Equus Announces Fourth Quarter Net Asset Value

Rhea-AI Summary

Equus Total Return (NYSE: EQS) reported a decline in net assets to $29.5 million as of December 31, 2024, with net asset value per share decreasing to $2.17 from $2.96 in the previous quarter.

The company experienced significant portfolio value changes in Q4 2024:

• Morgan E&P's fair value decreased by $6.0 million to $13.0 million due to declining oil price curves and reclassification of proved reserves
• Equus Energy's fair value dropped by $4.0 million to $4.0 million

Subsequent events in early 2025 included:

• Issuance of a $2.0 million convertible note at 10% interest with 2 million warrants
• $1.5 million investment in GEVI convertible note
• Sale of Equus Energy to NAEOC for $1.25 million cash plus $2.75 million in redeemable preferred shares

Positive

• New $1.5M investment in GEVI convertible note with warrant coverage
• Secured $2M financing through convertible note issuance
• Successfully divested Equus Energy for combined $4M consideration

Negative

• Net asset value per share declined 26.7% QoQ from $2.96 to $2.17
• Morgan E&P fair value decreased by $6.0M (31.6%) in Q4
• Equus Energy value dropped by $4.0M (50%) in Q4
• Potential dilution from convertible note and warrants issuance

Insights

Financial Analyst

Equus Total Return's latest quarterly report reveals significant deterioration in shareholder value, with Net Asset Value (NAV) per share -26.7% quarter-over-quarter (from $2.96 to $2.17) and -38.9% year-over-year. This persistent decline represents substantial value erosion across four consecutive quarters.

The $10 million reduction in NAV was primarily driven by two factors: a $6 million decrease in Morgan E&P's fair value (from $19 million to $13 million), attributed to declining oil price forecasts and reclassification of reserves from producing to non-producing status, and a $4 million decrease in Equus Energy's valuation (from $8 million to $4 million).

Post-quarter transactions indicate a strategic pivot attempting to stabilize performance. The company raised $2 million through a convertible note at 10% interest with a $1.50 conversion price (67% premium to current share price). They're diversifying away from energy by investing $1.5 million in a fire suppression technology company and divesting Equus Energy for consideration potentially worth $4 million ($1.25 million cash plus redeemable preferred stock).

Despite these strategic moves, the persistent trading discount ($0.90 share price vs $2.17 NAV) reflects significant market skepticism about the company's asset valuations. The need for 10% debt financing with equity sweeteners points to challenging capital-raising conditions and potential future dilution. These factors collectively signal serious challenges to Equus's investment model and ability to preserve shareholder value.

HOUSTON, April 11, 2025 (GLOBE NEWSWIRE) -- Equus Total Return, Inc. (NYSE: EQS) (“Equus” or the “Company”) reports net assets as of December 31, 2024, of $29.5 million. Net asset value per share decreased to $2.17 as of December 31, 2024, from $2.96 as of September 30, 2024. Comparative data is summarized below (in thousands, except per share amounts):  

As of the Quarter Ended	12/31/2024		9/30/2024		6/30/2024		3/31/2024		12/31/2023
Net assets	$	29,510	$	40,165	$	49,792	$	45,892	$	48,287
Shares outstanding		13,586		13,586		13,586		13,586		13,586
Net assets per share	$	2.17	$	2.96	$	3.66	$	3.38	$	3.55

Portfolio Value Changes. The following were the principal contributors to the changes in fair value of the Company’s portfolio holdings in the fourth quarter of 2024:

• Decrease in Fair Value of Morgan E&P.   Morgan E&P, LLC (“Morgan”) holds development rights to approximately 6,707 net acres in the Bakken/Three Forks formation in the Williston Basin of North Dakota. During the fourth quarter of 2024, the forward price curve for oil decreased significantly, and certain of Morgan’s proved reserves were reclassified from producing to non-producing. Principally as a result of these two factors, the fair value of the Company’s equity holding in Morgan decreased $6.0 million, from $19.0 million as of September 30, 2024 to $13.0 million as of December 31, 2024.
  
