Earnings call transcript: EON Resources Q1 2025 shows EPS beat

EON Resources Inc. reported its Q1 2025 earnings, revealing an earnings per share (EPS) of -0.11, surpassing the forecasted -0.15. Despite this beat, the company’s revenue fell short of expectations, coming in at 4.56 million dollars against a forecast of 8.12 million dollars. Following the earnings release, EON Resources’ stock saw a modest increase of 1.76%, closing at 0.37 dollars per share. According to InvestingPro data, the company’s overall financial health score stands at 1.19, indicating WEAK conditions. InvestingPro analysis reveals 11 additional key insights about EON Resources’ financial position and market performance.

Key Takeaways

• EON Resources reported a narrower-than-expected EPS loss for Q1 2025.
• Revenue fell significantly short of forecasts, raising concerns about sales performance.
• The company’s stock price rose slightly in after-hours trading.
• EON Resources is focusing on cost reduction and operational efficiency.
• Future drilling and production enhancements are in the pipeline.

Company Performance

EON Resources demonstrated improved financial discipline in Q1 2025, with notable reductions in lease operating expenses and interest costs. The company also reported a decrease in ongoing business losses, reflecting its commitment to cost management. However, revenue underperformance highlights potential challenges in market demand or sales execution. InvestingPro data shows the company operates with a total debt burden of $42.32 million and a concerning current ratio of 0.17, indicating potential liquidity challenges. The company’s gross profit margin remains strong at 100.14% for the last twelve months.

Financial Highlights

• Revenue: 4.56 million dollars, below the 8.12 million dollars forecast
• Earnings per share: -0.11, better than the forecasted -0.15
• Lease Operating Expense reduced to 683,000 dollars per month
• Interest expense decreased by 165,000 dollars for the quarter

Earnings vs. Forecast

EON Resources’ EPS of -0.11 exceeded the forecast of -0.15, marking a positive surprise for investors. However, the revenue miss was significant, with actual figures at 4.56 million dollars compared to the expected 8.12 million dollars, indicating a 43.8% shortfall.

Market Reaction

Following the earnings announcement, EON Resources’ stock price increased by 1.76%, closing at 0.37 dollars. This movement reflects a cautious optimism among investors, despite the revenue miss. The stock remains well below its 52-week high of 2.92 dollars, indicating potential room for recovery. InvestingPro analysis shows the stock has declined by 83.48% over the past year, with a concerning six-month return of -63.72%. Discover EON Resources’ detailed Fair Value analysis and comprehensive financial metrics with an InvestingPro subscription, including access to the company’s Pro Research Report, part of our coverage of 1,400+ US stocks.

Outlook & Guidance

EON Resources remains optimistic about its future, with plans to reduce debt and close a financing deal by mid-2025. The company is preparing for drilling activities in Q4 2025 and aims to initiate a multi-well drilling program in Q1 2026. EON Resources also continues to explore low-cost acquisition opportunities and is targeting a long-term oil price of 70 dollars per barrel.

Executive Commentary

CEO Dante emphasized the company’s strategic positioning, stating, "We’re positioned for launch." He also highlighted debt management efforts, saying, "We’re gonna retire both those debts in the next quarter." Additionally, Dante noted potential opportunities in gas monetization, including helium.

Risks and Challenges

• Revenue shortfall raises concerns about market demand and sales execution.
• Volatility in oil prices could impact future earnings and cash flow.
• The success of future drilling programs is uncertain and depends on market conditions.
• Potential macroeconomic pressures may affect overall industry performance.
• Execution risks associated with planned acquisitions and financing deals.

Q&A

During the earnings call, analysts inquired about EON Resources’ relationship with Chevron, which remains strong. Questions also focused on the company’s hedging strategy, covering 70% of production at approximately 70 dollars per barrel, and the favorable rig rates for future drilling activities.

