HNR Acquisition Corp Reports Compliance with NYSE American Company Guide Following Filing of its Annual Report on Form 10-K on May 3, 2024

Rhea-AI Summary

HNR Acquisition Corp (HNRA) reported compliance with the NYSE American Company Guide after filing its Annual Report on Form 10-K. The company received a letter from NYSE American confirming compliance. Despite a going concern qualification in its audit opinion, management plans to address the issue by increasing profitability, maintaining hedge positions, and issuing additional shares through a Common Stock Purchase Agreement with White Lion Capital,

Positive

• None.

Negative

• The audit opinion for HNR Acquisition Corp included a going concern qualification due to a significant working capital deficiency, raising doubts about the company's ability to continue operating. This may impact investor confidence and stock performance.

• The need to raise additional funds to sustain operations and meet obligations could lead to dilution for existing shareholders if the company opts to issue more Class A common stock.

Insights

Financial Analyst

HNR Acquisition Corp's recent compliance with the NYSE American Company Guide is a procedural step indicating the company has met the filing requirements for its Annual Report. However, the notable aspect that investors should pay attention to is the inclusion of a 'going concern qualification' in the audit opinion. This signifies that the independent auditors have raised concerns about the ability of the company to continue its operations without the threat of liquidation or bankruptcy. The working capital deficiency and the need for additional funds to sustain operations are red flags that underline the financial challenges the company faces. While management's plans for improving profitability and securing additional funding through a Common Stock Purchase Agreement are positive steps, they also show reliance on external financing, which could dilute current shareholders' equity. The long-term success of these strategies is not guaranteed and they could potentially add more risk to an investment in HNRA. Investors should carefully weigh the potential for future growth against the financial uncertainties highlighted by the auditors.

Oil & Gas Industry Analyst

In the context of oil and gas operations within the Permian Basin, a region known for its rich oil reserves, the ability of HNR Acquisition Corp to maintain active hedge positions is important for mitigating risks associated with volatile commodity prices. The company's strategy to streamline costs could be beneficial if executed effectively in an industry where operational efficiency is key to maintaining profitability, especially in the face of financial constraints. Yet, the need for significant funding to sustain operations indicates that the company could be facing operational challenges or be in a phase of aggressive expansion that demands substantial capital. The industry's capital-intensive nature means that the company's ability to secure funding under the Common Stock Purchase Agreement could be a determining factor in its capacity to leverage the Permian Basin's resources and generate future revenues. However, investors should monitor the company's ability to manage its debt and meet its financial obligations, as failure to effectively address its working capital deficiency could adversely affect its prospects.

HOUSTON, TX / ACCESSWIRE / May 7, 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 in New Mexico. Today, the Company announces its receipt of a letter from the NYSE American LLC ("NYSE American") indicating the Company's compliance with Section 1007 of the NYSE American Company Guide following the Company's filing of its Annual Report on Form 10-K on May 3, 2024. Pursuant to the letter, the Company will be removed from the NYSE American's late filers' list and the "LF" indicator posted on the Company's "Profile, Data and News" page on the NYSE American website will be removed.

Receipt of Audit Opinion with Going Concern Qualification

In addition, the Company is issuing this release to incorporate certain disclosures that are required under the NYSE American Company Guide Sections 401(h) and 610(b). Included below are these additional disclosures related to the Company's receipt of an audit opinion with going concern qualification for the year ended December 31, 2023.

The audit opinion provided by the Company's independent public auditing firm relating to the Company's audited consolidated financial statements for the year ended December 31, 2023 included a going concern qualification. The financial statements were included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the Securities and Exchange Commission on May 3, 2024. The opinion of the Company's independent public auditing firm notes that the Company has a significant working capital deficiency and needs to raise additional funds to meet its obligations and sustain its operations. The Company's independent public auditing firm indicated in its opinion that these conditions raise a substantial doubt about the Company's ability to continue as a going concern. Management's plans to alleviate this substantial doubt include improving profitability through streamlining costs, maintaining active hedge positions for its proven reserve production, and the issuance of additional shares of Class A common stock through under the Common Stock Purchase Agreement with White Lion Capital, LLC. The Company has a three-year Common Stock Purchase Agreement with a maximum funding limit of $150,000,000 that can fund the Company operations and production growth, and be used to reduce liabilities of the Company, subject to the Company's Registration Statement on Form S-1, which is in the review process, being declared effective by the Securities and Exchange Commission

About the Oil Field Property

In November 2023, the Company acquired LH Operating, LLC ("LHO") including 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, now a wholly owned subsidiary of the Company, 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 2023 reserve report from our third-party engineer, William H. Cobb and Associates, Inc. ("Cobb"), reflects LHO to have proven reserves of approximately 15.4 million barrels of oil and 3.5 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 956,000,000 barrels of oil.

Our primary production is currently from the Seven Rivers zone. In addition to proven reserves, the Company believes we may access an additional 34 million barrels of oil by adding perforations in the Grayburg and San Andres formations. With proven oil reserves of over 15 million barrels, combined with the potential 34 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 slow decline rate.

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. HNRA'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. On November 15, 2023, HNRA acquired its operating entity, LH Operating, LLC, 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 (NYSE American: HNRA) and our public warrants trade on the NYSE American (NYSE American: HNRAW). For more information on HNRA, please visit the Company's website: https://www.hnra-nyse.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.
mike@plrinvest.com

SOURCE: HNR Acquisition Corp

View the original press release on accesswire.com

FAQ

What did HNR Acquisition Corp report?

HNR Acquisition Corp reported compliance with the NYSE American Company Guide after filing its Annual Report on Form 10-K.

What was the audit opinion for HNR Acquisition Corp?

The audit opinion included a going concern qualification, indicating doubts about the company's ability to continue as a going concern.

How does HNR Acquisition Corp plan to address the going concern qualification?

HNR Acquisition Corp plans to address the going concern qualification by improving profitability, maintaining hedge positions, and issuing additional shares through a Common Stock Purchase Agreement with White Lion Capital,

What is the maximum funding limit of the Common Stock Purchase Agreement with White Lion Capital, ?

The Common Stock Purchase Agreement with White Lion Capital, has a maximum funding limit of $150,000,000.