The Albany Gazette - EON Resources Inc. Announces Funding Design for the Settlement of the Seller Agreement and Debt Payoff and the Grayburg-Jackson Field Development

Funding offers: Subject to execution of definitive documents, we expect to fund the $41 to $53 million using volumetric funding ("VMA") via the sale of one or more ORRI packages. The schedule is to close and fund in approximately four weeks. The funding is to discharge our $20.5 million settlement with Seller and to retire the Company's senior debt for $18.5 million. As disclosed in previous press releases, we expect the benefits to include:

• Completion of our $20.5 million cash settlement with Seller that returns to EON the 10% ORRI; retirement of the $22 million Seller note ($15 million principal plus accrued interest); and return to treasury of the Seller preferred shares with redemption value of $24 million. This would create over $40 million in net value to the Company and its shareholders.

• Retirement of its senior debt eliminating a $700,000 per month note payment with a payment substitution of an estimated incremental ORRI payment of $100,000 to $300,000 per month. A positive cash flow impact of $400,000 to $600,000 per month is expected.

• Funds raised by the VMA and farm-in proceeds in excess of $41 million would be used to develop 45 in field waterflood patterns out of a remaining 150 waterflood patterns in our Seven Rivers formation.

Farmout with Horizontal Drilling Program: In a separate farmout and drilling commitment transaction, EON has reached an agreement in principle with a private company with a proven team to develop reserves estimated to be up to 40 million barrels in the San Andres formation using a horizontal drilling program. We are targeting commencement of the initial San Andres horizontal drilling in the first quarter of 2026. EON expects that this will add over $100 million in PV-10 value to the Company. Details of this transaction are being withheld until the private company completes due diligence and closing occurs.

"We could not be more pleased with the outcome of this raise that has resulted in connecting us with a world class Permian driller, and energy investors who are focused on Permian development opportunities," said Dante Caravaggio, President and CEO of the Company. "To ensure we close in on schedule, we will proceed with one preferred and one backup funding source. Both sources look to the value of overriding royalties the Company could deliver in consideration of funding, with both sources in an advanced stage of due diligence. Simultaneously with the close, EON significantly improves cash flow reducing the need to use our ELOC facility."

More information will be released if we are successful in negotiating definitive documents and funding occurs, of which we can make no assurances at this stage.

About the Grayburg-Jackson Oil Field Property

LH Operating, LLC ("LHO"), a wholly owned subsidiary of EON, operates its holdings in New Mexico of oil and gas waterflood production comprising 13,700 contiguous leasehold acres, 342 producing wells and 207 injection wells situated on 20 federal and 3 state leases in the Grayburg-Jackson Oil Field. The Grayburg-Jackson Oil Field is located on the Northwest Shelf of the prolific Permian Basin in Eddy County, New Mexico.

Leasehold rights of LHO include the Seven Rivers, Queen, Grayburg and San Andres intervals that range from as shallow as 1,500 feet to 4,000 feet in depth. The December 2024 reserve report from our third-party engineer, Haas and Cobb Petroleum Consultants, LLC ("Haas & Cobb" or "Cobb"), reflects LHO to have proven reserves of approximately 14.0 million barrels of oil and 2.8 billion cubic feet of natural gas. The mapped original-oil-in-place ("OOIP") in the LHO leasehold is approximately 876 million barrels of oil in the Grayburg and San Andres intervals and 80 million barrels in the Seven Rivers interval for a total OOIP of approximately 956 million barrels of oil.

Our primary production is currently from the Seven Rivers zone. In addition to proven reserves, the Company believes it may access an additional 34 million barrels of oil by adding perforations in the Grayburg and San Andres formations, plus another 40 million barrels from the horizontal drilling program in the San Andres. With proven oil reserves of over 15 million barrels, combined with the potential 74 million additional barrels from the Grayburg and San Andres zones, LHO should produce oil and a revenue stream for more than two decades with a low decline rate.

About the South Justis Field Property

The South Justis Field ("SJF") is a carbonate reservoir, similar to the rest of the Permian. The SJF was first developed in the 1960's and had an initial production in the 6,000 BOPD range. The waterflood implemented at a cost of $40 million dollars in the 1990's by a major oil company had mediocre performance due to poor connectivity between wells, which indicates an opportunity for horizontal infill well drilling. The subsequent owners of the SJF had higher priorities, which led to an increase in idle wells with downhole failures, thus allowing the production to drop dramatically. The Seller acquired the field and has reactivated several wells with good results increasing the production of oil. This indicates that there are a significant number of wells that can be reactivated to increase production on existing wells.

The SJF comprises 5,360 contiguous acres with 208 combined producing and injection wells with well spacing of 50 acres. The field is located in the Central Basin of the prolific Permian Basin in Lea County, New Mexico located approximately 100 miles from EON's Grayburg-Jackson Oil Field property. The producing formations include the Glorietta, Blinebry, Tubb, Drinkard and Fusselman intervals that range from 5,000 feet to 7,000 feet in depth. The original-oil-in-place ("OOIP") is approximately 207 million barrels of oil.

About EON Resources Inc.

EON is an independent upstream energy company focused on maximizing total returns to its shareholders through the development of onshore oil and natural gas properties in the United States. EON's long-term goal is to maximize total shareholder value from a diversified portfolio of long-life oil and natural gas properties built through acquisition and through selective development, production enhancement, and other exploitation efforts on its oil and natural gas properties.

EON's Class A Common Stock trades on the NYSE American Stock Exchange (NYSE American: EONR) and the Company's public warrants trade on the NYSE American Stock Exchange (NYSE American: EONR WS). For more information on EON, please visit the Company's website: https://eon-r.com/

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties that could cause actual results to differ materially from what is expected. Words such as "expects," "believes," "anticipates," "intends," "estimates," "seeks," "may," "might," "plan," "possible," "should" and variations and similar words and expressions are intended to identify such forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Such forward-looking statements relate to future events or future results, based on currently available information and reflect the Company's management's current beliefs. A number of factors could cause actual events or results to differ materially from the events and results discussed in the forward-looking statements. Important factors - including the availability of funds, the results of financing efforts and the risks relating to our business - that could cause actual results to differ materially from the Company's expectations are disclosed in the Company's documents filed from time to time on EDGAR (see www.edgar-online.com) and with the Securities and Exchange Commission (see www.sec.gov). Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Investor Relations

Michael J. Porter, President
PORTER, LEVAY & ROSE, INC.
[email protected]

SOURCE: EON Resources Inc.

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