Full transcript - EON Resources Inc (EONR) Q1 2025:

Conference Operator: Good day, everyone, and welcome to the E. ON Resources Inc. Announces First Quarter twenty twenty five Earnings Call on Thursday, 05/22/2025. At this time, all participants have been placed on a listen only mode. If you have any questions or comments during the presentation, you may press star one on your phone to enter the question queue at any time.

And we’ll open the floor for your questions and comments after the presentation. If you’re listening on webcast, can submit a question by clicking on the ask question button on the left of your screen. Type your question into the box and hit the send button to submit your question. It is now my pleasure to turn the floor over to your host, Michael Porter. Sir, the floor is yours.

Michael Porter, Host/Moderator, E.ON Resources Inc.: Thank you, Matthew. Good afternoon, ladies and gentlemen, and welcome to the EON Resources first quarter earnings call. This call comes under the forward looking statements rules of the Private Securities Litigation Reform Act of 1995 that involves risks and uncertainties that could cause effect result and to differ materially from what is expected words such as expect, believe, anticipate, etcetera, Such forward looking statements but in 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. Any results and changes that are material, the company’s expectations are disclosed in the company’s documents filed from time to time with Edgar and with the Securities and Exchange Commission.

And without further ado, I’d like to introduce Dante to you. Dante, the floor is yours.

Dante, CEO, E.ON Resources Inc.: Thank you, Mike. All of you, thank you for dialing in. It’s a warm day in Houston here in the afternoon. I just got my air conditioner fixed, so I’m I’m in a very nice nice way to be speaking with each of you. We just spoke to all of you thirty days ago for our year end financial results.

So the focus of this call is what’s happened in q one. And, I’m gonna I’m gonna do this as a good, bad, good sandwich here. So the good, of course, is we’ve got this wonderful asset. We we all believe in it. This management team is committed to making this thing much bigger, much more profitable than it is today.

And, we’ve made a lot of progress on the things we mentioned a month ago, advancing the financing to retire all of our senior debt and our seller debt. We’ll talk a little bit about that. We’ve made great advances to find a driller that will bring money and drill, and we we put this out on our website. 50 San Andreas horizontal wells. And I was delighted to hear that one of our potential drilling partners said, oh, no.

It’s not 50. It’s 90. And these are big wells. These are big wells. We’re talking about 400 plus barrels a day per well.

So those kinda jump way up to the top of the list of the good. On the bad side, in the last quarter, oil prices have been down. Our stock has been down. Our debt has stayed about the same. We continue to pay down our debt, but we still have high debt.

We we don’t make money each month, but we’ve been reducing our costs to cut the amount of loss that we have each month. That’s kind of a good good story out of a bad story. And we are short of capital. We need to invest more money than we are in the field, but right now, our priority is just pay our bills. So a lot of our cash goes to that.

So onto the slide that you have is slide one. We’re trending in the right direction. If you compare what we did year end last year to what we did in q one, we lowered our cost, and we lowered our loss per quarter. I’m figuring and and if you cut through all the, I’ll say, the accounting rules and get to our cash loss per month, we’re we’re we’re close to probably $400,000 right now is the run rate that we need to find either through increased production or increased costs. I mean, sorry, reduced cost or increased production.

There. Now I got it right. And that’s that’s that’s almost twice as good as it was this time last year. And a lot of these cuts were responding to lower commodity pricing even though we’re hedged. We’re hedged at 70 plus percent, meaning we get $70 a barrel.

Even if today oil prices are 55 or 60 or 62 or whatever they are, we get 70. The financing to retire our big debt is is worth talking about. So that’s occupying most of my time and a lot of our team’s time. So we we we met with Onstream in Dallas this past week. We’re on track to get the financing needed to retire our senior debt.

