HNR Acquisition Corp Gives a Business Update; Acquired Entity Reports $20.3 million in Revenues and Solid Earnings for the Nine Months Ended September 30, 2023

Rhea-AI Summary

HNR Acquisition Corp (HNRA) acquired the Grayburg-Jackson oil field in the Permian Basin through the purchase of equity interests in Pogo Resources, LLC and its subsidiary, LH Operating, LLC. The field has seen a significant increase in production, generating $20.3 million in revenues and $3.9 million in net income for the nine months ended September 30, 2023. With the acquisition, HNRA aims to increase production, expand operations, and exploit other properties within the Permian Basin.

HOUSTON, TX / ACCESSWIRE / November 28, 2023 / HNR Acquisition Corp (NYSE American:HNRA) (the "Company" or "HNRA") is an independent oil and natural gas company focused on the acquisition, development, exploration and production of oil and gas properties in the Permian Basin. The Company's assets include its interest in the Grayburg-Jackson oil field in the prolific Permian Basin in New Mexico.

HNRA acquired the property by purchasing all equity interests in Pogo Resources, LLC and its subsidiary, LH Operating, LLC (collectively "LHO") in the business combination that occurred on November 15, 2023. HNRA filed its Super 8-K with the SEC on November 21, 2023. All filings by HNRA with the SEC, together with additional information concerning the Company, are available through the hyperlinks within the Company's website at: https://www.hnra-nyse.com/

Highlights of the to-date operations results LHO

LHO was a privately owned company that operated the Grayburg-Jackson field (the "field") from early 2020 after acquiring the property in late 2019. The 2020 baseline production level was approximately 500 barrels of oil equivalent (BOE) per day. LHO's production has increased from the baseline 500 BOE to an average of 1,388 BOE per day for the nine months ended September 30, 2023. All field production of the Company is being sold under long-term contracts to various customers in the USA.

LHO had $20.3 million of revenues generating positive cash flow and $3.9 million of net income for the nine months ended September 30, 2023. As of September 30, 2023, total assets of LHO were $70.4 million. With the acquisition now completed, HNRA will report its first consolidated financials for the fiscal year ended December 31, 2023. The results from the acquisition will only be included for six (6) weeks of the fourth quarter in the fiscal year ended December 31, 2023.

Following the acquisition, all of the experienced field personnel of LHO who achieved these results have remained with the Company.

"The consolidation of the business has started and, with the help of the prior management, our HNRA team has been engaged for months to become familiar with the operations of the field. We have been interacting with the field staff so that, operationally, we will continue to produce and sell oil," said Dean Rojas, Chief Executive Officer. "We have completed our initial operational plan for the field and our field staff, who have worked the field for years. We have started improving the operation with continued modernization and maintenance so we can increase production. The expansion of the field with our disciplined operating philosophy should drive higher revenue and earnings. In addition, there are several analogous opportunities within the Permian Basin we are investigating with an eye to acquire and exploit other properties."

Grayburg-Jackson Oil Field

The field is located in Eddy County, New Mexico in the Delaware basin of the prolific Permian Basin. LHO's holdings comprise of 13,700 contiguous leasehold acres, 343 producing wells and 207 injection wells for a total of 550 wells. The Grayburg-Jackson oil field has several large reservoir structures that range from as shallow as 1,500 feet deep to 4,000 feet deep. The field has attainable proven reserves of approximately 20 million barrels of crude oil and 6 billion cubic feet of natural gas.

Since the 500 BOE per day baseline production in 2020, by the implementation of Zone 7R waterflooding, the production has increased to today's range of 1,250-1,450 BOE per day. We plan on doing the same successful workovers which will expand the existing waterflood patterns field-wide which are expected to triple field production to 4,000 BOE per day by 2027. This production increase, forecasted by our 3rd party engineer, Cobb and Associates, will increase HNRA's enterprise value to approximately $433 million on a PV-10 basis. This is our key focus in creating increasing shareholder value quarter over quarter for the balance of this decade.

The existing and future production is principally comprised of waterflooded, long-lasting, low decline oil production. This creates a long-term steady revenue stream, which is a strong base to generate sustain cash flow and earnings. Additionally, because the field has over 500 wells, the geological and mechanical risks are significantly mitigated. This steady revenue stream and low-risk oil recovery waterflooding method increases the economic value of this asset.

According to the United States Geological Survey (USGA), the Permian Basin is considered the largest oil and natural gas rich property in the USA. The basin is known for an extensive production history, long-life reserves and historically high drilling success rates. In 2018, the USGA did an assessment where the Delaware Basin portion of Texas and New Mexico's Permian Basin province contains an estimated 46 billion barrels of oil and 281 trillion cubic feet of natural gas.

"HNRA has acquired an operating asset that is profitable, and is our foundation for future growth," said Joseph V. Salvucci, Sr., Chairman of the Board. "The board and management are comprised of industry experts with many decades of operational experience at both major oil companies, as well as, smaller independent entrepreneurial ventures."

"We have entered into a hedging program with financial derivatives with respect to a portion of our production to manage our exposure to oil and gas price volatility," said Mitchell B. Trotter, Chief Financial Officer. "We are engaging in price risk management activities to protect ourselves from commodity price fluctuations while maintaining upside potential as we develop the untapped proven reserves."

About HNR Acquisition Corp

Until November 15, 2023, HNRA was a blank check company (otherwise known as a special purpose acquisition company or SPAC) formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities. HNRA is now an operating company. HNRA's stock continues to trade on the NYSE American.

For more information on HNRA, the acquisition and the transaction, 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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FAQ

What is the company name and ticker symbol of the independent oil and natural gas company focused on the acquisition, development, exploration, and production of oil and gas properties in the Permian Basin?

The company is HNR Acquisition Corp, and its ticker symbol is HNRA.

What assets did HNRA acquire and through which companies?

HNRA acquired the Grayburg-Jackson oil field through the purchase of all equity interests in Pogo Resources, LLC and its subsidiary, LH Operating, LLC.

What were the financial results of the Grayburg-Jackson oil field for the nine months ended September 30, 2023?

The field generated $20.3 million in revenues and $3.9 million in net income for the nine months ended September 30, 2023.

What are the plans for the future of the acquired field and the company's operations?

HNRA aims to increase production, expand operations, and exploit other properties within the Permian Basin.

What is the location and composition of the Grayburg-Jackson oil field?

The field is located in Eddy County, New Mexico, with 13,700 contiguous leasehold acres, 343 producing wells, and 207 injection wells for a total of 550 wells.