, last year, we went too fast and made some mistakes and then just slowed it down.

Some mistakes of the past week, we thought we had a winter with asset stimulations and frankly last year, we went too fast and made some mistakes and then just slowed it down so that the answer is yes, we'll will accelerate but not not to to a ludicrous speed.

Dante Caravaggio: So the answer is yes, we'll accelerate, but not to a ludicrous speed. Let me, let me add to that answer a little bit, because there's another obvious question in that. If it does get to that level, We're watching it. So, you know, the horizontal wells, they're all incremental. I will look at it, we will as a company, whether we hedge a little bit more, take advantage of the higher prices to lock in some future oil, like we're at $70 or greater, because price was at the 85 to 90 range a year ago, and we locked it in all the way through the end of 2025.

Speaker Change: Let me, let me say I think that answer a little bit.

Speaker Change: Because there is another obvious question that if it does get to that level.

Speaker Change: We're watching it so you know the horizontal wells are all incremental I will look at it we will as a company, whether we hedge a little bit more take advantage of the higher prices to lock in some future oil like we're at $70 or greater because price. It was at the 85 to 90 range.

Speaker Change: A year ago, and we locked it in all the way through the end of 2025 things to that.

Mitchell Trotter: Thanks to that. that will something like that pops up, we're going to take advantage, either for later parts of 25 or going into 26. So we watch it to to make certain our hedging program is Now back to you, Mike. Yeah, yeah, I'll answer it. So far, the lender is saying yes. And until it closes, frankly, I'm nervous. But the indications I have is that we're still on track. If oil takes a precipitous drop. this number may reduce, and we're just going to deal with it, we'll just deal with it. And we've got backups in place to cover the shortage.

Speaker Change: So that will something like that Pops up we're gonna take advantage either for later parts of twenty-five are going into 26. So we watch it too to make certain our hedging program is proper.

Mike: Back to you Mike.

Mike: Okay last question regarding the 52.8 million revenue sharing a volumetric funding arrangement with Onstream capital is this funding deals still on track for June 2025 closing thank you.

Mike: Yeah I'll take that.

Mike: Yeah, I'll answer it so far the the lender is saying, yes, and until it closes frankly, I'm nervous, but the indications I have is that we're still on track yes.

Mike: If oil takes a precipitous drop.

Mike: This number may reduce it will just going to deal with it we'll just deal with it and we've got backups in place to cover the shortage. So.

Mitchell Trotter: So we've got a backup A and a backup B and a backup C.

Mike: We've got we've got a back up in the back up be in the backup C. But it would sure be helpful for us to have oil prices stabilized in the 16 five range or better you know as we head into June.

Mitchell Trotter: But it would sure be helpful for us to have oil prices stabilized in the 65 range or better, you know, as we head into June.

Mitchell Trotter: Okay, if you all don't mind, I just got two more questions. So I'd like to put them out there. The first one is financing for the 50 workovers. Is the goal to get this done in the next two or three months? Or can you give us a timeline?

Speaker Change: Okay. If you all don't mind I, just got two more questions. So I'd like to put them out there. The first one is financing for the 50 Workovers is the goal to get this done in the next two or three months or can you give us a timeline.

Mitchell Trotter: I'll answer that. It really ties into the on stream and Part of that program has the $52 million, $53 million, has just under $10 million for those 50 wells. So that's already prearranged and it'll close at the same time. And if things for some reason work out, maybe we can do it soon.

Speaker Change: I'll enter that yeah, it really ties into the Onstream and.

Speaker Change: Part of that program has the 52 million 53 million is just under $10 million for those 50 wells. So that's already prearranged and it'll close at the same time and if things for some reason work out maybe we can do it sooner. So yeah and then we'll kick off the program are actually doing.

Jesse Allen: And then we'll kick off the program of actually doing the work, which will take a few Okay, and one one more question with President Trump saying drill baby drill. Are you seeing new drilling permits going through faster for your going forward? And what is your relationship with drilling permits with the state of New Mexico?

Work, which will take.

Speaker Change: A few months.

Speaker Change: Okay, Okay, and one one more question with President Trump's, saying drill baby drill are you seeing new drilling permits going through faster for you going forward and what is your relationship with drilling permits with the state of New Mexico.

Jesse Allen: I'll let Jesse answer that. Yes, as most people probably know, the regulatory environment in New Mexico is a little tougher than Texas. And so, as Dante has already said, we deal with it. And the drilling permit process is typically an eight or nine month process. But with the new administration, all indications are maybe that maybe that's going to be a five or six month process. So the answer to that it does look like the environment is improved for permitting. The same goes for the workovers. Because our property is BLM land, Bureau of Land Management, federal land and state land, we have to get approval typically from both agencies.

Speaker Change: Yeah, I'll, let Jeff answer that.

Speaker Change: Ah yes.

Speaker Change: Most people probably know.

Regulatory environment in New Mexico is a little tougher than Texas, and so as daunting as already said we deal with it.

Speaker Change: And.

Speaker Change: The drilling permit process is typically.

Speaker Change: Eight or nine month process, but with the new administration.

Speaker Change: All indications are maybe that maybe that's going to be a five or six month process. So the answer to that question yet. It does look like the environment has improved for permitting the same goes for the Workovers.

Speaker Change: They have because our properties.

Speaker Change: Is it BLM land, a bureau of land management Federal land and state land.

Speaker Change: Have to get approval typically from both agencies.

Speaker Change: Agencies.

Jesse Allen: And so, workovers do take longer than they do in Texas, typically two to three months. And we are fighting a little bit at that now. But we're working on relationships. And hopefully, by the time we're funded with NSTREAM, those permits will be approved, the workover permit. So to conclude, yes, the environment is improving, and it is probably a result of the new administration having come into.

Speaker Change: And so workovers do take a longer than they do in Texas are typically two to three months and where we are fighting a little bit at that now, but we're working on relationships and hopefully by the time, we're funded within stream those permits will be approved the workover permits so.

Speaker Change: To conclude yes, the environment is improving and it is probably a result of the new administration, having come into office.

Operator: Thank you.

Dante Caravaggio: Dante, that's the last comment, last question. I'm turning the meeting back over to you. Yeah, well, I just want to say thank you to all our shareholders. We're grateful for all of you. And we know you put your trust in us every time you buy a share. And we don't want to betray that trust. We are very optimistic on our future. We think we'll weather the storm, whatever it is. And we've got a lot of knobs to turn to, as we mentioned today, to keep us on track to a very profitable 26. And we think in the trailing quarters of this year, you're going to see remarkable results from us.

Speaker Change: I don't think that's the last comment last question I'm, turning the meeting back over to you.

Speaker Change: Yeah, well I just wanted to say thank you to all our shareholders. We're grateful for all of you and we know you've put your trust in US every time, you buy a share and we don't Wanna be afraid that trust. We are very optimistic on our future. We think we'll weather the storm.

Speaker Change: Ever it is and we've got a lot of knobs to turn to as we as we mentioned today.

Speaker Change: Keep us on track to do it.

Matt: Profitable 26, and we think in the trailing quarters of this year, you're going to see remarkable results from us so with that I'll turn it back over to Matt.

Michael Porter: So with that, I'll turn it back over to Matt to wrap it up. Thank you, everyone.

Matt: To wrap it up.

Speaker Change: Thank you everyone. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.

Operator: This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.