So we’ve reported that to our bank, and the timing to get that all taken care of is June, middle of July, and that’s about the best forecast I can give for that. Part of the on stream financing is to also give us 9 and a half million to do workovers. And I previously mentioned we have 45 workovers approved. It’s a mixed bag of injectors and producers. We are a waterflood producing field, which means we need producers that are completed in our in our waterflood zone, which right now, the 7 Rivers is our dominant zone.

At the same time, we need water injectors injecting water in those same zones. So you’re gonna hear Jesse when he gets on talking about that. In parallel with that, we accelerated our search for a drilling partner, and we’ve got we’ve got one LOI in hand, and we expect additional ones to come in. But the format of these things is a little bit of a leasehold payment, a a sharing of production, and a sharing of drilling costs. And we are looking for an experienced driller familiar with the formation in our area, and I’m delighted to report we’ve got keen interest in that regard.

And this is where we’re gonna make the big move to the upside. I already mentioned that New Mexico’s state OCD has approved 45 workovers for us. That’s a milestone. So that gives us a big backlog of work to do once the funding is in place. I’m also delighted to report that our acid stimulations, a new formulation cooked up by Jesse Allen, our VP of ops, has doubled and tripled production.

Now we’ve we’ve done this before where we did simple acid. It doubled and tripled production, but it was short lived. So we had to go back to the drawing board to find a better formulation that would hold up. So in conclusion, I believe all this hard work that that hasn’t put money in the bank for us yet has positioned us for launch. And as we continue to do these workovers and and refine our our formulas for sand fracs, for acid jobs, for drilling, I believe we’re in in terrific position to take off for in q three and ’4 this year.

With that, for the details, I’m gonna turn it over first to to Mitch Trotter.

Mitch Trotter, CFO, E.ON Resources Inc.: Thanks, Dante. Hello. I’m Mitch Trotter, the CFO. Welcome the newcomers and those that we’ve talked to in the past. We thank you for attending today.

In this call, I’ll give you some insights into q one results. Main takeaways from q one are two things. Cost reductions are starting to materialize. Efforts to clean up the balance sheet continue. On the cost reduction side, g and a cost reduction will be discussed on a later slide.

The LOE, the leasehold, the field expenses have dropped to 683,000 per month in Q1. This is down from what we were talking about last year where it ranged from 700 to 750 per month averages. Another area of reduction is interest expense has dropped a hundred and 65,000 for the quarter, and that’s due to note conversions in our efforts to clean up our balance sheet. Now I wanna hit on something else. The income statement, you look at it, it’s all over the place, and that’s part of what Dante was saying.

It’s due to non cash items that don’t really reflect the running of the business. So in past calls we’ve drilled down to all the puts and takes of these items. Those items are properly recorded, but when you strip them away, you can see a little bit more insight into the actual business. And there are two running the business numbers that’s hard for you to see, but I like to see them. The first one is income from operations, which I’ve talked to about in the past.

And this is simply the cash driven revenues less the field related expenses. And this is before G and A and all the other We continue since day one to have consistent income from operations in the 1,800,000.0 range per quarter. That’s the good news, and it’s still there, maybe a slight uptick. The second is kinda new to this call, and I’m calling it the ongoing business income or loss. And it is the income from operations less the, or just talked about less the G and A, excluding all the non cash equity based type costs, and less of course interest expense.

If you remove all the rest of those non cash items, Q1 was a loss of 1,200,000.0 after the interest expense. Last year, the loss was running more like 1,500,000.0 per quarter average across the year. This is a 300 k improvement, and that’s driven back to cost reductions, and you’ll hear a little bit more about that in the G and A. So let’s get on with it, and let’s go to the revenue slide, please. Next slide.

As you can see, production remained stable for this quarter again. There was an uptick in oil revenue due to fluctuations in the market price oil. Dante noted, we know market price for the last couple months has been up and down and all around. Good news is 70% of our oil is hedged at $70 a barrel. This mitigates these market fluctuations, and we’ve got our head position at this level all the way through the end of twenty twenty five.

