HNRC COMPLETES ACQUISITION OF INTEREST IN CUNNINGHAM ENERGY

Rhea-AI Summary

Houston Natural Resources Corp. (OTC: HNRC) announced the acquisition of a 9% interest in Cunningham Energy, LLC for $19.62 million, effective September 19, 2022. The deal is projected to enhance HNRC's asset value by $0.39 per share, raising it from $2.43 to $2.82, a 16% increase. The acquisition aligns with HNRC’s strategy to expand its oil and gas interests, particularly in Canada, and involves a drilling program of up to 40 wells. Cunningham Energy, recognized for its operations in the Appalachian Basin, holds significant potential reserves and aims for NASDAQ or NYSE listing.

Positive

• Acquisition increases asset value by $0.39 per share, from $2.43 to $2.82.
• Total appraised value of Cunningham's assets is $218 million.
• Expansion of oil and gas interests into Canada and internationally.
• Potential for significant recoverable reserves estimated at 5.088 million barrels.
• Participation in the $16 billion Bipartisan Infrastructure Deal for legacy pollution clean-up.

Negative

• None.

Acquisition Increases Asset Value Substantially

HOUSTON, Oct. 11, 2022 /PRNewswire/ -- Houston Natural Resources Corp (OTC: HNRC) ("HNRC or the Company") announced today that it has completed the acquisition interest in Cunningham Energy, LLC effective September 19, 2022.

An independent engineering company has completed an evaluation of the Oil & Gas Assets of Cunningham Energy. The appraised value of the company's leasehold position as of May 18^th, 2022, is $218 million dollars, assuming the current proposed 40 well drilling program is completed. The acquisition of the 9% interest of Cunningham Energy, in cash and securities, is valued at $19,620,000, which increases the company asset value by $0.39c per share to $2.82 per share from $2.43 per share, up 16% as reported in their Q2 financials an August 1, 2022, based on the  current shares outstanding.   

With this acquisition, the company further expands its interest in Oil, Natural Gas and Oil Field Services properties. It further expands its overall business interest to Canada and is looking to increase expansion internationally.   

Cunningham Energy is an independent producer of oil and gas. Cunningham Energy conducts operations and oil/gas interests in the Appalachian Basin with over 30,000 plus net acres of leasehold. Cunningham Energy was formed in 2008 and was a pioneer of shallow horizontal oil drilling in West Virginia starting in 2014.  During its future phase 1 development program in West Virginia, Cunningham Energy is to permit, drill, and complete 20 Shallow horizontal Big Injun, Weir, and Berea Sandstone Oil wells to fulfil legacy drilling & lease obligations. Identified currently are 68 potential development well sites on existing leases with plans to expand the company's leasehold footprint through future acquisitions and leasing.

Cunningham Energy of Canada Inc. also controls an interest in more than 965,000 acres in the Matapedia Valley, Gaspesie, Quebec Canada from Marzcorp Inc. on a 75% NRI (net revenue interest) basis through an executed Farmout Agreement. Over $14 million has been spent on the project to date through collaboration with Marzcorp Inc. Fifteen core holes have been completed with three bringing hydrocarbons to surface on production test. The 51-101 report indicates a High Estimate case of 5.088MMSTB (million stock tank barrels of light sweet crude) recoverable reserves (from 4 targets covering only 3% of the property). Currently, there are 7 verified drilling targets for Phase 1 as well as 12 drilling areas of interest targeted on the leasehold. Resource potential on the total 965,000 acre leasehold of up to 500 million plus barrels of oil  ("OOIP") Oil-Initially-In-Place, as well as barrels of oil equivalent (BOE) from multiple conventional reservoir targets and total area has been estimated. The median EUR recovery projected of oil per lateral in the Forillon/Indian Cove formation on areas the company's farmout leasehold has been estimated at 942,000 bbls.  The Forillon/Indian Cove is a naturally fractured limestone conventional formation of lower Devonian age. The property has shown documented 51 API gravity light sweet oil samples produced during core drilling.

Cunningham Oilfield Services (COS), a division of Cunningham Energy, provides a variety of oilfield services and equipment within the Appalachian Basin. From drilling and support of horizontal and vertical wells to general well service, rigs and equipment. The recent US Government Bipartisan Infrastructure Deal includes a $16 Billion investment in legacy pollution clean-up, including $11.3 billion for abandoned mine land and water reclamation projects and $4.7 billion for orphaned well site plugging, remediation, and restoration activities. Cunningham Oilfield Services projects meaningful participation in the program moving forward which includes recently allocated funds for West Virginia and Texas.

Cunningham Energy is engaging auditors to complete its last two years audited statements for a listing onto NASDAQ or NYSE.

HNRC will also enter into a separate agreement/and or joint ventures with Viper Capital Partners LLC (www.vipercapitalpartners.com) on a deal-by-deal basis for further development of acreage, minerals, and drilling projects in the lower 48 states, including West Virginia and Texas.

About Houston Natural Resources Corp

Houston Natural Resources Corp. (OTCMKTS: HNRC)(www.hnrcholdings.com) is a diversified energy company with oil and gas interests as well as wastewater treatment facilities.  Additionally, the company owns over $53 million in non-energy assets which it will spin off into Worldwide Diversified Holdings, Inc. (WDHI) in 2022.  HNRC Shareholders of record prior to the end of 2022 will receive equity in WDHI based on shares owned in HNRC.  The spin-off changes the focus of the company towards its energy reserves, the Halff Oil Field in Crockett County, Texas, 83 oil wells, estimated 33 million barrels of oil and water treatment and appraised reserves of $69 million. Furthermore, the company's net earnings Q2 Revenue $5.13M +41% Y/Y, increased 38%, $0.18 earnings per share (EPS), $74M Assets, NAV $2.43/share for the first six months of 2022. The company will also continue to seek new oil and gas and wastewater acquisitions as it focuses on creating more value for HNRC investors.

The Company, through its subsidiary Houston Natural Resources, Inc sponsored HNR Acquisition Corp, a Special Purpose Acquisition Corp (NYSE:HNRA).   

About Cunningham Energy LLC

Cunningham Energy (www.cunninghamenergy.com) is an independent producer of oil and gas based in Charleston, West Virginia. The company was formed in 2008 for the purpose of acquiring, exploring, and producing oil and gas in the Appalachian, Illinois, and Williston Basins. Since inception we have relied on past experience in parallel with the application of new technologies to succeed in the ever-changing field of efficient energy production. Cunningham Energy is positioned to take advantage of current and future trends in oil and natural gas production throughout these basins with aggressive but responsible decisions in the coming future.

FORWARD-LOOKING STATEMENTS:

This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties.

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SOURCE Houston Natural Resources Corp.

FAQ

What is the significance of HNRC's acquisition of Cunningham Energy?

HNRC's acquisition of a 9% interest in Cunningham Energy is valued at $19.62 million and is expected to enhance HNRC's asset value significantly.

How much will HNRC's asset value increase after the acquisition?

The acquisition will increase HNRC's asset value by $0.39 per share, raising it from $2.43 to $2.82.

What is Cunningham Energy known for?

Cunningham Energy is known for its operations and oil/gas interests in the Appalachian Basin, with over 30,000 net acres of leasehold.

What future plans does HNRC have following the acquisition?

HNRC plans to expand its oil and gas interests internationally, aiming for a NASDAQ or NYSE listing through completed audits.

What financial performance did HNRC report prior to the acquisition?

HNRC reported a Q2 revenue of $5.13 million, up 41% year-over-year, and an earnings per share of $0.18.