  
• Decrease in Fair Value of Equus Energy.   During the fourth quarter of 2024, the fair value of the Company’s holding in Equus Energy, LLC (“Equus Energy”) decreased $4.0 million, from $8.0 million to $4.0 million, largely as a consequence of the decrease in the forward price curve for oil during the quarter, as well as a result of the subsequent sale of Equus Energy described below.
  

The Company received advice and assistance from a third-party valuation firm to support its determination of the fair value of its investments in Morgan and Equus Energy.

Recent Events. Subsequent to the end of 2024, the Company undertook the following transactions:

• Issuance of Convertible Note and Warrants. On February 10, 2025, the Company issued a 1-year senior convertible promissory note bearing interest at the rate of 10.0% per annum in exchange for $2.0 million in cash (“Equus Note”). The Equus Note is convertible into shares of the Company’s common stock at a conversion price of $1.50 per share. Contemporaneously with the issuance of the Equus Note, the Company also issued two common stock purchase warrants to acquire an aggregate of 2,000,000 shares of the Company’s common stock at an exercise price of $1.50 per share.
  
  
• New Portfolio Investment. On February 10, 2025, the Company purchased from General Enterprise Ventures, Inc., a developer of fire suppression products (OTC Markets: GEVI), a 1-year senior convertible promissory note bearing interest at the rate of 10% per annum, in exchange for $1.5 million in cash (“GEVI Note”). The GEVI Note is convertible into shares of GEVI’s common stock at a conversion price of $0.40 per share. Contemporaneously with the purchase of the GEVI Note, the Company also received a common stock purchase warrant to acquire an aggregate of 1,875,000 shares of GEVI common stock at an exercise price of $0.50 per share.
  
  
• Sale of Equus Energy. On March 3, 2025, the Company sold Equus Energy to North American Energy Opportunities Corp., a developer of upstream oil and gas assets (“NAEOC”). The consideration provided by NAEOC consisted of $1.25 million in cash and 27,500 shares of preferred stock, redeemable within 6 months of the date of issuance at $100.00 per share, or an aggregate of $2.75 million, conditional upon Equus facilitating NAEOC’s acquisition of operating rights with respect to Equus Energy’s holdings in the Conger Field, as well as the acquisition of the working interests associated with the Conger Field not already held by Equus Energy.
  

About Equus

The Company is a business development company that trades as a closed-end fund on the New York Stock Exchange under the symbol "EQS". Additional information on the Company may be obtained from the Company’s website at www.equuscap.com. 

^{This press release may contain certain forward-looking statements regarding future circumstances. These forward-looking statements are based upon the Company’s current expectations and assumptions and are subject to various risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements including, in particular, the performance of the Company, including our ability to achieve our expected financial and business objectives, and the other risks and uncertainties described in the Company’s filings with the SEC. Actual results, events, and performance may differ. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as to the date hereof. Except as required by law, the Company undertakes no obligation to release publicly any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The inclusion of any statement in this release does not constitute an admission by the Company or any other person that the events or circumstances described in such statements are material.}

Contact:

Equus Total Return, Inc.
1-888-323-4533

FAQ

What caused EQS's net asset value to drop in Q4 2024?

EQS's NAV declined due to a $6.0M decrease in Morgan E&P's value and a $4.0M decrease in Equus Energy's value, primarily due to falling oil price curves.

How much did Equus (EQS) receive from the sale of Equus Energy in March 2025?

EQS received $1.25M in cash plus 27,500 preferred shares redeemable at $100/share ($2.75M total) from NAEOC.

What are the terms of EQS's February 2025 convertible note issuance?

EQS issued a 1-year 10% convertible note for $2M, convertible at $1.50/share, with warrants for 2M shares at $1.50/share.

What is the status of EQS's investment in Morgan E&P's Bakken assets?

Morgan E&P holds 6,707 net acres in Bakken/Three Forks, valued at $13M as of Dec 2024, down from $19M due to oil price decline and reserves reclassification.