Last item I wanna do note on the revenue slide, though, is the gas revenues are up 50 k for the quarter, and that’s due to the higher price of gas. So let’s go to the next slide, please. And I showed this slide on production impacts last call. I was not planning to include it, but the slide did stimulate a lot of good discussion in the Q and A. So I’ve left a slide in the deck, which I’m sure got from the website, and it’s for reference to help you understand some of the business better.

And if needed, we’re gonna talk if needed in the Q and A, it may refer back to it, but I’m not gonna talk about it at this point in time. What I wanna do is go to the G and A slide. Next slide, please. Now we have a plan we’ve stated to reduce G and A cost across the entire year, and some reductions have started in Q1. First, the salaries and fees decreased by 225,000 in q one over last year, or this is approximately a million dollar a year run rate for the year.

Second area, q one, professional fees, legal, audit, consulting, they’re slightly down from last year’s average per quarter. Now a significant portion of these stem from acquisition filings, complicated instruments, balance sheets, settlement agreements, trailing legal matters. We do expect these to drop off dramatically after q two. Third area of cost reduction is the insurance costs are down 25, excuse me, 75,000 per quarter, and that’s just due to renewal rates that we’ve negotiated. So let’s move on to the balance sheet, please.

Next slide. Not gonna spend a whole lot of time here, but I do wanna mention the company has made and is continuing to make improvements to the balance sheet. As reported before, the FPA liability went away in q four of last year. Now we’ll discuss some other Q1 improvements, but I’m gonna do that on the equity slide. So let’s flip to the debt structure slide.

Now there’s really nothing new here, so it’s there for your reference. I wanna go ahead and move forward to the equity slide, please. Okay. Now there are a couple of changes in equity as we clean up the balance sheet. First, there is no more class b common stock.

It’s all class a common stock, so that messiness is gone. The number of warrants outstanding, they have dropped by a couple of million with our exchanges to long term convertible notes. Correspondingly, the warrant liability has also dropped by $1,600,000 from the balance sheet. Now next slide, please. Now just like the production impact slide I showed on the last call, I wasn’t gonna include it, but it did stimulate a lot of good discussion, so people wanted to review it.

So I’ve left it in there for help to help you understand our business better. Again, in q and a, I can may refer back to it, but it’s there in the deck for you to look at. So for the financial section, starting to wrap it up, I want to repeat, we have a key focus on reducing costs, which have started to materialize, and efforts to clean up the balance sheet continues and will continue in the future. So now I wanna move it on to Jesse for to review operations. Thank you.

Jesse Allen, VP of Operations, E.ON Resources Inc.: Yes. Thank you, Mitch. I’m Jesse Allen, the VP of Operations. And today, I will briefly discuss some of the highlights of 2024. Some of them are very important and just wanna jog everybody’s memory on those.

But more importantly, I’ll talk about what we’re doing currently in q one of twenty twenty five to increase our production. So first though, wanna start with safety. For 2024 and into our first quarter twenty twenty five, we’ve had no reportable incidents. So our field operating personnel are doing an excellent job of their daily work routine, noting any possible near misses, etcetera and so on so they’re doing a great job there. So for 2024, when we took over the operations of the Grayburg Jackson Field, the daily production was in a free fall.

So we had to stabilize that production and we were able to do that with a well service workover rig that we ran throughout the year and we were able to stabilize production in the nine twenty five to nine fifty barrel oil per day range. And so that was a good thing and we continue those efforts of course. And then in in in order to stabilize that production, we did several upgrades throughout the field, flow line repairs, electrical repairs, purchased some key equipment that helped us reduce LOE. And so that’s a good segue into the LOE which both Mitch and Dante have mentioned. At the beginning of 2024, we were in the $780,000 range, $7.50 to $7.80.

