Equus Announces Third Quarter Net Asset Value

Rhea-AI Summary

Equus Total Return (NYSE: EQS) reported net assets of $40.2 million as of September 30, 2024, with net asset value per share decreasing to $2.96 from $3.66 in the previous quarter. The decline was primarily due to decreased fair values of two major holdings: Morgan E&P decreased by $7.0 million to $19.0 million, affected by a 17.6% drop in oil prices and declining production from two wells. Equus Energy decreased by $2.0 million to $8.0 million, also due to lower oil prices. These valuations were supported by a third-party valuation firm.

Positive

• None.

Negative

• Net asset value per share decreased 19.1% to $2.96 from $3.66 quarter-over-quarter
• Morgan E&P's fair value declined $7.0 million (26.9%) due to oil price drop and lower production
• Equus Energy's fair value decreased $2.0 million (20%) due to falling oil prices
• Total net assets declined by $9.6 million (19.3%) from previous quarter

Insights

Financial Analyst

The significant decline in net asset value per share from $3.66 to $2.96, representing a 19.1% drop, is concerning. Two key portfolio holdings drove this deterioration: Morgan E&P and Equus Energy, both impacted by falling oil prices and operational challenges.

Morgan E&P's valuation dropped by $7.0 million (26.9%) due to a 17.6% decline in oil prices and reduced production from operating wells. Similarly, Equus Energy saw a $2.0 million (20%) decrease in fair value. The total NAV reduction of $9.6 million reflects the company's high exposure to energy sector volatility.

The third-party validation of these valuations adds credibility, but the concentration risk in energy assets makes the portfolio particularly vulnerable to commodity price swings. This quarter's performance highlights the risks of such concentrated exposure in cyclical sectors.

HOUSTON, Nov. 14, 2024 (GLOBE NEWSWIRE) -- Equus Total Return, Inc. (NYSE: EQS) (“Equus” or the “Company”) reports net assets as of September 30, 2024, of $40.2 million. Net asset value per share decreased to $2.96 as of September 30, 2024, from $3.66 as of June 30, 2024. Comparative data is summarized below (in thousands, except per share amounts):  

As of the Quarter Ended	9/30/2024	6/30/2024	3/31/2024	12/31/2023	9/30/2023
Net assets	$40,165	$49,792	$45,892	$48,287	$47,128
Shares outstanding	13,586	13,586	13,586	13,586	13,518
Net assets per share	$2.96	$3.66	$3.38	$3.55	$3.49

The following were the principal contributors to the changes in fair value of the Company’s portfolio holdings in the third quarter of 2024:

Decrease in Fair Value of Morgan E&P.   During 2023 and the first half of 2024, Morgan E&P, LLC (“Morgan”) completed the acquisition of approximately 6,707 net acres in the Bakken/Three Forks formation in the Williston Basin of North Dakota. During the third quarter of 2024, there was a decrease of 17.6% in the price of oil. Morgan also experienced a decline in production from its two operating wells. Principally as a result of these two factors, the fair value of our equity holding in Morgan decreased $7.0 million, from $26.0 million as of June 30, 2024 to $19.0 million as of September 30, 2024.

Decrease in Fair Value of Equus Energy.   During the third quarter of 2024, the fair value of the Company’s holding in Equus Energy, LLC (“Equus Energy”) decreased $2.0 million, from $10.0 million to $8.0 million, largely as a consequence of the decrease in oil prices during the quarter.

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.

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:

Patricia Baronowski
Pristine Advisers, LLC
(631) 756-2486

FAQ

What was Equus Total Return's (EQS) net asset value per share in Q3 2024?

Equus Total Return's net asset value per share was $2.96 as of September 30, 2024, down from $3.66 as of June 30, 2024.

How much did Morgan E&P's fair value decrease in Q3 2024 for EQS?

Morgan E&P's fair value decreased by $7.0 million, from $26.0 million to $19.0 million, due to a 17.6% drop in oil prices and declining production from its wells.

What caused the decline in Equus Energy's valuation in Q3 2024?

Equus Energy's fair value decreased by $2.0 million, from $10.0 million to $8.0 million, primarily due to the decrease in oil prices during the quarter.