HNR Acquisition Corp Announces 2024 Operational Plan - Increase in Production Expected in 2024; Cost Control and Optimizing Production to Increase Revenues and Earnings
- Positive revenue growth and consistent positive cash flow from the Grayburg-Jackson oil field
- Subsidiary LH Operating, LLC, generated $20.3 million in revenues and $3.9 million in net income for the nine months ended September 30, 2023
- Efforts to improve capital expenditure efficiency through fine-tuning waterflood completions and pumping methods
- Identification of low-cost opportunities to increase and improve oil production
- None.
Insights
The recent acquisition by HNR Acquisition Corp of the Grayburg-Jackson oil field represents a strategic expansion within the energy sector, specifically in the oil and gas sub-sector. The field's historical profitability and positive cash flow indicate a robust operation that has already been optimized to an extent, as evidenced by the implementation of waterflooding techniques that have boosted oil recovery since 2020.
From a financial perspective, the integration of LH Operating, LLC's revenues and net income into HNRA's consolidated financials could potentially bolster the company's earnings report for the fiscal year. The historical lift costs of $17.00 per barrel provide a benchmark for evaluating operational efficiency post-acquisition. Investors should monitor the forthcoming financial statements to assess the immediate impact of the acquisition on HNRA's overall financial health.
The company's initiative to reduce idle well count and enhance production through low-cost repairs is a prudent approach to cost management and operational optimization. These actions suggest a focus on lean operations and could lead to improved margins if executed effectively.
HNRA's efforts to reduce flaring and carbon emissions, as well as to improve water recycling for the Seven River waterflood, are significant from an environmental compliance and sustainability perspective. These initiatives could potentially reduce the environmental footprint of their operations and align with broader industry trends towards more sustainable and responsible resource extraction.
Reducing wellhead back pressure and enhancing water treatment and injection processes not only contribute to increased oil production but also demonstrate a commitment to environmental stewardship. As regulatory pressures increase and investors become more environmentally conscious, HNRA's proactive measures may position them favorably in the market and could potentially lead to cost savings through reduced fines and improved operational efficiencies.
The technical aspects of HNRA's operational strategy, including the fine-tuning of waterflood completions and pumping methods, aim to enhance capital expenditure efficiency. The company's focus on improving existing infrastructure, such as well workovers and facility maintenance, indicates a strategic approach to asset management that prioritizes incremental output increases and reliability over large-scale capital projects.
By targeting low-cost opportunities for production enhancement, HNRA is leveraging its operational expertise to maximize the value of its assets. The anticipated increase in production by approximately 100 barrels of oil per day through reducing idle wells is a modest yet strategic move that could yield significant returns relative to the investment required. The company's ability to identify and execute on these opportunities will be critical to their success in increasing production and profitability.
HOUSTON, TX / ACCESSWIRE / January 8, 2024 / HNR Acquisition Corp (NYSE American:HNRA) (the "Company" or "HNRA") is an independent oil and gas company focused on the acquisition, development, exploration and production of oil and gas properties in the Permian Basin. Over 45 days ago, the Company completed the acquisition of its interest in the Grayburg-Jackson oil field in Eddy County, New Mexico. The field operates 550 oil and gas wells on 13,700 contiguous acres.
The Grayburg-Jackson field began development in the 1940's and in 2020 started to waterflood the Seven Rivers ("7R") interval with good results. The revenues have grown ever since 2020 and the field has been profitable with positive cash flow for the last two years. LH Operating, LLC ("LHO"), a wholly owned subsidiary in the Company structure acquired in November 2023, had
HNRA has performed an initial analysis of the field in conjunction with the results of the pilot study and subsequent actions. To improve capital expenditure efficiency the Company intends to fine-tune its 7R waterflood completions and pumping methods. The Company believes this approach has a high probability of success.
"After approximately 45 days of operating the field, our management team found many areas where we believe we can enhance oil production, as well as numerous financial opportunities we expect to increase our profitability," stated Dante Caravaggio, President and CEO of HNRA. "We anticipate that by reducing our idle well count from 120 to 90 with simple downhole repairs or surface repairs, we can increase production by approximately 100 barrels of oil per day at minimal cost."
"We are fine-tuning our four new well workovers, with production to begin shortly," stated Jesse Allen, Vice President of Operations. "Our team has started maintenance and repairs on a producing facility to reduce flaring and carbon emissions, as well as reduced wellhead back pressure on several wells. We have already improved and increased water recycling to aid the Seven River waterflood by improving the reliability of water treatment/reinjection, and we have improved consistency and increased water injection rates to stimulate additional oil production."
"We made great gains in our initial management of the field, and we will take advantage to improve our oil production and economics. We have also identified ten low-cost opportunities to increase and improve oil production, which will enhance our financial position. Our goals will help us achieve the highest return with a fast payout for our company and to shareholders", continued Jesse Allen.
"We are actively working to "harden" our mechanical and electrical systems to reduce downtime, and to improve safety and reliability", concluded Caravaggio.
About HNR Acquisition Corp
HNRA 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. Our 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. On November 15, 2023, HNRA acquired our operating entity LH Operating, LLC ("LHO") whose assets include interests in the Grayburg-Jackson oil field in the prolific Permian Basin in Eddy County, New Mexico.
HNRA's Class A common stock trades on the NYSE American Stock Exchange. For more information on HNRA, please visit the Company website: https://www.hnra-nyse.com/
Forward-Looking Statements
This press release includes "forward-looking statements" 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.
mike@plrinvest.com
SOURCE: HNR Acquisition Corp
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