Slowly we were able to reduce it to $700,000 per month for our lease operating expense and currently here in quarter one we’re at $683,000 per month. So let’s move on to the more important stuff, so next slide please. What are we gonna do to increase production? And we’ve already initiated several programs and concentrating our effort on doing that. We did several sand frac treatments using low temperature resin coated sand which will help keep the sand in place and not cause us operational problems having to pull down hole pumps, etc.

So that’s been successful. And the first couple wells, one came in a little over 20 barrels all day and the other one we’re still in the process of testing. In addition, we’ve initiated an acid treatment program, new formulation, little bit larger jobs to sustain the production. And as Dante mentioned, we basically doubled and tripled production on the first two wells we did. And as a matter of fact, we are doing two additional jobs today.

And so there’ll be some news the next time that I’m on on those wells that we acidize. In addition, we always have a continuing effort of bringing down producing wells and down injection wells back online and so that effort continues. We’re contemplating adding another rig to accelerate that program. And then finally, the really big highlight is gonna be our horizontal drilling program in the San Andres. As Dante said, our own analysis which of course is on our website, we indicated we had 50 locations.

But as one of our partners who looked over the data, they feel like it’s more like 90. And that’s mainly because there’s additional intervals within the San Andres that have potential so there’s just different intervals within that San Andres that we’re going to be able to exploit. Thus the reason for increased potential well count of horizontal wells. So with that, I’ll turn it back over to you Dante for the wrap up. Dante, are you there?

Mitch Trotter, CFO, E.ON Resources Inc.: All lines.

Dante, CEO, E.ON Resources Inc.: I’m here. I was on mute. I apologize. I was on sorry about that. Guys, I’m giving our our walk away points or our takeaway points from this quarter.

We’re positioned for big big time debt reduction. You know, this includes the the RBL at it’s standing close to 20,000,000 and and also includes a seller note that stands close to $1,819,000,000. We’re gonna retire both those in the next quarter along with the preferred shares that are that are also standing in our capital stack. All three of those are gonna go away. We’re gonna have workover madness next next quarter because we’ve already got a a solid backlog of approved workovers.

This is gonna increase our water injection, gonna increase our oil production. The last quarter of this year, we’re gonna have, you know, I’m just gonna say we’re gonna be going great guns in drilling preparation. Not drilling, but drilling preparation. Q one of next year in ’26, we should be drilling up to up to six wells three to six wells. We’re also gonna be doing some low cost acquisitions, which we can’t help ourselves because of these low oil prices.

Frankly, our phone is ringing. So even though our stock is quite low, we can do some very, very low cost acquisitions that will be accretive to our stock, and we’re we’re in the midst of looking at two. So when will this stock ever go up? You’re gonna ask. And and I’ve got my family and friends in the stock and they’re asking me how low can it go?

And I I told them as of today it can’t go any lower than 37¢. So but I believe that the stock is is really attractive. I’m in it at a much higher price. I’m more optimistic now than ever. And, with the upside that I just mentioned, I just can’t help feeling very optimistic on our future.

With that, I’m gonna turn it back over to Mike Porter and our our q and a, please.

Michael Porter, Host/Moderator, E.ON Resources Inc.: Matt, would you give them the instructions, please?

Conference Operator: Certainly. Everyone at this time will be conducting a question and answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, please pick up your handset if you’re listening on speakerphone to provide optimum sound quality. We do ask that participants please ask one question and one follow-up then reenter the queue.

Once again, if you have any questions or comments, please press star one on your phone. Please hold while you poll for questions. Thank you. Once again, everyone, if you have any questions or comments, please press star then 1 on your phone. Please hold while you poll for questions.

Thank you. That concludes our dial in Q and A. For those listening on the webcast, you can submit a question at this time by clicking on the ask question button on the left of your screen. Type your question into the box and hit the send button to submit your question. I will now turn the call over to Michael Porter for remaining questions.

Michael Porter, Host/Moderator, E.ON Resources Inc.: Thank you, Matt. Guys, the first question that came over the Internet is can you give us some color on your gas operations and what you think the future in gas will be for the company?

Dante, CEO, E.ON Resources Inc.: Yes. Let me let me feel that one, guys, if I could. So our first off, gas prices have behaved much better than oil prices, and our gas revenue is up. So we’re happy about that. And it’s a it’s a very good question because we’re looking at gas.

We’re looking at gas opportunities. And, you know, I’ll I’ll just I’ll just say we’re looking at gas opportunities in The US, and we’re also looking at unconventional gas. We we like the specialty gas where the price of gas is much higher than I’ll say Permian gas. So, you know, just as a for example, helium costs closer to 4 or $500 per Mcf. If we can pick up a property or plant that that generates a helium revenue line, we’re then tapping into deep, I’ll call it deep value for our company.

The gas we get and sell to Kinetics out there, that’s our midstream provider that bought out Durango, we don’t get a whole lot for that gas. So if we can monetize that gas that we produce, which is about 900 per day by either doing a data center, Bitcoin mining, or one of those things, and we we’re we’re investigating it now, but we don’t know how to do it yet. So we’re looking at help from others. We’d be very excited to do that. But at the moment, we are enjoying a little more income because the gas prices for just, I’ll say, methane loaded with, c two, c three, c four, and c five is is on the upswing, just the opposite of oil and gas.

Let me ask Paul my team if they have anything they wanna add to that. Jesse or Mitch?

Jesse Allen, VP of Operations, E.ON Resources Inc.: No. I’m fine. Well, let’s see. I’m I’m fine in that regard. Yep.

Dante, CEO, E.ON Resources Inc.: Okay. We’ll go back to you then, Mike.

Michael Porter, Host/Moderator, E.ON Resources Inc.: Okay. The next question is, how was your relationship with Chevron?

Dante, CEO, E.ON Resources Inc.: I’ll feel that one too. All of us when we first bought this property wanted to make sure we had a good relationship with Durango and Chevron. They’re they’re really our client because they buy they buy the gas now Kinetics and and, Mitch and I, no. Sorry. Mitch and I and Jesse all have had chats with Chevron as well as with, with Kinetics.

And I I’d like to to say our our relationship is excellent. In the case of Chevron, they’ve said if you quadruple your oil production, we’ll take it off. So at the moment, we don’t see any issues there. In the case of Kinetics, the Permian is is awash in gas. So we have to be very careful, and we’re we’re curtailed about 20% of our gas production in a rolling curtailment because, the midstream guys have to catch up to what the producers are producing.

So they have a a big gas plant due to come online. I think the end of this year, Jesse, you’re more familiar with that. When when would their next trains come on that would relieve some of this?

Jesse Allen, VP of Operations, E.ON Resources Inc.: Should be the July is what they’ve indicated, but, I I’m taking that with a grain of salt because they keep pushing it, but hopefully the July.

Dante, CEO, E.ON Resources Inc.: Yeah. The dates slip. Okay. That’s the best answer we can give you there. Back to you, Mike.

Michael Porter, Host/Moderator, E.ON Resources Inc.: Okay. The the next question hang on. It’s coming over right now. Would the entire deal with Encore, will it close in June, or can you do it in pieces?

Dante, CEO, E.ON Resources Inc.: It looks like it’s gonna be an all all at once. And the latest I’ve got is we were trying to hold a June 23 date, and it’s it’s it’s complicated because we’re involving the bank, the seller, a very large investor that is the backer for Onstream. And I I believe to be safe for this audience, I I’d say we’ll we’ll we’ll get it done by the July. Although we’re pushing like hell to get it done in June, and that’s the best I can guidance I can give. It’s not that the funding’s not there.

The funding is there. The issue is getting all the paperwork together, to everyone’s satisfaction. It’s a complicated transaction.

Michael Porter, Host/Moderator, E.ON Resources Inc.: Thank you. Mitch, this question is for you. Can you explain to me exactly how the hedging program operates and do you make any money off of it?

Mitch Trotter, CFO, E.ON Resources Inc.: Sure. Well, first off, the hedging program that we have is our hedges are swaps where we basically have gone in and our range is a little over $70. Actually, there are three or four hedges, blocks that are between $70.10 and $70.50, where whatever and there’s 15,000 barrels per month hedged, which is 70% of our production. And no matter what the oil price sells, market is, if it’s at $60, we collect the $10 at the end of the month, actually the twenty fifth of the month. And if it’s 80, we gotta give the $10 back.

And the rest of it, the other 30% new production, floats with market. So that’s pretty simple. We don’t have collars and all that. Now we may in the future, but a little bit more complicated. We actually had that at the beginning of of last year, collars and stuff, but we’re not paying for hedges just to get it to one number.

We’re we’re locking in hedge price. We’re not in the business of a hedge fund. We we we derisk, mitigate our risk by doing that, and it’s set up to cover our basic loan needs and basic operating expenses. So hope that answered the question. Back to you, Mike.

Michael Porter, Host/Moderator, E.ON Resources Inc.: Thank you. Dante, the question is, can you give us your thoughts on the oil and gas business in ’25 and how do you feel about what’s been going on worldwide?

Dante, CEO, E.ON Resources Inc.: Wow. Yeah. The there’s there’s a lot of opinions on that. You you know, for us, the the minds that put together the New York Strip oil pricing is probably the best collection of mines, but my my own observation, and I’ve been in this field a long time since since I got out of school in ’79. The the Permian, I I do believe has peaked.

I I you’re seeing the rig count falling off at these oil prices. We have an unusually good Permian rock. I don’t believe that we’re gonna be phased even if oil prices are in the low sixties or high fifties. Certainly, we’re in the low fifties, that’ll readjust our focus to be just workovers, which are lower capital cost and faster payouts. But I I think the world can’t can’t produce a hundred million barrels a day infinitely, and and the world continues to increase in demand.

So my my own belief is we’re gonna trade in this, it’s pretty easy to say, 60 to kinda 80 range, and we’re at the bottom of that range. And if we go below 60, it won’t be for long because you’ll see the drilling rigs all dry up. And right now, more production’s coming out of the Permian than any other oilfield. So, if if the Permian continues to drop and and every new well drilled, almost everywhere in the world, it’s almost like this other than oh, there’s one field off of Northern South America that’s doing quite well. But other than that, every new well does worse than the previous well.

So if we drill a new Permian well, it does worse than than the older good Permian wells a decade ago or twenty years ago. So we’re we’re gonna fight that. We’re gonna fight that and drill better wells. We’re gonna have better workovers, and we’re gonna enjoy, we believe, $70.70 dollars a barrel. And as oil goes up and it will go over 70, we’ll look to hedge, the 26 production at 70 again.

So I think 70 is a fair price. It’s it’s gonna go up and down from there, But I I think generally, it’s it’s gonna it’s gonna level out around 70. And I’m bucking the trend with that statement because New York strip pricing is forecasting low sixties. And I’m just basing that on my own insight on, you know, people can’t easily just turn the spigots up to make oil come out. It just doesn’t work like that.

And and that includes Saudi Arabia. You know, their largest oil field, the South Gavar field that I worked on is a water flood. Just and it’s a carbonate water flood. Now I I would trade that carbonate for our carbonate, but it it it just reflects that we’re dealing with a finite resource, and that finite resource is gonna eventually run out. So I’ll turn it back over to you.

Mike.

Michael Porter, Host/Moderator, E.ON Resources Inc.: Thank you. Jesse, next to the last question, do you see an opportunity for you guys on as far as the rig count going down where you’ll be able to get rigs at a cheaper price? And would you buy a rig rather than rent it or lease it?

Jesse Allen, VP of Operations, E.ON Resources Inc.: I assume they’re talking about a drilling rig. So, yeah. Now typically as an operating company, we don’t want to have that additional liability of a drilling rig. So we will but right now, it is a good market to go out and get a drilling rig at a fair market value or fair market daily rig rate. So I don’t anticipate repurchasing our own rig.

If we end up doing anything with the rig, it’ll be a workover rig and a little less liability there. And so to answer that question, I’m saying rig rates are good right now based on the information talking to consultants and other operators out there. So don’t anticipate buying our own drilling rig but there could be the potential for us to buy a workover rig or two. I hope that answers the question.

Michael Porter, Host/Moderator, E.ON Resources Inc.: Thank you. Nicks, the last question. Good job on cost controls. How do you look at 2025, especially with the industry under pressure? And do you think that you can bring your costs down somewhat lower?

Mitch Trotter, CFO, E.ON Resources Inc.: Yes, we certainly are looking at a couple things. Obviously, Jesse hit on some lease operating expenses, field expenses. As he gets that WER line in, that will drop 30,000 a month. The insurance costs are what they are, but we may be able to drive those down. The labor and fees, you know, we already started, and we expect that to be a full million reduction this year over last year.

And the legal professional fees will be dropping, as I said, after Q two. If we do some of these acquisitions, those will obviously, they’ll be expenditures, but they may or may not be capitalized as far as acquisition costs and then amortized. But So those are the areas, the biggest areas that we have. We don’t have a whole bunch of buildings and stuff around. We have a really nice, small engineering design center, but we don’t have a lot of We’re not into a lot of big excessive stuff, we don’t have a whole lot of staff, we outsource it at very good reasonable rates.

So we’re fairly lean and mean as it is, and these acquisitions will not increase our core base g and a. Obviously, you have an acquisition, it has its own insurance cost for that operation. You know, we may we’re not gonna add, you know, staff or a whole bunch of stuff. We can leverage our accounting firms or payroll provider or legal firms. So we’re not we’re looking to spread the cost of the G and As across multiple growth opportunities this year, and you said this year, but obviously the future years, that’s what we’re designed to do.

So think I hopefully answered that person’s question, so I’ll go back to you, Mike.

Michael Porter, Host/Moderator, E.ON Resources Inc.: Thank you. If anybody else has any questions, please feel free to give me a call, and I’ll arrange for one of the management people to call you. Dante, that’s the end of the questions. I’m turning the meeting back over to you.

Dante, CEO, E.ON Resources Inc.: Yeah. I I’m just gonna repeat the takeaways. Guys, we we we put a theme on this discussion that we’re we’re ready for launch. And and it really the the foundation to take this company to a whole another level. And we’re talking about achieving what the analyst said, that we should be a 4 or $5 stock.

To get there, we gotta get our our balance sheet in order, and that’s by retiring debt, retiring these preferred shares, retiring the seller note. That’s that’s kinda step one. Step two is we gotta get the production way higher than where it is. Near term, it’s gonna be done with workovers. Longer term, it’s gonna be done with drilling.

And then smart hedging, which we’re already doing. Smart cost control, which we’re already doing. We’ll we’re gonna continue that focus so that we think that by q three and q four, our shareholders can finally, you know, stand up and cheer. Right now, we’re just grateful for all of you for sticking it out with us because we know this is painful. It’s painful for us and the management team to see this stock down at this level, and we are doing everything behind the scenes to position this thing to take off.

So with that, I thank all of you for dialing in. Look forward to talking to you again soon. And if you have questions, we’re very accessible. You can reach out to Mike. You can call us.

We’re we’re happy to just tell you everything we’re doing. So with that, I I turn it back over to, Mike and Matt.

Michael Porter, Host/Moderator, E.ON Resources Inc.: Matt, you can finish off the meeting.

Conference Operator: Certainly. Everyone, this concludes today’s event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.

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